The ISDA master agreement and the new European governing law and jurisdiction options

The ISDA master agreement and the new European governing law and jurisdiction options

Katherine Tew Darras, ISDA general counsel and Alban Caillemer du Ferrage, co-chair of Jones Day's global Banking & Finance practice, French counsel to ISDA and member of the P.R.I.M.E. Finance Panel of Experts discuss ISDA’s plans to draft new documentation for derivatives transactions that will conform with French and Irish law and allow disputes to take place in an EU court post-Brexit.

Why has ISDA set up working groups to add new European governing law and jurisdiction options?

Katherine Tew Darras (KTD): A major impetus is uncertainty over what Brexit will mean for the English law Master Agreement. An overwhelming majority of the ISDA Master Agreements entered into between counterparties based in the EU/EEA are currently governed by English law. Counterparties typically also submit to the jurisdiction of the English courts. Because the UK is part of the EU and EEA, it means any English court judgement is automatically recognised and enforced across those member states. Without some type of 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 recognised in EU/EEA countries. That doesn’t mean an English court judgement won’t ultimately be recognised and enforced by an EU court after Brexit, but it does potentially mean more expense, more uncertainty and more red tape. Some firms in the EU/EEA  may therefore want to retain the convenience of automatic recognition across the EU/EEA by opting for an EU law Master Agreement. Counterparties may also want to retain specific benefits of EU legislation.

Alban Caillemer du Ferrage (ACF): Indeed, English court judgments will be treated in the same way that any decision of a non-EU court (including US ones). This would also lead to uncertainties as to the conformity of the decision to international policy rules of the relevant jurisdiction where enforcement/exequatur are sought, which will need to be assessed and confirmed by a local court or judge.

Why have French and Irish law been suggested?

KTD: The ISDA working groups opted to consider French and Irish law because they are repr

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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.