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29 June 2017

ISDA response to European Commission consultation on conflict of law rules for securities and claims

ISDA responds to the questionnaire as part of the European Commission Consultation Document on conflict of laws rules for third party effects of transactions in securities and claims.

The Commission has proposed a number of conflict of law rules with relevance to derivatives transactions in the context of the EU Collateral Directive, Settlement Finality Directive, the Hague Securities Convention and the UNCITRAL Assignment of Receivables Convention.

ISDA provides answers to all 42 questions in questionnaire, e.g.:

Q: Do you observe in practice that legal opinions on cross-border transactions in securities and claims contain an analysis of which law is applicable (conflict of laws)? Please elaborate on your reply if you have further information.

In general yes, but not in all relevant situations.

Our members seek legal opinions on cross-border transactions for various purposes and in various contexts. Some are transaction-specific opinions and some are generic opinions, applicable to anytransaction that falls within the scope of the opinion.

Whether or not a legal opinion includes an analysis of the conflict of laws position depends entirely on the context, including the legal risk management needs of the party or parties commissioning the opinion. As far as we are aware, however, it is commonplace for our members to request that a legal opinion on a cross-border transaction involving the transfer of securities or claims, in particular in the context of the giving of financial collateral, should also deal with the relevant conflict of laws rules that apply.

For example, we request such an analysis in the opinions that we have commissioned from local counsel in relation to the enforceability of financial collateral taken under standard form credit support documents that we have published. Currently, we have such opinions from local counsel in fifty-five jurisdictions globally (with opinions from additional jurisdictions currently commissioned and in preparation), including 19 Member States of the European Union.

Full document

© ISDA - International Swaps and Derivatives Association

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