The International Swaps and Derivatives Association, Inc. (ISDA) has published new French and Irish law versions of the ISDA Master Agreement, adding to the existing suite of English, New York and Japanese law versions. France and Ireland were selected to provide forms under both civil law and common law systems inside the remaining member states of the European Union (EU). The new forms of Master Agreements are intended to provide options for those institutions that would prefer to continue trading under an EU member-state law with EU court jurisdiction clauses once the UK leaves the EU. This is to cater for the possibility that English law may become a third-country law after the UK withdraws from the EU, which could mean that English court decisions would no longer be automatically recognized and enforced across the EU and European Economic Area. There may also be insolvency law benefits in certain EU Member States whose EU national insolvency laws require contracts to be subject to EU/EEA law in order to qualify for safe harbour protections following a bankruptcy.
However, it remains to be seen what the uptake will be. English law Master Agreements will not cease to be valid and binding in the EU post-Brexit and will still benefit from the existing law and practice on how they are to be interpreted under English law and by English Courts. There will continue to be good reasons for EU/EEA counterparties to continue using the English law Master Agreement including to ensure that there is no basis risk introduced into their derivatives books by contracting under multiple governing laws which could undermine the certainty of having offsetting positions under the same governing law.
