International Construction Law Review
PROJECT FINANCE IN PARAGUAY – PPPS’ FIXED PAYMENTS, SOVEREIGN GUARANTEES, AND OTHER SPECIAL SURETIES
Pedro Lacasa*
Attorney, BKM/Berkemeyer Law Firm
Abstract: the international construction industry is very familiar with the role of sovereign guarantees in obtaining financing for infrastructure projects, especially in projects which use the Project Finance methodology. The legal interpretation of such sovereign guarantees has been inconsistent from the courts of one country to another. But what are sovereign guarantees and what role do they play in the construction sector? Notwithstanding this, Public-Private Partnerships (PPPs) may contain a legal framework that secures the payments agreed within the project without recourse to sovereign guarantees. Paraguayan Law is a good example.
INTRODUCTION
Construction is a public policy. Public infrastructure demands suitable legislation and foreseeable judicial precedents, even though construction law may only be an aspect of the general contract law.1 The main character of Infrastructure Law is its double structure. The private and public areas converge in the legal nature of public infrastructure and that is one of the key elements that differentiates Infrastructure Law from classic public procurement law2 which is predominantly governed by public law.
Even though Infrastructure Law is also governed by a public-law regime, it is complemented (and on some occasions even co-governed) by private-law rules.3
The size and complexity of major international construction projects nowadays demands a cooperation between many entities to enable the risks and skills to be shared.4
* Pedro Lacasa is an International Law specialist. LLM Paris II – Panthéon Assas, LLM Universidad Católica de Asunción. Construction attorney of the Infrastructure, Project Finance and PPP Department at BKM/Berkemeyer law firm in Paraguay, email: Pedro.Lacasa@berke.com.py. Former Head of the PPP Contracts Department, Technical Planning Secretariat, Paraguayan Government.
1 Shilston, A W, “International Aspects of Construction Law”, (1998) 64 Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 40, 42.
2 Infrastructure law comprehends the legal alternatives to public procurement for public works, such as Turnkey Projects, PPPs and other types of Concessions. Yescombe, E R, Public-Private Partnerships. Principles of Policy and Finance (Elsevier, 2007) 3.
3 De la Riva, I M, Lo Público y Lo Privado En El Derecho de Las Infraestructuras (Thomson Reuters - La Ley, 2018) 23–25.
4 Shilston, A W (fn 1) 41.
Pt 2] Project Finance in Paraguay
157