P.R.I.M.E. Finance 2017 Conference

Camilla Perera-De Wit, head of secretariat at P.R.I.M.E. Finance Foundation and legal counsel at the Permanent Court of Arbitration (PCA), discusses the main issues discussed at the 2017 P.R.I.M.E. Finance 2017 conference.

What is P.R.I.M.E. Finance?

P.R.I.M.E. Finance stands for the panel of Recognized International Market Experts in Finance, an innovative collaboration launched in January 2012. The project was established to help resolve, and to assist judicial systems in the resolution of, disputes concerning complex financial transactions. P.R.I.M.E. Finance has the support of key international regulatory bodies and is complementary to the on-going financial market reforms process.

P.R.I.M.E. Finance’s great strength lies in the knowledge and training of the group of legal and market experts in its ranks, an offering which currently includes more than 130 of the most senior people from the world of finance and financial markets law with collectively more than 4,000 years of relevant experience. Through our Panel, we provide independent and multi-jurisdictional expertise in relation to complex financial disputes.

The P.R.I.M.E. Finance Foundation, an independent not-for-profit institute based in The Hague, oversees and supports the global role played by its Panel of Experts. The core activities include dispute resolution (including arbitration, mediation, expert witness services, determinations and risk assessment), judicial training and support, and the compilation of a central database of international precedents and source materials.

The PCA and P.R.I.M.E. Finance entered into a cooperation agreement on 7 December 2015. P.R.I.M.E. Finance’s filing address is the Peace Palace in The Hague. The arbitrations under the P.R.I.M.E. Finance Arbitration Rules will be administered by the PCA. These arbitrations may take place anywhere in the world, and may be facilitated by the PCA’s host country agreements with a number of its contracting parties.

What do you set out to achieve in your annual conference?

The aim of the annual conference is to share knowledge and think creatively about ways in which P.R.I.M.E. Finance can help advance legal certainty in the financial markets and better ensure correct and fair outcomes when disputes arise. It is a unique reporting out event of P.R.I.M.E. Finance Experts, with high quality panel sessions. We are also fortunate to have leading key note speakers join us for our events. At this past conference the key note address was given by Steven Maijoor, chair of the European Securities and Markets Authority (ESMA).

What were the main issues discussed in the 2017 conference?

The main issues discussed at the conference include:

The reality of Brexit

At the 2016 P.R.I.M.E. Finance conference, Brexit was on the agenda but it was far from certain. At that time, the date for the referendum had not even been set. Now, a year later, the P.R.I.M.E. Finance conference again discussed Brexit, this time as a reality. This session discussed the current state of discussions regarding Brexit, including court decisions about how the process should be taken forward, and what it means for financial contracts and the potential for disputes.

Lehman—the beat goes on

More than eight years after Lehman’s bankruptcy, disputes remain and important decisions continue to be handed down in England and the US. This experience sharpens the focus on exploring ways in which legal disputes over the terms of financial contracts might benefit from the alternative dispute resolution process that P.R.I.M.E. Finance is committed to promoting. This panel discussed relevant cases and how P.R.I.M.E. Finance’s experts can assist, not only in remaining disputes involving Lehman, but in future disputes as well.

Fundamentals of valuation and damage calculations

The process of valuing financial instruments can be as complex as the instruments themselves, and new forms of analytics provide ever deeper understanding of an instrument’s value. Yet despite this complexity there are basic building blocks that anyone involved in the financial markets should understand. And understanding how these principles apply in the ordinary course of business will serve litigants, their lawyers and the courts well in analysing damage claims. This panel covered the building blocks and how they can be used in damage calculations.

Views from the bench

P.R.I.M.E. Finance has, from its inception, benefited from the insight and experience of experts from the judicial community. The annual conference afforded an opportunity to gather several of these judges to discuss trends in the courts and the role that P.R.I.M.E. Finance experts and alternative dispute resolution mechanisms can play in assisting litigants and the courts to resolve disputes under financial contracts efficiently and fairly.

Developments in sovereign finance

Change is a constant in the world of sovereign debt. One dispute reaches resolution as other issues appear. This panel explored the increasing role of international arbitration in sovereign financings through the lens of a series of cases involving Argentina, Greece, Cyprus and Sri Lanka and addressed the policy question whether investor-State arbitration is the appropriate vehicle for resolving such disputes or whether another forum such as P.R.I.M.E. Finance may be more appropriate. The panel also exposed two issues on the horizon, namely the impact of the EU Market Abuse Regulation on sovereign finance and the treatment of ISDA master agreements involving sovereigns and central bank counterparties under new resolution regimes.

A year in case law—decisions affecting financial contracts

Court decisions affecting financial contracts, across issues and across continents, continue to be handed down. Some themes are familiar; some are new. Misselling remains an issue, addressed through the courts and through regulatory processes. Netting, a linchpin of financial contracts, was called into question in an important jurisdiction. And the list goes on. This panel summarised key developments and consider how P.R.I.M.E. Finance can assist in resolving similar disputes in the future.

Credit markets—change in the works?

Credit markets, from single name credit default swaps to bank lending, have struggled in recent years. Banks have shown an aversion to risk, whether due to regulatory changes, the low global rate environment, fundamental credit concerns or other factors. But change may be coming, with rates trending higher and possible changes to the mechanism that has supported credit default swaps since 2009, the determination committees established by ISDA. This panel discussed these developments and a possible P.R.I.M.E. Finance role in any new determination committee structure.

The art of the new—fintech and legal tech

As it has for so many other industries, technology holds great promise for making the financial and legal worlds more efficient. Distributed ledger, blockchain, electronic execution, smart contracts and e-discovery are just some of the developments underway. This panel discussed a number of these developments, with a particular focus on regulatory implications, how dispute resolution mechanisms such as P.R.I.M.E. Finance may evolve to address emerging issues and how dispute resolution itself may be affected by these technological developments.

Beyond LIBOR—new benchmarks and new issues affecting benchmarks

Past P.R.I.M.E. Finance conferences have discussed the legal fallout from manipulation of LIBOR. While some issues remain, focus has recently shifted to other issues and other benchmarks. The industry and regulators have encouraged the development of alternatives to LIBOR and to ISDAFIX. The scrutiny that was brought to bear on the fixed income markets has now shifted to markets such as foreign exchange, commodities and precious metals. This panel discussed these new developments and considered the role that P.R.I.M.E. Finance and its experts could play in an orderly transition to new ways of pricing and valuing transactions.

What are P.R.I.M.E. Finance’s aims for 2017 and beyond?

The services of our experts are much in demand at the moment in various roles in connection with complex financial market disputes, including both as arbitrators and as expert witnesses. The past year has shown that our work is valued and needed. Our aims for 2017 and beyond are to progress our work in the field of financial dispute resolution. Whether it is in the area of dispute resolution (advancing the knowledge about the benefits of the use of arbitration and mediation in complex financial disputes and the assistance that P.R.I.M.E. Finance and the PCA can offer in terms of making available the required expertise to decide the dispute as well as an experienced team to administer the dispute), judicial support (our formal training initiative in finance and other technical assistance and support for judges in domestic courts has continued to expand: we have now presented to judges on 15 visits in nine countries on four continents, including Chile and Romania in 2016), or any of our other projects that we are developing as part of our mission to serve a public policy need by ensuring that the requisite expertise is available for the settlement of these complex cases.

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