Best Project Finance Lawyers in Tehran

About Project Finance Law in Tehran, Iran

Project finance in Tehran, Iran, is a specialized legal and financial process used to fund large-scale infrastructure and industrial projects. This approach typically involves the creation of a legally independent project company, with financing primarily secured against the project's future cash flows and assets, rather than the balance sheets of project sponsors. Common examples of project finance in Tehran include power plants, transportation projects, oil and gas developments, and telecommunications infrastructure. The legal framework around project finance encompasses diverse disciplines, such as contract law, banking and finance, securities, public-private partnerships, and regulatory compliance. Understanding the landscape of project finance law is crucial for both domestic and foreign investors, as Iran applies specific local regulations, approval processes, and risk allocation methods to these transactions.

Why You May Need a Lawyer

A qualified project finance lawyer can add significant value and help prevent costly mistakes or legal disputes. In Tehran, some common situations where legal advice is highly recommended include:

• Structuring complex project finance deals and negotiating bankable contracts
• Navigating local regulations and licensing requirements unique to Iran
• Assessing and allocating risk among sponsors, lenders, contractors, and public authorities
• Drafting and reviewing financing agreements, security documents, and guarantees
• Mitigating issues related to Iranian foreign investment laws and sanctions compliance
• Resolving disputes over project performance or payment between stakeholders
• Advising on public-private partnership (PPP) arrangements and government concessions

Each project can involve numerous parties from different jurisdictions, government approvals, and local legal nuances. Missteps can lead to delays, legal liability, or even project failure, making local legal support a necessity.

Local Laws Overview

Iran’s legal framework for project finance is a mix of general commercial law, sector-specific statutes, and regulations concerning foreign investment. Key aspects include:

• Foreign Investment Regulation - The Foreign Investment Promotion and Protection Act (FIPPA) governs foreign investment in Iranian projects, offering protections such as capital repatriation and non-discriminatory treatment, while also requiring detailed applications and approvals.
• Public-Private Partnerships - Government-related ventures typically involve concession agreements that must comply with public procurement and tendering rules, as well as sector-based oversight (especially in energy and infrastructure).
• Security and Collateral - Iranian law allows for a variety of security interests, such as mortgages, pledges, and assignments, but their enforceability can depend on adherence to local formalities and public registration.
• Islamic Finance Principles - Conventional interest-based lending is not allowed under Iran’s Islamic banking law. Sharia-compliant instruments like Ijara (leasing), Murabaha (cost-plus sale), and Sukuk (Islamic bonds) are therefore widely used.
• Sanctions and Currency Controls - Given the impact of international sanctions, special attention is needed for contract structuring, currency conversion, repatriation of funds, and choice of law.
• Contract Law and Dispute Resolution - Project documents often require careful drafting to align with both Iranian law and international standards, including mechanisms for arbitration or dispute resolution that are enforceable in Iran.

Frequently Asked Questions

What is project finance and how does it differ from other types of financing?

Project finance is a method of funding projects where the repayment relies on the project's cash flow, with the project's assets and interests held as collateral. It differs from corporate finance, which uses a company’s balance sheet and broader assets as security.

Is foreign investment allowed in project finance deals in Tehran?

Yes, foreign investment is permitted under the Foreign Investment Promotion and Protection Act (FIPPA), subject to specific conditions and government approval processes.

How are project risks typically allocated in Tehran’s project finance deals?

Risks such as construction, operation, market, legal, and political risks are usually allocated through comprehensive contracts, with lenders and sponsors negotiating which party bears which risks.

Are there any restrictions due to international sanctions?

Yes, international sanctions can restrict involvement by certain foreign parties, limit bank transfers, and impact contract terms. Legal advice is essential to navigate these constraints.

Which Islamic finance structures are commonly used in Iranian project finance?

Common Islamic finance tools include Ijara (leasing), Murabaha (cost-plus financing), Musharakah (joint venture), and Sukuk (Islamic bonds), as these comply with Sharia principles.

How is dispute resolution usually handled in project finance agreements?

Disputes can be resolved through Iranian courts or through arbitration, depending on contract terms. International arbitration is possible but must be carefully structured to be enforceable in Iran.

Can project revenues be repatriated outside Iran?

With FIPPA approval, investors can repatriate profits and capital, but currency controls and banking procedures must be strictly followed.

What security interests can be created under Iranian law?

Lenders can take security over real estate, project assets, shares, and receivables; however, proper local registration and legal compliance are essential to ensure enforceability.

Is government support or guarantee available for project finance in Tehran?

Some strategic projects may have government guarantees or support, especially in energy and infrastructure. These are typically negotiated as part of the concession or investment agreement.

What is the role of a legal advisor in a Tehran-based project finance transaction?

A legal advisor helps structure the transaction, perform due diligence, draft and negotiate contracts, ensure regulatory compliance, and manage risks from inception to completion.

Additional Resources

For more information on project finance in Tehran, the following organizations and government bodies may be helpful:

• Organization for Investment Economic and Technical Assistance of Iran (OIETAI) - The main government body overseeing foreign investment including project finance
• Iranian Chamber of Commerce, Industries, Mines and Agriculture - Provides information and support to investors and project developers
• Central Bank of Iran - Monitors and regulates banking, currency, and financial transactions relevant to project finance
• Ministry of Economic Affairs and Finance - Coordinates foreign investment and privatization efforts
• Association of Iranian Private Banks - Offers guidance on local banking practices and Islamic finance solutions
• Iranian National Standards Organization - Sets technical and safety standards for infrastructure projects

Consulting reputable law firms with experience in project finance is also highly recommended.

Next Steps

If you are considering a project finance deal in Tehran, Iran, take the following steps:

• Clearly define your project objectives and financing needs
• Identify key stakeholders, including sponsors, lenders, and government bodies
• Consult a local legal advisor or law firm specializing in project finance and foreign investment
• Prepare all necessary due diligence documents and project information
• Review local legal requirements for sector permissions, licensing, and regulatory compliance
• Work closely with your lawyer to draft and negotiate robust financing and project agreements
• Ensure compliance with Islamic finance principles if using Sharia-compliant instruments
• Plan for dispute resolution and risk management from the start

With the right legal guidance, you can successfully manage the challenges of project finance in Tehran while protecting your investment and achieving your project goals.