Financial Law Issues for Lawyers in Transition Economies Department of Law The London School of Economics A three day series of seminars in London jointly hosted by The London and Political Science School of Economics and Political Science and the European Bank for Houghton Street London WC2A 2AE Reconstruction and Development.

Tel: +44 (0)20 7955 7684 6-8 July 2011 Email: [email protected] www.lse.ac.uk/collections/law/projects/lfm.htm

Legal Transition Programme European Bank for Reconstruction and Development One Exchange Square London EC2A 2JN

Tel: +44 (0)20 7338 7631 Fax: +44 (0)20 7338 6150

Email: [email protected] www.ebrd.com/law This publication is printed on recycled stock Financial Law Issues for jurisdiction financing documents and the Outline of programme Lawyers in Transition civil law tradition of transition countries. Please note that the details below are subject to change. Details of venues (conference rooms etc) will be made available following registration. Economies Delegates will be presented with a Certificate of Attendance at the conclusion This series of seminars is held over a of the seminars. three day period at the London School of Day 1: Project Finance, Public Private Partnerships and Concession Based Financing Economics and Political Science (LSE) and LSE’s Law and Financial the European Bank for Reconstruction and (6 July 2011, at the London School of Economics and Political Science) Development. It follows the highly successful Markets Project series held in 2008, 2009 and 2010 and These seminars are being arranged as offers the opportunity to examine in depth, part of the ongoing programme of LSE’s Co-Chairs for the day: with leading academics and experienced Law and Financial Markets Project. Any Roger McCormick and practitioners, the key issues of particular profits from these seminars will be used David Kennedy sensitivity for transition economies in areas to fund the Project’s activities and other 8.45am Coffee such as concession-based project finance Law Department activities at LSE. More and public private partnerships and other 9.15am-9.30am Welcome and general introduction Roger McCormick and information about the Project kinds of secured lending . The seminars, David Kennedy and opportunities to participate in its which will be designed to stimulate open 9.30am-10.15am Session 1 – Introduction to project finance, public private partnerships Roger McCormick activities can be found at its website discussion (with delegate numbers being and concession based financing www.lse.ac.uk/collections/law/ limited to approximately 35) will be of projects/lfm.htm or by contacting the • The structure of limited recourse financing interest to all lawyers based, or practising in, Director of the Project, Roger McCormick, • Role of special purpose vehicle; single point of responsibility; how limited transition economies. at [email protected]. recourse is achieved • Key risks, risk transfer and allocation Background The EBRD Legal Transition • Key players and their relationships: host government, sponsors, lenders and Law is a fundamental part of the toolkit for Programme project company economic and political change. Countries • Contractual structure: project structure, finance structure and that wish to make the transition from The EBRD is associated with these security structure ‘command’ economies to something akin seminars as part of its Legal Transition 10.30am-11.15am Session 2 – Sources of limited recourse financing, bankability Harry Boyd-Carpenter to a market economy need to implement Programme, an initiative to contribute and risks and risk perceptions to the improvement of the investment legal changes in order to facilitate the • Why use limited recourse financing – the worst option, apart from all the rest… necessary economic and political changes. climate in transition countries. Programme This is not an easy or straightforward activities focus on the development of • Strengths and weaknesses of the financing model legal rules and establishment of the legal process and it takes time. Time is itself a • Sponsor interests and dynamics precious commodity in countries that wish institutions and culture on which a vibrant to improve their physical infrastructure market-orientated economy depends. • Funding sources – equity and quasi-equity to offer better access to, say, clean More information about the programme • Funding sources – IFIs, ECAs and commercial banks water and electricity to their citizens or can be found at www.ebrd.com/law or • Consequences of this funding choice – the focus on risk to improve transport links within and by contacting Michel Nussbaumer, Chief across their borders. They will need to Counsel, EBRD at [email protected] • Risk – identification, perception and allocation encourage foreign investment – and 11.15am-11.45am Tea and Coffee potential investors will look to the laws 11.45am-12.30pm Session 3 – Key aspects of term sheets and project finance loan agreements Jelena Madir and of the investee country to safeguard their David Kennedy investment. • Significance of term sheet The situation is made more complex by the advent of global markets across the entire • Representations and warranties world – especially in banking and finance – • Conditions precedent and the accompanying demands for more • Affirmative and negative covenants globally consistent laws and regulation to serve and regulate those markets. • Financial covenants The seminars will explore these topics. The • Events of default speakers will propose a global approach, • Dispute resolution taking into account both the common law regimes that often apply to multi- • Boilerplate provisions

Continued ... 12.30pm-13.45pm Lunch Day 2: An Introduction to Concepts of Insolvency and Security 13.45pm-14.45pm Session 4 – Commentary on contents of term sheets and loan agreements Roger McCormick (7 July 2011, at the London School of Economics and Political Science) • Key issues in negotiations • The planning and structuring of negotiations Co-Chairs for the day: • The realities of risk allocation Michael Bridge and • How documents interlock James Wilson 14.45pm-15.30pm Session 5 – Typical provisions in concession agreements and comparable Roger McCormick 9.30am-10.30am Session 1 – Practice and principles Andrew McKnight documents relating to infrastructure and energy projects • Corporate and individual debtors • The parties; duality of roles and conflicts of interest; host government as concession grantor and/or as ‘customer’ – Creditors and others who have dealings with a debtor • The justification for ‘guarantees’ – What happens when things go wrong • How to assess the documents from a lender’s point of view – The general concept of equal misery amongst unsecured creditors – Creditors who receive preferential treatment • Provisions regarding environmental impact, local communities and comparable issues; – Security as a method of protection in an insolvency • The position, and influence, of ‘stakeholders’ – Other reasons for taking security • The specifications • Assets in the context of security – The types of assets that may be available • Price mechanisms and deadlines/milestones – Matching types of security to assets • Benchmarking • Cover by third parties • Force majeure and undue hardship • Liquidated damages and other remedies for non-performance – Guarantees from associated entities • Termination rights and financial consequences of termination – Cover from independent entities • Assignability and step-in rights • Concepts of set-off and netting 15.30pm-16.00pm Tea and Coffee • Cross-border issues and an introduction to conflict of laws 16.00pm-17.00pm Session 6 – Legal opinions and the role of transaction and local lawyers Andrew McKnight 10.30am-11.30am Session 2 – Secured finance: the English model Michael Bridge • The purposes of legal opinions • English concepts of security – To cover legal issues, not commercial or financial issues – The English concepts of security, the scope and coverage of security – To cover the conflict of laws issues that arise in the transaction – The types of asset that are available as security – An opinion, not a cast iron assurance – Present v. future assets • The limits on giving opinions • Possessory v. non-possessory security – Speaks as of a certain date – Fixed security – Speaks of identified documentation, not other matters – The concept of the floating charge – Subject to assumptions as to matters of fact and laws of other jurisdictions – Priority issues as between competing claimants – Legal qualifications • Alternatives to security – In some jurisdictions, may not cover unknown statutes – The concept of quasi-security • The beneficiaries of legal opinions (eg, immediate parties, parties with – Equipment finance techniques a derivative interest, regulators, credit rating agencies, security trustees) – Retention of title in favour of suppliers • Who should give them (eg, lawyers qualified in the relevant jurisdictions, independent lawyers, the banks’ lawyers, the borrower’s lawyers, in-house lawyers) – Receivables financing • The matters that should be covered – Title transfer transactions (particularly for securities) – Local law opinions (eg, in the jurisdiction of incorporation/establishment • Cross-border issues in secured/proprietary transactions and in the jurisdiction where relevant assets are located) – Characterising the issues involved in a transaction – The transactional opinion (eg, as to the governing law of the facility agreement) – The issues that are likely to be involved in a financing transaction • Responsibilities of those giving opinions (eg, liability in contract or tort, – The English approach to proprietary transactions involving rights in rem conflict of laws issues) – Conflicts rules for different types of asset • The form of an opinion – The effect upon a transaction of illegality or avoidance under a foreign law 17.00pm-17.30pm Round-up of Day 1 and Introduction to Case Study All speakers 11.30am-12.00pm Tea and Coffee 17.30pm-19.00pm Drinks

Continued ... 12.00pm-12.45pm Session 3 – Corporate insolvency and restructuring Andrew McKnight and 15.30pm-16.00pm Tea and Coffee Michael Bridge 16.00pm-17.00pm Session 6 – Security law reform in transition economies Frederique Dahan • Concepts of insolvency and insolvency proceedings • Problems in reforming security law – Formal and informal procedures and self-help procedures • EBRD involvement – The English insolvency procedures • International standards – Administration contrasted with US Chapter 11 • Opportunity of reform: legal efficiency – Voluntary arrangements • Examples – and vision for the future – Schemes of arrangement 17.00pm-17.30pm Round-up of Day 2 All speakers – Receivership (specific and administrative receivership) • Restricting administrative receivership – and the exceptions thereto • The pari passu concept and the distribution of assets in liquidation Day 3: Miscellaneous issues affecting participants and advisers in project financings and the • Insolvency set-off financial markets (8 July 2011, at the European Bank for Reconstruction and Development) • The order and ranking of claims in a liquidation • Rescues and restructurings of insolvent businesses Co-Chairs for the day: Roger • Avoidance/deferral/suspension of security in insolvency proceedings McCormick and Michel Nussbaumer – Registration requirements 9.30am-10.30am Session 1 –Environmental liability and other legal risks in Paul Watchman and – The risk of re-characterisation the post-Crisis era Roger McCormick – Dispositions after the commencement of winding up • Why “Environment, Social and Governance” (ESG) is important for banks – Transactions at an undervalue, preferences, avoidance of transactions, • The evolving concept of environmental liability transactions to defraud creditors • The Equator Principles and their effectiveness – The effect of administration and a proposal for a voluntary arrangement • ‘Sustainable finance’ • Cross-border insolvency • The role and perceptions of civil society – The scenario • Legal and reputational risk managment – The issues that are likely to arise 10.30am-11.30pm Session 2 – Key issues to consider in structuring equity deals in Enrico Canzio – The approach that is taken in England transition economies – The EC Insolvency Regulation 2000 • Corporate structures 12.45pm-13.4pm5 Lunch • ’Locked-box’ mechanism versus purchase price adjustments 13.45pm-14.30pm Session 4 – Secured lending in emerging markets – pitfalls and problems Mathias Chmielewski and • Representations & warranties – indemnities James Wilson • Regulatory approvalss • Security – what does it really mean? • Closing mechanics • Security – what counts? • Minority protection rights: shareholders agreements versus by-laws • Security – why bother? • Exit strategy • Context – the Anglo-Saxon expectation 11.30am-11.45am Tea and Coffee • Theory… and reality, telling the ‘Enforcement Story’ 11.45am-12.45pm Session 3 – Political Risk Insurance – What is it all about? Markus Renfert • Things that get in the way: execution, perfection, scope, enforcement Theory and practice • Dispute resolution • What is political risk? 14.30pm-15.30pm Session 5 – Case studies illustrating comparisons between advanced and Mathias Chmielewski and • How to manage political risk early transition countries James Wilson • Who bears political risk? • Put options – what to do if a put option is not recognised under local law • Guarantees – are all guarantees the same? Do they require consideration or • What does political risk insurance cover? are there corporate benefit issues? • Consequences of a political risk event • Security – Comparing enforcement in Poland and in Turkmenistan 12.45pm-14.00pm Lunch

Continued ... 14:00pm-15:00pm Session 4 – Financing a wind farm in a transition country – a case study Daniele Quaggiotto Speaker profiles • Introduction – Description of a typical wind farm financing structure – Brief overview of relevant EU legislation – Local legislation issues (licensing, grid connection) Professor Michael Bridge Frederique Dahan – Incentive schemes (green certificates, feed-in tariffs) Michael Bridge was an undergraduate and postgraduate student at LSE Frederique Dahan presently serves as Lead Counsel and Head of the Financial – Environmental issues (noise control, bird protection) before starting his academic career. Before coming to LSE in 2007, he Law Unit (FLU) in the Legal Transition Team (LTT) of the EBRD, which provides – Checklist of other issues relevant to windfarm financing held chairs in law at McGill University, the University of Nottingham and legal reform assistance to the countries of central and Eastern Europe and the • Discussion of issues raised in a mock legal due diligence report UCL, and was Dean of the Faculty of Laws at UCL. He has been a Visiting former Soviet Union. Frederique oversees all of the FLU legal reform projects Professor at the Universities of Leeds, Malaya, Hong Kong, Melbourne, concerning secured transactions and access to credit, insolvency and creditors’ – Small Group discussion Sydney and Auckland and at Monash University rights, corporate governance and securities markets. She personally leads all – General discussion secured transactions projects - with country-specific projects currently on-going 15.00pm-15.30pm Tea and Coffee in Mongolia, Moldova, and Russia. Frederique is a recognised expert in the Enrico Canzio subject matter, having personally worked on some of the key EBRD standards 15.30pm-17.00pm Session 5 –Final case study: Participative discussion Roger McCormick Enrico is Principal Counsel at EBRD, where he advises on a variety setting projects on secured transactions, collateral registers and mortgage 17.00pm-17.30pm General Round-up and distribution of certificates lending. Prior to joining the EBRD in 2000, Frederique worked as a Lecturer of debt and equity transactions, in both the public and private at the University of Essex, in the United Kingdom, teaching Comparative law, 17.30pm-18.30pm Drinks sector, across Central and Eastern Europe, Central Asia, and the European Company Law, Cross-Border Insolvency and Business and Corporate former CIS countries. Prior to joining EBRD, Enrico was a counsel Law Issues in Central and Eastern Europe. She was also a Research Fellow at the at the Asian Development Bank in Manila, where he developed Institute of Advanced Legal Studies in London, UK. a significant experience in sovereign transactions in China and Pakistan, and, before that, a senior associate in the M&A group Frederique has published numerous articles on secured transactions, including in the Butterworths Journal of International Banking and Financial Law, Law of Freshfields Bruckhaus Deringer in Milan. Since January 2010, and Financial Markets Review, Penn State International Law Review, Uniform Enrico has been teaching the course “Financing for Development” Law Review, European Business Law Review and Uniform Commercial Code at the Institute for Political Sciences (Sciences Po) Paris as part of Law Journal. She is also the Editor (with John Simpson) of the work on Secured the Master Affaires Publiques. Enrico holds a law degree from Transactions Reform and Access to Credit, 2008, Elgar. Frederique is a LUISS University (Rome) and an LL.M. from the New York University qualified French solicitor. She received her Doctorate in Law from the University School of Law. of Paris I Panthéon-Sorbonne.

Harry Boyd-Carpenter David Kennedy Harry, who is a British Citizen, joined EBRD as counsel in 2005 where he David, who is a Canadian citizen, is currently Principal Counsel at the EBRD. advised on a range of equity and loan investments across Central and Before joining the Bank, he was a senior associate in the Equity Capital Markets Eastern Europe and in former CIS countries. Prior to joining EBRD Harry group at the London office of Allen & Overy LLP, where he advised clients on a was a senior associate in the project finance group of Allen & Overy LLP in range of cross-border M&A, corporate finance and private equity deals. David London, working on a range of international project finance transactions spent five years based in Central Europe where he advised governments and in the PPP/PFI, oil and gas and power sectors. In 2001-2002 Harry worked corporate clients on PPP/PFI, private equity and M&A transactions. David holds for the European Agency for Reconstruction based in Pristina, Kosovo. a law degree (LLB) from Queen’s University (Kingston), a certificate in EU law Since 1st January 2008, Harry has been working in the EBRD Banking from Ryksuniversiteit Groningen (Netherlands) and an anthropology degree department as a Principal Banker in the power and Energy Utilities team. (BA, Dean’s Honour List) from McGill University (Montreal). David qualified as a barrister and solicitor in Ontario in 1999 and as a solicitor in England and Wales in 2002. Mathias Chmielewski Mathias Chmielewski is Counsel at EBRD, where he advises on a variety of Daniele Quaggiotto debt (including project finance) and equity transactions, in both the public and private sector, across Central and Eastern Europe, and the CIS countries. Daniele Quaggiotto is a Principal Counsel at EBRD advising on banking and Prior to joining EBRD, he worked in the London and Moscow offices of finance transactions in both the public and private sector in the countries of Simmons & Simmons where he advised financial institutions on emerging operations of the Bank. Prior to joining EBRD Daniele was an associate in the markets financings, structured securities and derivative transactions. Before London office of Sidley & Austin and subsequently worked as in-house counsel moving to London in 2007, he was a member of the banking and financial for a leading investment bank in London. Daniele also spent four years in Asia services practice of Canadian law firm Stikeman Elliott. Mathias holds a working for the Asian Development Bank in Manila and for investment banks in masters degree in international business law from McGill University and Hong Kong. His areas of expertise include cross-border structured finance and qualified as an attorney at law in Quebec, Canada in 2000. banking transactions. Daniele holds a degree in law (University of Milan, Italy) and a potst-graduate Diploma in Law (College of Law, London). He is an English qualified solicitor. Jelena Madir Markus Renfert Registration Jelena Madir is a Principal Counsel at the EBRD, where her practice focuses Markus Renfert is a counsel at EBRD, where he advises on a variety on a variety of international financing transactions in Central and Eastern of debt (including project finance) and equity transactions, in both Europe, Russia, Central Asia and Turkey. Prior to joining EBRD, Jelena worked the public and private sector, across Central and Eastern Europe, as a finance and capital markets lawyer at Cleary Gottlieb Steen & Hamilton Central Asia, and the former CIS countries. Prior to joining EBRD, If you would like to register for attendance please contact Mandy Tinnams on +44 (0) 20 7955 LLP in Washington, DC; Shearman & Sterling LLP in Frankfurt, Germany; Markus was a senior associate at the Paris office of Linklaters, and Privredna Banka and DLA Piper LLP in Zagreb, Croatia. She is a graduate 7684 or by email [email protected]. The cost of attendance at these seminars is £1,750 where he advised sponsors and financial institutions on cross- of Dartmouth College (BA Government and Asian Studies) and Columbia payable, immediately following registration, by sterling cheque to ‘The London School of University School of Law (JD) and is qualified in Washington, DC and England border project and structured finance transactions, including in and Wales. Jelena also lectures at the Zagreb School of Economics and emerging markets, particularly in North and West Africa. Markus Economics’. Payment other than by cheque can be arranged; please contact Mandy Tinnams for Management in Croatia. She has published a number of articles and books in holds law degrees from the universities of Paris Sorbonne, details. If you register before 9th April 2011 the lower cost of £1,600 will apply. No refunds are Croatia on capital markets and corporate governance issues. France and Köln, Germany. He received his doctor iuris from the Humboldt-Universitaet, Berlin, Germany. payable under any circumstances except cancellation of the seminars, Roger McCormick Roger McCormick is the Director of the Law and Financial Markets Project at Paul Watchman A place will be reserved for you once you have been registered and on receipt of your payment by LSE and also a Visiting Professor there. He is also the author of Legal Risk in no later than Friday 11th June 2011 but please note that LSE and EBRD reserve the right to refuse the Financial Markets (2nd edition, Oxford University Press 2010) He retired Paul Watchman is a Visiting Fellow at LSE where he also co-leads from full-time legal practice six years ago, having practised law in the City of the Sustainable Finance Project (with Roger McCormick). Prior to accept any person for registration. As places are extremely limited you are advised to register as London for nearly 30 years (22 of them as a partner of Freshfields, where he to leaving private legal practice, Paul practised environmental soon as possible. was for several years the head of its project finance practice group). He has and land development law for over 30 years. He was formerly a represented clients on project finance transactions in Russia and Hungary as partner with Brodies and Head of its Environmental and Planning well as many other jurisdictions, including China, India, the Philippines and Practice, a partner with Freshfields Bruckhaus and Deringer in its various parts of Africa. At LSE, he teaches courses on project finance and Environmental Planning and Regulation group and global head of legal risk in financial markets, amongst other things. Outside LSE, Roger acts the environmental practice and climate change group of Dewey as a consultant and is regularly asked to act as an expert witness or arbitrator & LeBoeuf. Paul is the principal author of the UNEPFI report on in connection with commercial and financial disputes. the integration of Environment Social and Governance issues into pension fund investment decision-making, His most recent Andrew McKnight publications include as editor and contributor of Climate Change: Andrew McKnight is a Visiting Professor of Law at Queen Mary, University of A Guide to Carbon Law and Practice (2008) and Complicity: London and a Consultant at Salans LLP. He is a solicitor who has practised in Charting a Path through the Conceptual Minefield in M J Pattanaik, the City of London for almost 30 years, specialising in English, cross-border Human Rights and Business: Perspectives and Practices (2008). Paul and international banking and finance transactions, as well as related areas is a director or member of or adviser to a number of public and such as insolvency, financial reconstructions and banking regulation. He is charitable bodies including the United Nations Environmental Panel the author of The Law of International Finance (OUP 2008), as well as a Financial Institutions, The Prince of Wales’s Trust, London Climate large number of legal articles that have been published in legal journals that Change Panel, European Commission, and Fair Pensions. specialise in banking and international finance. He is also a general editor of the Encyclopaedia of Banking Law (Butterworths, LexiasNexis). James Wilson Michel Nussbaumer James Wilson is a Senior Counsel at EBRD, where he advises on a variety of debt (including project finance) and equity transactions, Michel Nussbaumer is Chief Counsel of the EBRD Legal Transition and Knowledge Management Team, a group of legal experts working on in both the public and private sector, across a broad range of legal policy dialogue and technical assistance in the EBRD countries of EBRD’s countries but with a particular focus on Ukraine. Prior to operations. Prior to that, Michel worked for almost three years as counsel joining EBRD, James worked for Lovells in London, Moscow and on EBRD banking operations, where he was responsible for legal aspects of Prague where his practice involved advising on public and private various investments of the Bank, with a particular focus on SME financing. M&A and fund-raisings, particularly for private equity clients. Michel has practiced as a commercial lawyer in Geneva, Moscow and James has a Scots law degree from the University of Aberdeen, an London. While in private practice, Michel acted as a Swiss correspondent LLM in shipping law from the University of Southampton and was for various legal publications and has also published a number of articles on admitted as an English solicitor in 1998. Swiss and Russian legal matters. Michel, who is a Swiss national, received his Masters Degree in Law from the University of California at Berkeley and also was a visiting scholar at the Moscow State University.