ISDA future-proofs arrangements against uncertainties posed by Brexit

ISDA future-proofs arrangements against uncertainties posed by Brexit

Judith Lawless, partner at McCann FitzGerald in Dublin, explains how the International Swaps and Derivatives Association’s (ISDA) publication of Irish and French law governed credit support documents is part of a broader ISDA initiative responding to member demand for documentation governed by the laws of an EU Member State.

Why did ISDA publish credit support documents governed by Irish and French law?

ISDA’s publication of Irish and French law governed credit support documents is part of a broader ISDA initiative responding to member demand for documentation governed by the laws of a Member State, with a related election for the courts of that Member State to have jurisdiction in related disputes, to future-proof their arrangements against the uncertainties posed by Brexit. The initial step was taken in June 2018, when ISDA published Irish and French law governed versions of its 2002 Master Agreement. Given that many derivative market participants are subject to regulatory margin requirements and, of those that are not, many choose to margin for risk management purposes, ISDA’s publication of credit support documents for use in connection with the new Master Agreements was a natural next step.

ISDA members had identified a number of benefits that would flow from the availability of such documents. The principal benefit is, of course, the EU’s highly flexible Council Regulation (EC) 1215/2012 (Brussels Regulation Recast) regime for the recognition and enforcement throughout the EU of judgments obtained in a Member State. It remains unclear whether judgments obtained in the UK post-Brexit will continue to benefit from automatic recognition throughout the EU as they do now, particularly after any agreed transition period expires. Even if, as proposed by the UK government, the UK independently participates as a contracting state in the Convention of 30 June 2005 on Choice of Court Agreements (Hague Convention), such participation will not resolve all concerns in this regard. Whereas Member States are contracting states to the Hague Convention, which requires effect to be given

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About the author:

Meet Emma:

1.Banking and finance lawyer with experience in derivatives, debt capital markets, securitisation and structured finance in London and Paris

2.Likes ballet, playing the harp and holidays

3.Thinks the law is always changing!

Emma trained and qualified at Allen & Overy LLP and worked in their derivatives and structured finance teams in London and Paris.  She then joined the foreign exchange prime brokerage legal team at Deutsche Bank before spending 4 ½ years with Crédit Agricole CIB advising the fixed income and derivatives desk.