[1] www.matheson.com/news-and-insights/article/matheson-welcomes-publication-of-irish-law-governed-isda-master-agreement With respect to past agreements, the parties may have considered that the benefits of changing existing legislation do not outweigh the disadvantages of a lengthy redeployment between several counterparties (which could involve the reopening of inconsistent and regulated trading points). Companies may also face a number of other significant deviations regarding their derivatives trading (e.g. B with regard to the proposed new initial margin and stop requirements for interbank rates), and an additional project could prove to be an unattractive proposal. Under a framework agreement under French or Irish law, counterparties also retain certain safeguard measures which apply only to agreements governed by a law on EU/EEA Member States. For example, some EU national insolvency laws require contracts to be subject to EU/EEA law in order to qualify for safe harbour protection after bankruptcy. On March 12, 2020, the International Swaps and Derivatives Association, Inc. (“ISDA”) issued a model amendment agreement allowing parties to an ISDA framework agreement in force under English law to transform that agreement into an equivalent Irish or French legal version (the “Amendment”). [1] www.jonesday.com/en/insights/2018/06/new-isda-master-agreement-french-law-brings-change In recognition of the potential complications related to Brexit for companies wishing to continue to operate within the EU jurisdiction, ISDA has introduced framework contracts under French and Irish law. Jurisdictions were chosen as representatives of both the common and civil legal system; French for the Civil Code and Ireland as the largest common law system among the remaining twenty-seven EU Member States. counterparties may submit to the jurisdiction of the French or Irish courts; As France and Ireland are still members of the EU/EEA, their judgments are automatically recognised and enforced throughout the region. ISDA believes that “these two legal frameworks also support the feasibility of ISDA protocols, which make it possible to effectively and evolutionarily modify several agreements between the parties.” IsDA`s intention is not to replace the English and New York legislation, but to increase the choice of master agreements available so that companies can “act under the agreement that best meets their needs”. “An English master agreement will be no less valid in the EU after Brexit, regardless of the outcome of the Brexit negotiations,” said Katherine Tew Darras, ISDA`s General Counsel. There will be good reasons for EU/EEA counterparties to continue to use the English law master agreement and there will be good reasons to use the French and Irish legal versions.
It is about offering a choice to the market and allowing counterparties to choose the option that best suits their needs. The choice of CIOs according to French and Irish legislation after Brexit has clear advantages for companies. The main benefit could be seen as the ongoing framework for established and successful regulation of counterparties through settlements and directives of European jurisdictions. The most obvious change in the new agreements lies in the provisions of the applicable law, since these agreements are subject to French and Irish law respectively. The agreements contain very few derogations from the agreement on English law, but it could be argued that the Irish legal version would be the tastiest choice, with the fewest derogations or additions to the current English legal agreement. In addition, counterparties can continue to benefit from the fact that cases are brought before an English-speaking European court without their current contract proposals being significantly altered. . . .