When and why is a foreign law legal opinion needed?

A lender will require a foreign law legal opinion from lawyers in each relevant jurisdiction in the context of a cross-border loan transaction. For example, in the scenario where a transaction has a facility agreement and other finance documents governed by the laws of England and Wales, a borrower or other obligor incorporated in the British Virgin Islands (BVI) and certain security assets situated in Jersey, a lender will require a legal opinion from lawyers in each of England and Wales, the BVI and Jersey.

The main purposes of a legal opinion (whether foreign law or otherwise) are:

1. •

   to confirm to the recipient of the legal consequences and effect of a document, transaction, or course of conduct (as relevant)

2. •

   to satisfy the recipient that a lawyer has examined specified legal aspects of a transaction, and/or

3. •

   to state conclusions of law as to the ability of a party to enter into and perform its obligations under a document

It should be noted