In 2005 one of the principal state-owned Chinese banks
assembled a panel of law firms to advise it on its overseas
limited recourse lending program. After a lengthy vetting
process, selected panel firms were summoned to the bank's
Beijing headquarters to be briefed on the program itself
together with terms for counsel engagement.
An impressive array of international and domestic project
finance advisory firms attended. They were impressed by the
bank's ambitious lending plans spanning Asia and Europe, the
African continent and the Americas. Enduring a relatively slow
period in domestic project financings following the closing of
the initial three big ethylene cracker financings earlier in
the decade, these aggressive and expansive objectives seemed to
be just the tonic that the Chinese project finance industry
needed. And then came the terms of engagement.
Once the bank resolved to enter into a project, the head of
the bank's in-house legal department...