| When a developer or a contractor decides to privately design, build, finance, and operate a public construction project in another country, the developer or the contractor must examine the country's laws in order to determine whether privatization is permitted. Although many countries have enacted laws to encourage privatization of public construction projects, the developer or the contractor must ensure that he or she will not be excluded from participating in the project or that he or she will not be required to enter into a joint venture with a local corporation in order to complete the project.
The right to own private property is a new concept in many of the developing countries, particularly countries that were formerly ruled under a Communist form of government, such as the Eastern European countries and the former Soviet Union. A developer or a contractor must determine whether those countries' laws have been changed in order to allow the private ownership of property.
The developer or the contractor must also become familiar with a country's real property laws, such as the laws regarding rights-of-way, easements, and eminent domain. If the country allows property to be nationalized by its government, the developer or the contractor may not be able to recover his or her investment before the project is nationalized. Also, some projects might require the relocation of inhabitants of the area within or around the project. The developer or the contractor should understand the country's power to condemn the property in order to relocate the inhabitants.
Laws that permit a lender to secure repayment of a debt by the issuance of a mortgage or a deed of trust must also be examined. If a country's laws do not permit mortgages to be issued on behalf of foreigners, financing for the benefit of the developer or the contractor may be impaired. The developer or the contractor should also inquire as to laws regarding the priority of liens and other security interests.
The developer or the contractor must also determine the impact of the country's environmental and safety laws. The developer or the contractor could be subjected to severe sanctions if the country's environmental or safety laws are violated.
The developer or the contractor should also make inquiries as to how business is conducted in the country. The developer or the contractor should determine the conditions for forming a binding contract and for enforcing a contract. The developer or the contractor should examine the various forms of business ownership and the rules that apply to the regulation of businesses. The developer or the contractor should review the foreign exchange laws and the import and export laws. The developer or the contractor should also examine the country's bankruptcy laws, securities laws, and tax laws. The country's tax laws are particularly important because they may affect the profitability of the construction project. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |