KEY POINTS Feature ––To mitigate the Brexit risk, ISDA released two new Master Agreements (one in Irish Law and one in French Law). ––French Law was chosen as it is perceived to be an efficient legal system within the tradition. ––French Law is entirely compatible with current OTC market practice. ––Although a French ISDA could be subject to more gap-filling than an English ISDA, this introduces flexibility particularly given that ISDA are necessarily incomplete. ––Interpretation under French Law should lead to a similar result as current English judicial practice, albeit achieved via a special branch of the French law of interpretation. ––Both the English and French lack a set of principles, rules or interpretative techniques specifically designed for standardised terms furnished by third parties.

Author Alexis Downe The choice of French Law for the new ISDA Master Agreement: Part 1

Brexit and its consequences has led ISDA to release new contracts as the UK will lose international business contracts, especially the benefits of being inside the European Union. Two new ISDA Master Agreements derivatives. can now be used: one in Irish Law and one in French Law. The aim of this article is to examine why ISDA decided to publish new Master Agreements and why French Law IMPACT OF BREXIT IN THE OTC was selected. DERIVATIVES MARKET Brexit has many consequences for the OTC derivatives market, the financial markets and THE OTC DERIVATIVES MARKET lawyers on the validity and enforceability of the UK as a whole. The derivatives market has grown the documentation. First, when exiting the European THE CHOICE OF FRENCH LAW FOR THE NEW ISDA MASTER AGREEMENT: PART 1 PART MASTER THE NEW AGREEMENT: FOR ISDA LAW OF FRENCH THE CHOICE nconsiderably since 1972 to almost ISDA documentation is made up of Union, the UK will lose all the benefits of $15bn gross in 2016. A derivative is a type the Master Agreement and the ancillary passporting. Furthermore, by combining of product (materialised via a financial documents such as the Credit Support Arts 3(a)(iv) and 5(a)(iv) of the 2002 ISDA ) that is derived from another Documentation (that includes many Master Agreement, loss of the European financial product, an index, a thing or a value annexes for variation margin, etc). accreditation (passporting rights) is an event (underlying asset). Derivative transactions can A derivative trade will usually be materialised allowing the counterparty to terminate range from simple or plain vanilla operations through a Master Agreement, a Schedule, the contract early. Alternatively, loss of (eg currency swaps) to more complex ones Confirmations, Definitions booklets accreditation could be seen as an illegality for (eg swaption straddles). One main distinction (eg Municipal Counterparty Definitions or new contracts entered into after Brexit. is between derivative operations that are Commodity Derivatives Definitions) and a Second, parties to an English contract will realised via regulated exchanges such as Credit Support Annex. It must be noted that need to modify them to make them conform Multilateral Trading Facility or Organised the Master Agreement plays a pivotal role. to fundamental requirements of European Trading Facility (Eurolist, MATIF, MONEP It is the framework agreement, ie a unique Law if (or when) the UK becomes a Third etc that often concern options and forwards) umbrella whose terms will apply to every Country to the Union. For example, parties and Over The Counter (OTC) derivatives operation signed by the parties. Derivative to an contract (such as an ISDA) where transactions are more complex, documentation includes provisions regarding will need to add bail-in clauses (Art 55 of the bespoke and flexible. the financial aspects of the transaction Bank Recovery and Resolution Directive) and The OTC market is partially and (which are in the Confirmations that recognition of stays (Arts 68-71 of the Bank increasingly regulated since the subprime incorporate Definitions, specify economic Recovery and Resolution Directive). There crisis (for instance clearing obligations) terms of each transaction etc) and provisions are other matters to consider such as the but mainly rests on contract law and self- determining the general, legal, credit and disappearance of LIBOR which has prompted regulation via the documentation used. trading relationship of the parties (in the ISDA to release Benchmark Supplements Globally, the most often used documentation Master Agreement). and launch consultations on how to calculate is produced by ISDA. Founded in 1985, Traditionally the ISDA Master fallbacks based on Risk Free Rates. ISDA is an organisation comprising of Agreement came with a clause Thirdly and most importantly, the UK various participants to the OTC market and giving the parties the option to elect either will lose the benefit of automatic recognition produces the standardised documentation English or New York law. Whilst New York and immediate enforcement of judgments of used by the market. The organisation also law is often selected for American operations, one member state in another member state. promotes and ensures the certainty of its English law is usually selected in the rest of Indeed, by exiting the European Union, templates by obtaining opinions from local the world. It is indeed extremely popular in the Recast Brussels I, the Lugano and the

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Hague conventions (the latter only works for opinions as none exist on the release two new Master Agreements exclusive clauses and thus not the combination of law A with a choice that would be submitted to the law of a 2002 ISDA, but ISDA have released a guide of jurisdiction B. member state of the European Union. with conforming model clauses: 2018 ISDA ––Second, parties could decide to keep Choice of and Governing Law Guide) English law but resolve disputes using DRAFTING THE FRENCH LAW ISDA will no longer apply to the UK. arbitration (eg ICC or P.R.I.M.E MASTER AGREEMENT This means that parties to an English Finance). Arbitration awards do benefit The starting point for the two new Master Law contract will need to rely on exequatur from a special recognition and enforce- Agreements is the 2002 model (as ISDA is procedures (which exist and are used, ment mechanism (New York Convention still trying to encourage market participants namely for US judgments). Exequatur 1958) but are limited in case of insolven- to switch to the 2002 ISDA). In the Irish will necessarily be longer, pricier, and this cy of the parties as awards are declara- Master Agreement, only cls 13a and 13b could be devastating if your counterparty tory. This means that the counterparty have changed, ie the ones pertaining to is approaching insolvency. Furthermore, would still need to join the general the choice of law. The French contract such delays would be contrary to the logic insolvency proceedings and specific registers slightly more differences from of financial contracts that often rely on proceedings for collateral in foreign the English one, but still resembles the financial collateral because it is quick and jurisdictions. original 2002 ISDA Master Agreement effective (hence the Financial Collateral ––Third, market participants could in almost every aspect. Directive of 2002). This would no longer be restructure their contracts. Indeed, While most changes are superficial the case as the enforcement of such collateral some parties are concluding duplication or terminological, some express major would require an exequatur judgment both agreements, ie reproducing their English differences between English and French law. in the country of the insolvent party’s real ISDA via an entity within the Europe- For instance, the flawed asset theory (that a or incorporated seat and also in the country an Union to benefit from a European cash deposit with a bank is only repayable if where the collateral is situated. Exequatur presence. Other parties are concluding a previous condition is fulfilled) is unlikely procedures currently take three to six months novation agreements (on the basis of to be valid and enforceable in French Law on average. However, given the breadth of models furnished by ISDA) which aim (Art 1170 of the French Civil Code). Instead use of English law in international trade, to maintain the accreditation benefit of of conditioning the very existence of the after Brexit European Union could the host country’s entity. obligation of a party to the performance of quickly become overwhelmed by requests ––Fourth, to mitigate the Brexit risk, the reciprocal obligations by the counterparty, which will increase the average time such a parties could decide to adopt one of the French Master Agreement just conditions procedure takes. the new contracts published by ISDA. the performance of said obligation. The Indeed, the organisation decided to drafting incorporates the ISDA Metavante SOLUTIONS TO THE BREXIT RISK release a new Master amendment to s 2(a)(iii) that aimed to avoid Several solutions can be used to mitigate the Agreement and a new civil law Master the possibility of suspending indefinitely the Brexit risk highlighted above. Agreement. It must be emphasised performance of the contract by the non- ––First, use Rome I to choose the that ISDA documentation is a risk- defaulting party, as recognised in Lomas v governing Law as Rome I is not exclusive management tool that relies on the JFB Firth Rixson Inc [2010] EWHC 3372 to member states. This means that the validity and enforceability of the (Ch). This grants the parties a contractual UK could re-join after Brexit (the same contract. This depends heavily on the law right that is different from the defence for could be done for the Lugano convention governing the contract. For certainty non-performance (on which see Art 1219 of and has already been done for the Hague and efficiency reasons, ISDA limited the the French Civil Code). convention in case of a hard Brexit). choice of governing law in the Master Regarding the support and institutional Then, parties could still keep English Agreement to two laws: English and approval for the drafting of the French law but elect an EU court to settle the New York. Limiting the choice of law to Master Agreement, the legal high committee matter as Rome I would bind that court. two common law jurisdictions reduces for financial markets of Paris Haut( Comité However, to truly tempt the parties, fragmentation and basis risk. Of course, Juridique de la Place Financière de Paris) was foreign courts would need to demon- unofficial translations exist and local very helpful as well as the working group set strate serious expertise in English law. opinions have been provided but ISDA up by the Jones Day Paris office. Furthermore, within the ISDA never proposed any other governing law A bilingual version of the French Master documentation the jurisdiction and until the Brexit vote (with the particular Agreement was published with a clause of choice of law clauses are meant to work exception of Japanese law that is only prevailing language in the Schedule at the together. By not combining them, used in the Japanese domestic market). parties’ discretion. It must be noted that you would lose the benefit of any legal Because of Brexit, ISDA decided to depending on your counterparty

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(eg certain public entities), the use of the Indeed, and unlike other continental systems, INFORMATION AND French language may be mandatory. French Law is compatible with the protocol INTERPRETATION method for updating ISDA documentation. In French Law, the judge can take into FRENCH LAW FOR THE NEW ISDA This method relies on ISDA proposing and account all precontractual information MASTER AGREEMENT or recording a potential change to an ISDA contrary to English law. Under English law, Numerous reasons explain why French document (such as Stay US, EMIR or the the parole evidence rule prohibits the use of Law was selected for the civil law ISDA. Benchmark protocol). All counterparties to acts exterior to the contract or oral evidence It mainly rests on the efficiency of the French an ISDA agreement can participate: to interpret it. This is justified for reasons of legal system and its compatibility with the ––ISDA proposes a change (recorded in the certainty, efficiency and common sense as financial markets. It is true that The Doing ISDA website); pre-contractual information can only Business Report initially ranked common ––parties to an ISDA contract agree or not establish the pre-contractual intentions law systems well above civil law systems in on the change (partially or totally); or negotiating positions of the parties terms of efficiency. The idea still lingers that ––all the parties to a contract agree to (Prenn v Simmonds [1971] 1 WLR 1381). certain systems are more efficient than others, exactly the same changes, the contract is Thus in practice parties to a French contract with English law often seen as one of the modified automatically. often insert an entire agreement clause (as most attractive legal systems in the world. can be found in the French ISDA Master But this has also been greatly criticised both This method for managing change Agreement) whilst English parties wishing methodologically and epistemologically. saves times because it is not necessary to to stray from the parole evidence rule will French Law is efficient and quite renegotiate and modify/amend each contract often stipulate the contract does not contain business-friendly. individually. This process would work under the entirety of their agreement (Couchman v ––In fact, French law was actually changed French Law as it satisfies the requirements Hill [1947] KB 554). Therefore, although to accommodate both market and ISDA of offer and acceptance (Art 1113 and follows the default positions are quite different, THE CHOICE OF FRENCH LAW FOR THE NEW ISDA MASTER AGREEMENT: PART 1 PART MASTER THE NEW AGREEMENT: FOR ISDA LAW OF FRENCH THE CHOICE needs. For example, the limitation on the French Civil Code). Additionally, proof the drafting of the Master Agreement the compounding of interest (Art 1343-2 is not formalised in commercial matters actually aligns the rules applicable to the of the French Civil Code) was modified (Art L. 110-3 of the French Commercial French ISDA with those of general English for financial contracts (resulting in the Code). contract law. modified Art L. 211-40 of the French Finally, it is of the utmost importance that Monetary and Financial Code) so that ISDA contracts are interpreted uniformly. IMPLICATION AND INTERPRETATION the ISDA Master Agreement would not This point merits further development on the Implication is a process of adding implied need to be amended. Furthermore, the rules surrounding contractual interpretation terms to the explicit content of the contract. Legal High Committee for Financial in English and French Law. In English law, terms can be implied in fact or Markets of Paris has introduced the in law (Liverpool City Council v Irwin [1977] possibility of replicating previous INTERPRETATION IN COMPARATIVE AC 239). Terms implied in fact depend on ISDA agreements under French law. CONTRACT LAW the particular circumstances surrounding the An Ordinance which will come into The meaning of a contract rests upon agreement. However, these terms must satisfy force in the event of a hard Brexit the common will of the parties and either the business efficacy testThe ( Moorcock creates a safe harbour regime during the interpretation is the process of determining (1889) 14 PD 64) or the reasonable spectator 12-month period immediately follow- or ascertaining the meaning. Interpretation test (Groveholt Ltd v Hughes [2010] EWCA ing the Ordinance coming into force. lato sensu (a broad interpretation) relies Civ 538). Terms implied in law are closer to Replication is equally useful as ISDA on numerous techniques: interpretation mandatory or default characterisation for a negotiations can be costly. Other aspects stricto sensu (a narrow or strict French lawyer. were also modified (eg the domain of interpretation), implication, rectification In French law the boundary between close-out netting was extended etc). and characterisation. When taking a holistic implication and interpretation is less apparent ––French Consumer Law only applies to view, the main differences between the and contracts appear less complete than physical persons and not companies. English and French law of interpretation English ones. This is because parties to a Indeed, French Consumer Law does are threefold: French judges have access French contract can rely on general norms not concern business deals. to (and are often obliged to use) more (French Civil Code etc) to fill gaps, in contrast ––French is very favourable to netting and information, implication has a greater scope to parties to an English contract. Not only other devices used by ISDA contracts. and interpretation is subjective in French law. does this mean English contracts tend to be But this will not necessarily lead to diverging more complete but also that they are treated French Law is entirely compatible with results in the interpretation of the ISDA as such by the courts (Marks & Spencer Plc the logic and needs of the financial markets. Master Agreement. v BNP Paribas Securities Services Trust Co

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(Jersey) Ltd [2015] UKSC 72). Nothing is, or contract in order to elude the safe harbour the interpretation of recurring standard should be, implied in commercial contracts on enforcement given to these arrangements terms by the lower courts – although, in under English Law (Crema v Cenkos Securities and return to ordinary insolvency rules. principle, the Court of Cassation is unable plc [2010] EWCA Civ 1444). The summary judge did not permit the to reconsider a lower court’s interpretation Theoretically, a French ISDA could be insolvency administrator to stray from the except if that lower court obviously violates subject to more gap-filling than an English parties’ characterisation (T. com. Paris, the meaning of a clear term (Art 1192 of ISDA. Although criticised this is actually ordonnance, 4/7/2019, no RG 2019031042). the French Civil Code). As this happens quite efficient as it reduces the need for The judge insisted on the clarity of the parties’ for many contracts where the terms are lengthy drafting and transaction costs. contractual terms, freedom of contract usually drafted once and then used on many Furthermore, implication (Art 1194 of the and the sophistication of the parties. This occasions (such as insurance contracts), French Civil Code) is based on the law of business-friendly approach of the Parisian it is safe to assume that under French équité or practices (usages). The French courts courts should be appreciated by the markets Law, interpretation of an ISDA Master have declared that English and New York and those apprehensive of switching the Agreement will be objective. precedents would be treated as commercial governing law. Therefore an ISDA Master Agreement practices for the basis of Art 1194 (this was will be interpreted in a similar objective declared in a recent conference hosted at the CURRENT INTERPRETATION OF way in both legal systems. However, French Paris Court of Appeal on the 14 June 2019 ISDA DOCUMENTATION law would achieve this via a special branch entitled L’attractivité de la Place de Paris As we have seen, neither the information of the Law of interpretation whilst English Les chambres commerciales internationales : available to the judge nor the rules Law would resort to general contractual fonctionnement et trajectoire). surrounding implication and characterisation interpretation. The French openness should serve to would disadvantage parties to a French ISDA reassure the financial markets particularly as over parties to an English ISDA. The main THE NEED FOR SPECIFIC RULES an ISDA contract is necessarily incomplete. problem however could lie in the norms GOVERNING THE INTERPRETATION This is quite logical as a complete contract, governing interpretation stricto sensu. In OF AN ISDA CONTRACT if possible, would not be flexible and could this area, English law favours an objective Although both English and French law lead to disputes. Markets prefer to have approach to interpretation while French law require that an ISDA Master Agreement be short incomplete contracts with good faith is sometimes criticised for being primarily interpreted objectively, they do not specify obligations and to trust the dealers. subjective (Art 1188 of the French Civil exactly how to do so. Many interpretative Code). Indeed, the former is seen as more techniques are available and this could lead CHARACTERISATION AND certain. But this means that English law is to a disparity between the courts in one INTERPRETATION more interested in what the parties apparently legal system or between each legal system. Both the English and French legal system agreed (a more literal approach nowadays as Such divergence would be dangerous for the control and admit (re)characterisation. shown in Arnold v Britton [2015] 2 WLR OTC market. For instance, English law has known cases 1593) whilst French law is concerned with the Unfortunately, most legal systems do regarding the recharacterisation of a fixed real intentions of the parties. not yet offer solid legal rules for interpreting charge into a floating charge Lloyds( and However, an ISDA Master Agreement ISDA documentation (although the recent Scottish Finance Ltd v Cyril Lord Carpet is not like an ordinary contract as it is Re Lehman [2016] EWHC 2417 (Ch) is a Sales Limited [1992] BCLC 609). Foreign a standardised contract that is drafted step in the right direction). Indeed, currently lawyers are often wary of French judges for by a third party and repeatedly used by French law only separates negotiated terms fear that they interfere more freely with the market participants. It must be noted, from imposed terms (Art 1190 of the French characterisation of a contract (this is no doubt though, that ISDA documentation can Civil Code). But an important distinction due to Art 12 of the French Civil Procedure be negotiated, altered and tailored which must be recognised between standard terms Code). But cases of (re)characterisation is why any inconsistencies between the that come from one of the parties to the mainly concern fraud or, as also happens in Master Agreement and a Schedule or a contract and standard terms that were not English law – but perhaps less frequently in Confirmation are resolved in favour of the drafted by either of the parties as is the English law, contracts that are ill-named Schedule or Confirmation. Regardless, case with the ISDA Master Agreement. (Re George Inglefield Ltd[1933] Ch. 1). in the presence of standardised terms that Both must be interpreted objectively, but not A recent case illustrates how respectful are used repeatedly, French judges have to necessarily in the same manner. French commercial courts are of party interpret the contract objectively in order For the standard terms of one of the autonomy. An insolvency administrator to ensure harmonisation among these parties, the courts will need to check whether was seeking to contest the denomination recurring terms. The Court of Cassation the terms were put forward by one of the value given by the parties in a derivatives actually makes sure of this and controls parties or could have been negotiated. If they

Butterworths Journal of International Banking and Financial Law November 2019 661 Feature

could have been negotiated, then an objective and this leads to more certainty which in ––changed meaning given officially by (literal and contextual) approach would turn has an impact on liquidity and risk- ISDA (in a user guide or as intervener suffice. If they could not have been negotiated management. Thus, rules relating to the for instance); then, in case of ambiguity, the maxim contra interpretation of ISDA documentation must ––as close to unanimous market proferentem would be applicable. satisfy the need for coherent, consistent, interpretation (buy and sell-side) In the presence of standard terms clear and certain results. as possible; furnished by a third-party, it seems futile to ––previous judicial interpretations probe (objectively or subjectively) the acts SUGGESTIONS REGARDING THE of similar provisions (interpretative of the parties as neither contributed to the INTERPRETATION OF AN ISDA precedent) which the French courts drafting. Thus, the matrix of facts or the CONTRACT assimilate to a usage/practice. commercial context surrounding the contract ––A literal approach is to be favoured over is irrelevant (AIB Group (UK) Ltd v Martin an overtly contextual one as neither POTENTIAL OF THE FRENCH [2002] 1 WLR 94). party to an ISDA Master Agreement LAW ISDA? What is lacking in both jurisdictions was involved in the drafting. However, To conclude, French law was selected by is a set of principles, rules or interpretative any clauses added or modified by ISDA from the other legal systems belonging techniques specifically designed for the parties should be interpreted to the civil law tradition because it appears standardised terms furnished by third parties. in a contextual light. For instance, compatible with the financial markets, business Some authors have suggested a historical when parties add specific notification friendly and has been modified to suit the method of interpretation (taking into account conditions for the exercise of an option, needs of the OTC market. Furthermore, upon circumstances prior to the drafting of the then the judge can reasonably interpret analysis interpretation in French courts should standard forms) recognising the normative it as being more restrictive than the lead to similar results although interpretation of ISDA. Historical interpretation standard drafting. of ISDA contracts more generally could be THE CHOICE OF FRENCH LAW FOR THE NEW ISDA MASTER AGREEMENT: PART 1 PART MASTER THE NEW AGREEMENT: FOR ISDA LAW OF FRENCH THE CHOICE would ground the meaning of the drafting ––Given that an ISDA Master Agreement improved in all legal systems. context. Moreover, users’ guides published has to be flexible enough to adapt itself However, the adoption of the new French by ISDA would be relevant. Although sound, to very different operations (in contrast, Law Master Agreement rests on many such a proposition neglects that market eg to the Definitions booklets that are considerations linked to the negotiation expectations as to the terms may evolve more operation-sensitive), judges should process of an ISDA and to the French legal and fluctuate between the date of drafting, avoid adopting a restrictive/narrow system as a whole. of publication and/or adoption of the meaning in the presence of ambiguity Depending on the parties and the Master Agreement by the parties and of the (Anthracite Rated Investments (Jersey) operations desired, negotiating a Master conclusion of various transactions etc. Limited v Lehman Brothers Finance S.A Agreement can be a long process. In fact, In proposing new rules, the rationality [2011] 2 Lloyd’s Rep. 538). parties sometimes begin trading via long- of OTC trades must be understood. To ––The maximcontra proferentem is of no form Confirmations before finalising their grasp them an example of certain practices relevance (on the evolution of contra agreement on the Master Agreement. should be developed. Parties often mirror a proferentem see Nabahar-Cookson v Switching legal systems means renegotiating trade to hedge their risks. That is to say they The Hut Group Ltd [2016] EWCA 128) the Master Agreements. Thus, it could be sometimes conclude a mirror-swap (with a because if neither party was involved reasoned that unless substantive law (such different dealer) to hedge their counter-swap. in the drafting neither party will have as a directive from the European Union) What if one trade is conducted in English put the ambiguous terms forward). imposes the use of French or a member state’s law and the other in French law? If the courts However behavioural norms such as law then parties will not wish to change their come to different conclusions, then the whole good faith and reasonableness are documentation. logic of hedging would be undone. There is extremely significant. On top of the time they consume (and both a liquidity and a basis risk. This must ––Judges can rely on the drafting context, clearly parties have other pressing issues to be qualified as in practice there already exists ISDA users’ guides, market practice and address as highlighted above), negotiations a certain basis risk between New York and interventions by ISDA. can also be costly. Pricing may differ per English Master Agreements (as was shown ––To summarise, the following sources are Master Agreement even though they in the Belmont/Perpetual Trustee cases relevant: govern a similar operation. It can be more relating to the validity of a flip-clause) and yet ––market practice at the time when the expensive to use different laws because the participants use them in hedging operations. parties concluded the Master Agree- counterparties do not know the legal system, Therefore, what counts is certainty ment or Confirmations; they perceive it as more risky or less certain, and clarity. The market expects a certain ––meaning of ISDA at the time of their enforcement costs are higher (eg they consistent standard of interpretation drafting; do not know local law firms and/or cannot

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use a law firm that is close to them; they may Firth S (ed), Derivatives Law and Practice Caillemer du Ferrage A, ‘L’accès Aux Chambres : have to deal in a different language or travel (Sweet & Maxwell 2019) Quelles Compétences et Quels Contentieux ? for enforcement proceedings etc). Given the Un Point de Vue de Praticien’ (2019) supposed uncertainty surrounding the French James S, The Law of Derivatives Master Agreement, participants could price (Informa Law from Routledge 1999) Caillemer du Ferrage A and Debeney N, its use higher. In reality, a French Master ‘Le Contrat-Cadre ISDA de Droit Français: Agreement may be cheaper as the cost of Henderson S K, Henderson on Derivatives Évolution Ou Révolution?’ [2018] Bulletin Joly justice in is comparatively low (the cost (2nd ed, LexisNexis 2010) Bourse et produits financiers 321 to plead, excluding counsel fees) compared to the UK or New York. Thus, adopting a Articles Caillemer du Ferrage A and Hu Q, ‘New French ISDA may be less expensive in the ISDA Master Agreement Brings Changes long run, although given lack of visibility on Austen-Baker R, ‘Implied Terms in English for EU’ https://www.jonesday.com/ the market, use of such a contract may impact Contract Law’, Commercial Contract Law, new-isda-master-agreement-french-law- its liquidity in the short-term. Transatlantic Perspectives (Larry Dimatteo, brings-changes-for-eu-otc-derivatives- On top of the costs there is uncertainty in Qi Zhou, Severine Saintier, Keith Rowley, market-06-28-2018/ accessed 17 June 2019 using a new contract regardless of how well it Cambridge University Press 2013) is drafted. Users sometimes prefer a template Caillemer du Ferrage A, Hu Q and Debeney with a predictable implementation to an Awrey D, ‘The Dynamics of OTC N, ‘French Brexit-Related Legislation – untested contract. This has been observed Derivatives Regulation: Bridging the Public- A Safe Harbor for ISDA Master when ISDA introduced a new Master Private Divide’ (2010) 11 European Business Agreements’ Jones Day Publications Agreement in 2002 as market participants Organization Law Review 155, ‘The Limits of (April 2019) https://www.jonesday.com/ were slow and reluctant to adopt it. Indeed, Private Ordering Within Modern Financial French-Brexit-Related-LegislationA- ISDA is still trying to encourage participants Markets’ (Social Science Research Network Safe-Harbor-for-ISDA-Master- to move to the 2002 version (hence why the 2014) SSRN Scholarly Paper ID 2262712 Agreements-04-01-2019/ accessed 1992 documentation has not been updated). https://papers.ssrn.com/abstract=2262712 19 June 2019 Adoption depends on the attractiveness of accessed 30 January 2019 the law and the courts – and on these points Chender L, ‘Isda Readies French many criticisms have been formulated with Baatsaikhan U and Schoenmaker D, and Irish Master Agreements’ regards to French law and French judges. ‘Can EU Actors Keep Using Common Law [2018] Global Investor ht t p://search. These points will be examined and qualified after Brexit?’ (LSE Brexit, 14 July 2017) proquest.com/docview/2000954367/ in Part 2 – Challenging the criticisms directed http://blogs.lse.ac.uk/brexit/ accessed abstract/302858B847F7419FPQ/1 accessed at French Law as the civil law choice for the new 17 June 2019 29 April 2019 ISDA Master Agreement. n Benoit G, ‘Dérivés : la France adapte son Choi SJ and Gulati GM, ‘Contract as BIBLIOGRAPHY droit aux contrats internationaux’ Les Echos Statute’ (2006) 104 Michigan Law Review (Paris, France, Paris, 2018) ht t p://search. 1129 Books proquest.com/docview/2046326768/ abstract/10D2AC995E05439CPQ/1 Flanagan SM, ‘The Rise of a Trade Alastair H, The Law on Financial Derivatives accessed 29 April 2019 Association: Group Interactions within (2nd ed, Sweet & Maxwell 1998) the International Swaps and Derivatives Braithwaite JP, ‘Private Law and the Public Association Student Articles’ [2001] Brouillou G, ‘La gestion du risque de Sector’s Central Counterparty Prescription Harvard Negotiation Law Review 211 contrepartie en matière des dérivés de gré à gré: for the Derivatives’ (2011) No 2/2011 LSE approche juridique’ (Université Panthéon- Legal Studies Working Paper 28, ‘Standard Golden J, ‘Setting Standards in the Sorbonne – Paris I 2018) Form Contracts as Transnational Law: Evolution of Swap Documentation’ (1994) Evidence from the Derivatives Markets’ 13 International Financial Law Review Carter JW, The Construction of Commercial (2012) 75 The Modern Law Review 779 18, ‘Financial Market Dispute Settlement: Contracts (Hart Publishing 2013) Making Sense out of Current Nonsense’ Brown C and Cleary T, ‘Impact of the [2013] Hague Yearbook of International Law/ Colin A, ‘Les Obligations Financières’ Global Financial Crisis on OTC Derivatives Annuaire de La Haye de Droit International, (Université Paris XIII – Sorbonne Paris in Structured Debt Transactions’ (2010) 5 Vol 26 (2013) 411, ‘Interpreting ISDA Cité 2015) Capital Markets Law Journal 218 Terms: When Market Practice Is Relevant,

Butterworths Journal of International Banking and Financial Law November 2019 663 Biog box Feature Alexis Downe is currently a trainee lawyer at the Paris Bar (EFB) and will undertake his final internship training at Clifford Chance Paris in the capital markets department. He has a doctorate in Law from the University of Toulouse in contractual risk-management in English and French Law. He has taught at the University of Toulouse and now tutors in Introduction to Law and Contract Law at the University Paris I (Sorbonne). Aside from his French PhD, he is currently finishing his LL.M. in Corporate and Securities Law at the London School of Economics. Email: [email protected]

as of When Is It Relevant?’ (2014) 9 Nicholas B, ‘Rules and Terms – Civil Law grateful to the following individuals (in Capital Markets Law Journal 299 and Common Law’ (1973) 48 Tulane Law alphabetical order) for having taken the time Review 946 to meet with me and discuss this topic: Lehmann M and D’Souza N, ‘What Brexit M Caillemer du Ferrage, Sir Ross Cranston, Means for the Interpretation and Drafting Riles A, ‘The Anti-Network: Private Global M Golden, Ms Hu, M Jacquemard, of Financial Contracts’ (2017) 32 JIBFL 101 Governance, Legal Knowledge, and the Dr Kleinheisterkamp, Dr Murphy, of the State’ (2008) 56 American Dr Praicheux, Dr Werner. All errors and Mourselas C, ‘ISDA Slams EU Location Journal of Comparative Law 605 mistakes are my responsibility only. Policy, Demands Legal Certainty Post Brexit’ Global Capital (London, 2017), Sébire M-E and Larroque P, ‘Adaptation ‘ISDA Preps French and Irish Law Master Du Droit Français Pour Les Besoins de Agreements’ [2018] Global Capital La Convention-Cadre ISDA’ (8 February Further Reading: http://search.proquest. 2019) https://cms.law/en/FRA/News- ––ISDA hedges its bets over Brexit com/docview/2000954470/ Information/Adaptation-du-droit-francais- (2019) 1 JIBFL 51. abstract/419AD695E9304128PQ/1 pour-les-besoins-de-la-nouvelle-convention- ––Post-Brexit: the factors increasing accessed 29 April 2019 cadre-ISDA accessed 18 June 2019 the pressure to refer matters to EU law (2018) 3 JIBFL 135. Murray E, ‘Lomas v Firth Rixson: “As You 1 This research was only made possible by ––LexisPSL: Banking & Finance: Were!”’ (2013) 8 Capital Markets Law ISDA who was gracious enough to allow me Practice note: European derivatives Journal 395 to examine their documents. I am extremely master agreements. THE CHOICE OF FRENCH LAW FOR THE NEW ISDA MASTER AGREEMENT: PART 1 PART MASTER THE NEW AGREEMENT: FOR ISDA LAW OF FRENCH THE CHOICE FULL COVERAGE OF COMPANY LAW DEVELOPMENTS Tolley’s Company Law Handbook 27th edition

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664 November 2019 Butterworths Journal of International Banking and Financial Law