Blog: In brief: key legal issues for project finance transactions in Australia – Lexology

Government authorities

Relevant authorities

16What are the relevant government agencies or departments with authority over projects in the typical project sectors? What is the nature and extent of their authority? What is the history of state ownership in these sectors?

Federal and state government agencies will often have shared responsibility for typical project sectors. The relationship between federal and state authorities can be complex and will depend upon the jurisdiction, sector and sometimes the nature of the particular project. Usually, the relevant state agency will be responsible for infrastructure procurement and minerals extraction although the federal agency will have responsibility for offshore oil and gas projects in Commonwealth waters.

General legal issues

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

No specific government approval is required for typical project financing arrangements, including loans and remittances. Approval may be required to take certain types of security, for example, security over mining tenements.

However, there is government regulation of common project finance areas such as infrastructure, transport, aviation, water and electricity. Federal, state and territory governments may be involved, and the requirements can be complex. Planning, environmental, health and safety, and native title laws will all apply. Further, approval is required to take an interest in some assets. Government approval is required for private acquisitions of critical infrastructure.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

There is no need for the registration of project documents other than the registration of security interests. Government authorities will need to approve any contract where the government is a counterparty, or any licence granted by the government where taking security requires consent. There is no need for documents to be notarised or apostilled.

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

Arbitral awards are, subject to the usual grounds for challenge, generally enforceable in Australia, regardless of the country in which they are made. Australia is a member of the ICSID Convention and the New York Convention, and the UNCITRAL Model Law has effect in Australia. If a foreign award meets the conditions of the New York Convention and the Model Law, Australian courts will generally enforce it. However, some matters are non-arbitrable as a matter of public policy. Bankruptcy and insolvency matters, some intellectual property, insurance contracts, and competition law are generally non-arbitrable. All Australian states have a version of the Model Law, creating a uniform framework for domestic arbitration. No statutory provisions require automatic domestic arbitration.

Australia has a well-developed and tried and tested legislative framework that supports the enforceability of arbitral awards produced through arbitration. The Australian Centre for Commercial Arbitration rules are in line with international best practice.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

Project agreements and financing agreements are typically governed by Australian law. Occasionally, financing agreements for projects are governed by foreign law, usually English or New York law. Security agreements generally are governed by domestic law regardless of the choice of law for the financing facility.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable? Do local courts enforce judgments of foreign courts without re-examination of the merits of the case?

Australian courts generally will give effect to the submission by parties to a foreign law contract to the jurisdiction of the courts of that governing jurisdiction unless there are public policy reasons not to do so. The Australian courts will draw a distinction between exclusive and non-exclusive jurisdiction, so it is prudent to draft any jurisdiction clause clearly. Also, certain Australian statutes may allow actions in respect of contractual arrangements where the jurisdiction of Australian courts is prescribed.

Foreign state immunity is codified in Australia in the Foreign States Immunities Act 1985 (Cth). Such immunity may be waived by agreement and any such agreement will be generally effective and enforceable.

The Foreign Judgments Act 1991 and Foreign Judgments Regulations 1992 provide a statutory regime for enforcing foreign judgments in Australia. Whether a foreign judgment can be enforced depends on the type of judgment and whether it was issued in one of the countries specified in the Schedule to the Regulations. Generally, for the purposes of enforcement, once registered, a foreign judgment has the same force and effect as, and can be enforced as if it were an Australian judgment.

Where the statutory regime does not apply, the foreign judgment can be enforced under common law principles.

Environmental, social and governance

Relevant ESG issues

What environmental, social and governance (ESG) issues are relevant in typical project sectors? Are project companies in your jurisdiction subject to any ESG reporting requirements or other ESG laws or regulations?

Most major projects require state, as well as federal approvals and ESG issues, which will be relevant for the assessment of both primary and secondary approvals.

Environmental approvals for resource projects are primarily regulated at the state level; however, federal legislation applies where a project is likely to have a significant impact on a matter of national environmental significance. There are opportunities to streamline these environmental assessment processes to minimise procedural duplication, owing to bilateral agreements in place between state and Commonwealth governments, depending on the nature of the impacts and location of the project.

Protection of cultural heritage issues, in particular, is currently a focus for resources sector projects in particular.

Work health and safety (WHS) legislation applies to all project sectors. The legislation is state-based, but with the exception of Victoria and Western Australia, the state legislation was modelled on WHS legislation. WHS law requires employers, or persons conducting a business undertaking, to do everything reasonably practicable to ensure the health and safety of workers and other persons at their workplace and any other place that is connected with their business undertaking.

Directors, officers and managers also have an ongoing due-diligence duty under WHS law, which requires them to take all reasonably practicable steps to eliminate or minimise health and safety risks in their workplace. Part of this duty requires them to monitor and assess, on an ongoing and continuous basis, all risks to health and safety that exist in their particular workplace.

The resources sector is subject to further industry-specific WHS legislation. For instance, the Mines Safety and Inspection Act 1994 (WA) and the accompanying Mines Safety and Inspection Regulations 1995 (WA) apply to mining operations in Western Australia. These laws impose greater duty-of-care obligations on relevant stakeholders and provide penalties for their breaches, with the aim of protecting workers from unsafe environments and hazards.



There is a growing expectation among Australian financial regulators that businesses will disclose climate-related risks and discussion of international frameworks such as that developed by the Taskforce for Nature-Related Financial Disclosures.

Companies should consider whether to disclose such risks in their standard corporate reporting, including Operating and Financial Reviews under section 299A(1) and company prospectuses under section 710 of the Corporations Act.

Law stated date

Correct on

Give the date on which the information above is accurate.

30 May 2022

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