SWEDEN Law and Practice Contributed by: Niklas Sinander, Elin Carlsson, Axel Schelén and Björn Wendleby, Harvest Advokatbyrå
8. Project Finance 8.1 Recent Project Finance Activity
applies to certain international cases with exclusive choice of court. International arbitration is always available to the par- ties, where arbitration is possible. 8.4 Foreign Ownership The Swedish Foreign Direct Investment Act (SFS 2023:560) (the “FDI Act”) imposes a notification requirement prior to making foreign direct investments in Swedish companies conducting certain protective activities. Such businesses include (for example) security-sensitive services, certain technology, equip- ment used in the military sector, raw materials and similar. Foreign direct investments in such companies of at least 10% of the total shares or votes will require a prior notification to, and approval by, the Swedish Inspectorate of Strategic Products ( Inspektionen för Strategiska Produkter ). Non-compliance with the FDI Act may result in fines of up to SEK100 million. The FDI Act has a significant impact on many transactions and may delay and/or restrict certain foreign direct investments. 8.5 Structuring Deals As described in greater detail in 5.4 Restrictions on the Target , Swedish law imposes financial assistance restrictions, which need to be taken into account in relation to Swedish acquisition financings in respect of a target company that is a Swedish limited liability company. In short, this means that such target com- pany may not – with a few exemptions – provide loans or grant security for the acquisition of the shares in the target company itself. Further, corporate benefit issues may also need to be carefully considered when structuring deals, to ensure that companies granting security or guarantees are deemed to receive sufficient corporate benefit of the transaction at hand. In many deals, the corporate ben- efit for a group company granting security or guaran- tees for the benefit of its parent company may lie in the group as a whole receiving financing on terms and conditions that would not be available to a company on a standalone basis.
In recent years, there has been significant activity in onshore wind power projects in Sweden due to an increased level of transition to renewable energy; this has been fuelled by political promotion of such energy sources. These projects are primarily located in non- residential areas in the north and, to a lesser extent, the south of Sweden. Large wind power parks have been built and financed by project financing during the establishment phase and subsequently sold to (for instance) large institutional investors. These project financings are often complex and generally attract interest from foreign lenders and investors. 8.2 Public-Private Partnership Transactions Public-private partnership (PPP) transactions are not very common in Sweden. Nevertheless, two high- profile PPPs in Sweden are the construction of Nya Karolinska (a hospital located in Stockholm) and the construction of Arlanda Airport Express (a railway from the city of Stockholm to Arlanda Airport). 8.3 Governing Law Swedish courts generally recognise the choice of for- eign law to govern contracts, subject to conflicts with public policy (ordre public), and foreign law contracts may be enforced in Sweden provided that Sweden has jurisdiction over them. Project documents may therefore be governed by foreign law; however, certain documents must comply with local law requirements, such as security agreements where Swedish law per- fection requirements will affect the perfection of such security. Further, issues that are governed by local legal principles that may not be negotiated are issues that will always be governed by local law, regardless of whether the parties have agreed that the issue will be governed by foreign law. English and New York local court judgments are, as a rule, not recognised or enforceable in Sweden without a retrial of the merits of the case. However, the foreign judgment may serve as strong evidence in the case. Certain English court judgments in civil and commer- cial matters may be recognised and enforceable in Sweden pursuant to the Hague Convention, which
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