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ISDA Announces Plans for French and Irish Law Governed Master Agreements After Brexit

On January 8, the International Swaps and Derivatives Association, Inc. (ISDA) published a blog post providing insight into how it is preparing for the UK’s departure from the European Union and how this will impact the use of the industry-standard ISDA Master Agreement.

The blog explains that, as it currently stands, virtually all of the ISDA Master Agreements entered into between counterparties that are both located in the EU or EEA are governed by English law. Counterparties typically also submit to the jurisdiction of the English courts. Because the UK is currently part of the EU and European Economic Area (EEA), any English court judgement is automatically recognized and enforced across those member states. Without a Brexit deal that replicates the effects of EU/EEA membership, English law would become a third-country law after Brexit. One of the consequences is that English court judgements would not be automatically recognized in EU/EEA countries which could translate into additional costs and delays for cross-border enforcement.

The blog goes on to state that some swaps market participants in the EU and EEA may want to retain the convenience of automatic recognition across the EU/EEA by using the jurisdiction of an EU/EEA country, rather than English law, in its agreements. Counterparties may also want to retain specific benefits of EU legislation—for example, protections under certain EU national insolvency laws that require use of an EU member-state-law agreement in order to receive those protections. In response, the blog states that ISDA is drafting French and Irish law governed Master Agreements, along with French and Irish court jurisdiction clauses. This would be in addition to the existing English, Japanese and New York law choices. The blog explains that in order to be representative of the civil and common law systems across the EU, French and Irish law have been suggested.

The blog states that working groups have been established, and are making good progress in considering the issues and identifying what changes might be necessary to the Master Agreements.

The blog is available here.

©2018 Katten Muchin Rosenman LLP


About this Author

Carolyn H. Jackson, International Attorney, Katten Muchin law firm

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring and documentation relating to OTC derivatives and structured products.

Prior to joining Katten, Nathaniel was a member of the US Regulatory and the Derivatives and Structured Finance practices at Allen & Overy LLP.

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...