Project Finance in China: Taking Security in Future Assets and Earnings

October 31, 2001 | BY

clpstaff &clp articles

Freshfields Bruckhaus DeringerThe promulgation of the PRC, Security Law in October 1996 (the Security Law) bridged a significant gap in China's framework…

Freshfields Bruckhaus Deringer

The promulgation of the PRC, Security Law in October 1996 (the Security Law) bridged a significant gap in China's framework of civil legislation by defining the forms of security and terms of their use. This has been important to foreign lenders. However, one of the vital policies to be served by the law, namely the encouragement of infrastructure development, has not been satisfied. In part this is because the Security Law does not establish a clear legal basis for taking security in future assets or revenues, which are the key issues for project finance. The Supreme People's Court, Several Issues Concerning the Application of the«PRC, Security Law»

Interpretations (the SPC Interpretation), effective as of December 13 2000, recognizes but still fails adequately to address this issue.

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