Best Project Finance Lawyers in Marshall Islands

About Project Finance Law in Marshall Islands

Project finance in the Marshall Islands refers to the use of structured financial arrangements to fund large infrastructure or industrial projects, typically with the project's own assets and revenue streams used as collateral. The Marshall Islands, recognized for its globally significant ship registry and business-friendly incorporation laws, is increasingly being used as a jurisdiction for registering corporate entities involved in project finance. The key feature of project finance in this context is the ability to allocate risks and rewards fairly among the various participants, including sponsors, lenders, and suppliers, in an environment that is conducive to international investment.

Why You May Need a Lawyer

Project finance transactions can be highly complex, involving multiple parties, significant capital outlays, and cross-border legal considerations. You may need a lawyer if you are:

• Setting up a special purpose vehicle (SPV) in the Marshall Islands to isolate project risk and responsibilities
• Negotiating financing agreements with international lenders or export credit agencies
• Drafting and reviewing construction, supply, and off-take agreements
• Navigating regulatory requirements for registering companies and assets
• Ensuring compliance with local and international anti-money laundering and Know Your Customer (KYC) requirements
• Addressing tax considerations and seeking structuring advice for international revenue streams
• Resolving disputes or enforcing contracts under Marshall Islands law

Having a skilled lawyer can help you mitigate risks, ensure regulatory compliance, and protect your interests throughout the life-cycle of your project.

Local Laws Overview

The Marshall Islands operates under a mixed legal system that features elements of both common law and customary law. There is a strong focus on corporate flexibility, making it a popular destination for setting up project finance entities.

• International Business Corporations (IBCs): The Marshall Islands permits offshore incorporation through International Business Corporations, often used as SPVs in project finance transactions.
• Security Interests: The law allows for the registration of mortgages, liens, and other security interests over project assets, both moveable and immoveable, which is crucial for protecting lender rights.
• Bankruptcy and Enforcement: The insolvency regime provides protection for creditors and sets out the processes for enforcement of security interests.
• Contracts: The legal framework facilitates enforceable contractual relationships, including recognition of foreign law and arbitration clauses.
• Taxation: There are favorable tax advantages for offshore entities, including no corporate income tax on income earned outside the islands and no exchange controls.
• Regulation: The Marshall Islands is committed to anti-money laundering standards and international cooperation, and entities must comply with due diligence and KYC regulations.

An understanding of these key aspects is essential for structuring successful project finance deals in the jurisdiction.

Frequently Asked Questions

What types of projects are typically financed in the Marshall Islands?

Most project finance transactions involve vessel acquisition, international shipping infrastructure, energy, and other capital-intensive projects. The jurisdiction's corporate flexibility makes it attractive for global ventures.

Can foreign investors participate in project finance deals in the Marshall Islands?

Yes, the Marshall Islands welcomes foreign investors. There are minimal restrictions on foreign ownership, and international participants commonly use the jurisdiction for forming SPVs.

What is an SPV and why is it important in Marshall Islands project finance?

A Special Purpose Vehicle (SPV) is a separate legal entity created to isolate financial risk. In the Marshall Islands, SPVs are often used to facilitate project finance because they simplify asset ownership, risk management, and profit allocation.

Are security interests in project assets recognized and enforceable?

Yes, the Marshall Islands legal system recognizes and allows registration of mortgages, charges, and other security interests over assets, ensuring lenders' rights are protected.

Does the Marshall Islands offer legal protection for contracts and arbitration?

Contracts governed by Marshall Islands law are generally enforceable. The jurisdiction also respects foreign law contracts and arbitration clauses, making international dispute resolution easier.

What regulatory approvals are needed for project finance?

Generally, formation of IBCs or other entities requires registration with the Registrar of Corporations. Certain projects, especially in shipping, may require additional regulatory compliance or licenses.

How does tax law affect project finance in the Marshall Islands?

Offshore entities typically benefit from no corporate income tax on foreign-source income, no capital gains tax, and no withholding taxes. However, participants should seek advice on whether local taxes or other offshore tax laws apply to their specific transaction.

Are anti-money laundering (AML) and KYC regulations enforced?

Yes, the Marshall Islands adopts robust AML and KYC standards. Proper due diligence is required for company formation and ongoing transactions to prevent financial crime.

How do I enforce a security interest or resolve a dispute?

Legal recourse is available through the Marshall Islands courts, and the law provides mechanisms for enforcing security interests. Arbitration and mediation are also frequently used in cross-border project finance disputes.

Should I consult a local lawyer or can I retain international counsel?

While international counsel may advise on global structuring, a Marshall Islands-based lawyer is essential for navigating local regulations, registration processes, and compliance requirements.

Additional Resources

• Marshall Islands Registrar of Corporations: The primary authority on company registration and corporate compliance.
• Marshall Islands Maritime Administrator: For vessel registration and maritime project financing questions.
• Marshall Islands Financial Services Authority: Oversees financial regulation, AML compliance, and related licensing.
• Local Law Firms: Many specialize in corporate, maritime, and project finance law and can offer tailored legal advice.
• International Chamber of Commerce (ICC): Often referenced for dispute resolution and standard project finance documentation.

Next Steps

If you are considering engaging in a project finance deal in the Marshall Islands, you should:

• Conduct initial research on the project and relevant legal requirements
• Consult with a qualified Marshall Islands legal advisor specializing in project finance
• Prepare necessary documentation for company formation and regulatory compliance
• Engage with financial advisors and relevant government agencies where appropriate
• Ensure thorough due diligence and compliance with AML and KYC requirements before proceeding

A proactive approach and professional legal assistance can help ensure a smooth and compliant project finance transaction in the Marshall Islands.