PORTUGAL Law and Practice Contributed by: Manuel Requicha Ferreira and Diana Avillez Caldeira, Cuatrecasas
8.3 Governing Law Portuguese law is mandatorily applicable to conces- sion agreements and other project documents related thereto entered into with public entities. With respect to agreements entered into with private entities, par- ties are free to choose the governing law, pursuant to the Rome I Regulation. Portuguese courts will uphold the applicability of the law specified as governing such agreements, unless such applicability would be illegal or would contravene Portuguese public policy principles, or unless it relates to foreclosure proce- dures occurring in Portugal (in which case Portuguese law shall apply). International arbitration may be used to settle dis- putes, although in the case of concession agreements and other project documents related thereto entered into with public entities, submission to international arbitration may be subject to certain requirements. 8.4 Foreign Ownership Except for public domain assets, which are not capa- ble of being appropriated by private entities, the own- ership of real property (or the exercise of remedial rights on liens on such property) does not require a permit, licence or administrative consent, apart from those required by normal urban planning regulations. Concerning water resources, their use, regardless of foreign ownership, is subject to a licence, an authorisation or a concession (depending on certain requisites, namely the volume used). They are usu- ally attributed through a public tender and subject, in some cases, to prior environmental assessments and other town planning regulations, which some- times disallow specific uses in protected areas or zones with particular scarcity. The transmission of a public domain water resource title is also subject to an authorisation (including in change of control situa- tions), and the transmission of a private domain water resource title is subject to a prior communication, with both being subject to certain conditions. Works and buildings placed on the hydric domain can- not be transmitted, directly or indirectly, nor can they be encumbered or mortgaged, without an authori- sation from the competent authority for the water resources title.
The restrictions arising from Regulation (EU) 2019/452 (the “FDI Screening Regulation”) and Decree Law No 138/2014 mentioned in 8.7 Natural Resources should also be taken into account. 8.5 Structuring Deals Project finance structures in Portugal are similar to those used internationally. A special-purpose vehicle (SPV) is typically incorporated as a share company. The financing structure is usually a loan, although bond structures are also used when international financing is involved or there is participation by funds that, for regulatory reasons, cannot grant loans. Monoline structures are less common but they were successfully used in the past. Loan structures can have different types of facilities for working capital, letters of credit or banking guarantees, liquidity, VAT or long-term loans, and they can be granted by one or two banks or can be club deals, depending on the size of the financing. In certain projects, there can also be a credit agreement with the European Investment Bank (EIB). There is typically a full security package, however, which limits the recourse to the project, project assets and project documents (such as the construction and operation contract). Apart from the pledge of shares of the SPV, the security package is not available to shareholders of the project company, which usually have their liability limited to certain amounts in relation to their participation in the share capital of the project company. The laws that are relevant depend on the project at stake. In the energy sector, the energy legal framework is of utmost importance, and lenders usually try, for example, to obtain certain protections regarding the reduction of feed-in tariffs. In the transportation and infrastructure sector, the concession agreement is usually the main legal document to consider. There are no relevant limitations on foreign invest- ment, except in energy and certain other sectors. 8.6 Common Financing Sources and Typical Structures Export credit agency financing is not very common in Portugal, although it has increased in the last few
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