Best Project Finance Lawyers in Arak

About Project Finance Law in Arak, Iran

Project finance in Arak, Iran typically involves financing large-scale, capital-intensive projects in sectors such as petrochemicals, heavy machinery, power, water, and manufacturing. Arak is a major industrial center in Markazi Province, so projects often require coordination with local authorities, state-owned enterprises, Iranian banks, and domestic contractors. Legal frameworks that govern project finance are largely national - including contract law, commercial law, banking regulations, public procurement rules, and environmental and land-use regulations - but local permits, municipal regulations, and provincial approvals in Arak are also essential.

Why You May Need a Lawyer

Project finance transactions are complex and high-value. A lawyer experienced in Iranian project finance can help in multiple ways:

- Structuring the project using a special purpose vehicle - SPV - to isolate project assets and liabilities.

- Drafting and negotiating core project contracts such as EPC, O&M, offtake, concession, and supply agreements.

- Designing security packages and documenting guarantees, mortgages, pledges, assignments, and account-sweeps that comply with Iranian law.

- Navigating licensing, land acquisition, zoning and environmental approvals from national and local authorities in Arak.

- Advising on finance options that comply with Iranian banking regulations and Islamic finance principles where required.

- Managing cross-border issues including currency convertibility, repatriation, sanctions screening, and foreign investment approvals.

- Representing clients in disputes, enforcement actions, and arbitration or litigation.

Local Laws Overview

Key legal and regulatory aspects to consider for project finance in Arak include:

- Contract and Commercial Law - Iranian Civil Code and Commercial Code govern contractual relationships, liabilities, and obligations. Careful drafting is required to ensure clear allocation of risks.

- Company Law - projects are often housed in an SPV. Company formation, corporate governance, shareholder agreements, and capital structure must comply with Iran's Companies Law.

- Banking and Finance Regulation - the Central Bank of Iran regulates domestic banking, foreign exchange operations, and payment systems. Islamic finance instruments are widely used to structure financing when conventional interest-bearing loans are not acceptable.

- Foreign Investment Framework - foreign investment in Iran is subject to domestic approvals and protections under Iran's foreign investment laws and related executive regulations. These can provide entry routes and certain protections, but approval processes and conditions may apply.

- Public Procurement and Concession Rules - projects that involve public assets or services may require procurement compliance or concession agreements such as Build-Operate-Transfer - BOT - arrangements governed by specific administrative rules.

- Land, Zoning and Real Estate Registration - land acquisition, leasehold arrangements, and registration of mortgages or pledges over property must follow national registration procedures and local Arak municipal requirements.

- Environmental and Safety Regulations - projects must obtain environmental permits and impact assessments from the Department of Environment and satisfy local environmental conditions enforced at the provincial and municipal level.

- Tax and Customs - project tax treatment, incentives, customs duties on imported plant and equipment, and any tax holidays or exemptions must be analyzed in advance.

- Dispute Resolution - parties frequently use arbitration clauses to avoid exclusive jurisdiction of domestic courts. The agreement must address applicable law, seat of arbitration, and enforcement strategies under Iranian law.

- International Sanctions and Compliance - international sanctions regimes can affect the availability of foreign financing, equipment supply, insurance and cross-border payments. Compliance screening and legal advice are essential for any cross-border element.

Frequently Asked Questions

What is project finance and how does it differ from corporate finance?

Project finance is a financing structure where lenders look primarily to the cash flows and assets of a specific project for repayment, rather than to the general credit of project sponsors. A project is typically ring-fenced in an SPV, and contracts and security are structured so project risks and revenues are predictable and enforceable.

Can a foreign investor own and operate a project in Arak?

Yes, foreign investors can participate in projects in Iran, but they must comply with Iranian foreign investment regulations and obtain required permits. The precise permissions and protections depend on the sector, the foreign investor's country of origin, and the project structure. Local counsel should be engaged early to manage approvals and registration.

Which contracting documents are essential for project finance?

Typical essential contracts are: EPC or construction contract, operation and maintenance contract, offtake or sales agreements, supply agreements, concession or lease agreements where public assets are involved, shareholder agreement for the SPV, and finance documentation including loan agreements and security documents.

How are security interests created and enforced in Iran?

Common security includes pledges over shares and receivables, mortgages over property, assignments of contracts and accounts, bank account control agreements and guarantees. Security must be created in accordance with Iranian law and registered where required to be enforceable. Enforcement in Iran often requires court proceedings or agreed arbitration and then domestic enforcement of judgments or awards.

Is Islamic finance commonly used in Iranian project financing?

Yes. Because conventional interest-bearing loans may conflict with Islamic law principles applied in Iran, Islamic finance structures such as Murabaha, Ijarah, Musharakah, Mudarabah and sukuk are frequently used to fund projects. Legal advisors with experience in Sharia-compliant documentation are important.

What local approvals are needed in Arak for a large industrial project?

Approvals commonly include: municipal zoning and construction permits from Arak Municipality, environmental impact assessment and permits from the Department of Environment, utility connections and permits from local water, electricity and gas authorities, land registration and title clearance from the relevant registry, and depending on the sector, sectoral ministry approvals such as from the Ministry of Industry, Mine and Trade or Ministry of Petroleum.

How do sanctions affect project finance in Arak?

International sanctions can limit the ability to obtain foreign loans, import specialized equipment, procure insurance, and make international payments. Sponsors and lenders must perform sanctions screening and get expert legal advice to assess risks. Sanctions exposure often influences choice of counterparties, payment mechanisms, and whether foreign banks will participate.

What dispute resolution options are available for project contracts?

Parties often choose international arbitration under established rules to resolve cross-border disputes, or domestic arbitration or courts for local matters. It is important to select the seat of arbitration, governing law and enforcement mechanisms that make awards practically enforceable against project assets in Iran.

Can lenders repatriate profits and service foreign debt?

Repatriation of profits and servicing foreign debt can be subject to foreign exchange controls and Central Bank regulations. In many cases currency conversions and transfers are possible but require compliance with registration and reporting obligations. For foreign lenders or sponsors, careful structuring and banking arrangements are necessary to reduce repatriation risk.

What are the typical risks lenders and sponsors face in Arak projects?

Typical risks include construction and completion risk, cost overruns, force majeure events, regulatory or permitting delays, environmental liabilities, currency and convertibility risk, political and expropriation risk, counterparty credit risk, and sanctions-related restrictions. Risk allocation in contracts and appropriate mitigation measures, such as performance bonds, insurance and sovereign or local guarantees, are essential.

Additional Resources

Useful bodies and organizations to consult or notify when developing a project in Arak include:

- Arak Municipality and Markazi Province local authorities - for zoning, construction permits and local coordination.

- Ministry of Industry, Mine and Trade - for industrial projects, licensing and sector regulations.

- Ministry of Petroleum - for oil and gas related projects or cooperation with national oil companies.

- Central Bank of Iran - for banking regulations, foreign exchange and financing rules.

- Department of Environment - for environmental impact assessments and permits.

- Organization for Investment, Economic and Technical Assistance of Iran - for foreign investment approvals and procedures.

- Iran Chamber of Commerce, Industries, Mines and Agriculture - for local business guidance and contacts.

- Securities and Exchange Organization - if project financing involves capital market instruments like sukuk or bonds.

- Local law firms and financial advisors in Arak or Tehran with project finance and Islamic finance experience.

Next Steps

If you need legal assistance for a project finance matter in Arak, consider the following practical steps:

- Engage a local lawyer early - choose counsel with experience in Iranian project finance, Islamic finance structures and local Arak permitting requirements.

- Prepare for due diligence - assemble corporate documents, licenses, title deeds, technical studies, contracts and financial models for review.

- Conduct legal, regulatory and sanctions screening - evaluate ownership, foreign investment approvals, environmental obligations and any sanctions exposure.

- Structure the project - decide on SPV formation, capital structure, security package, and choice of financing instruments that fit legal constraints.

- Negotiate key contracts - prioritize robust EPC, offtake, O&M and finance agreements with clear risk allocation.

- Plan dispute resolution and enforcement - agree practical mechanisms to enforce rights and secure assets, keeping in mind local enforcement realities.

- Coordinate with local authorities - start municipal and provincial approvals early to avoid delays.

- Obtain specialist advice - technical, tax, insurance and environmental experts will reduce execution risk and improve bankability.

Project finance in Arak requires coordinated legal, commercial and technical planning. A well-prepared team that includes experienced local counsel will help navigate the local rules and improve the chances of successful financing and execution.