Therefore, some EU/EEA counterparties may wish to retain this automatic recognition and application in the trade between them. There are other reasons why companies want to continue to negotiate under agreements between the EU and the EEA. For example, EU and EEA credit institutions are required to include contractual recognition of in bail in third country contracts, in accordance with Article 55 of the EU Directive on The Recovery and Resolution of Banking Failures – and without any kind of agreement, this would also include English legislation that regulates ISDA master contracts after Brexit. This would not be a problem for agreements that fall under the legislation of an EU Member State and the EEA. In addition, some EEA jurisdictions require that contract-related agreements include atheausa contractual recognition of the BRRD`s residence provisions (i.e. the temporary suspension of counterparties` rights to terminate the contract, enforce guarantees and honour payment and delivery obligations). The implementation of an Irish or French agreement on isDA would avoid (from the point of view of EEA counterparties) that EEA counterparties would not be obliged to amend an ISDA agreement for English legislation in order to implement them. In France, two types of master`s contracts are used for derivatives: that of the French Banking Federation (FBF), the most common when both parties are French, and that of the International Swaps and Derivatives Association (ISDA), the most widespread in the world and therefore the typical choice when one of the parties is not French. Until recently, a statutory contract of the ISDA could only be subject to the laws of England and Wales, New York state or Japan, meaning that English legislation was by far the most used in Europe. At this point, we do not have enough information, to be sure. If an agreement is reached between the EU and the UK to preserve certain aspects of the current legal framework – for example, automatic recognition of court decisions – it may not be much.
If there is no agreement, this automatic recognition between the EU and Britain would disappear after Brexit. Some companies in the European Economic Area and the European Economic Area (EEA) may wish to retain the comfort of automatic recognition in the EU/EEA by using the competence of an EU/EEA country. To be clear, this does not mean that an English court decision after Brexit is not recognised and enforced by an EU court, and that does not mean that an English law agreement is less “valid” or that EU and EEA counterparties will not be able to continue using binary agreements under English law. This potentially means more costs, more insecurity and more bureaucracy. Suppose an Italian counterpart and a French party act under an English legal agreement with the English court after Brexit; There is a dispute and the English court renders a judgment in favour of the Italian opponent. The Italian side would have to have this English court decision recognized by a French court in order to enforce it – it is another step in the process that could take years or, worse, lead another court to decide to reopen part of the case. It is difficult to predict how the market will use these new master`s contracts. However, it is not unreasonable to believe that European banks and counterparties will see advantages in using the new contractual instruments offered by ISDA for their intercontinental activities in Europe, not least because after Brexit, the counterparties also want to retain certain benefits of EU legislation – for example, guarantees under certain eu`s national insolvency laws that require the application of a legal agreement on EU member states to obtain such protection.