Derivatives disputes set to move to Irish courts
International disputes involving financial instruments look more likely to end up before the Irish courts post-Brexit.
An Irish law version of the industry's standard agreement was launched yesterday as part of an effort to "future-proof" against the uncertainties created by the UK's exit from the EU.
The move has been taken by the International Swaps and Derivatives Association (ISDA) at a time when the ease with which judgments by the British courts will be recognised and enforced across the EU remains unclear.
At present, derivatives contracts are primarily governed by the laws of either England or New York State.
Virtually all ISDA master agreements entered into between counter-parties based in the EU are governed by the laws of England. Following Brexit, Ireland will become the largest common law jurisdiction in the EU. Common law is the preferred governing law for most cross-border commercial contracts and arbitrations.
ISDA said the development of an Irish law version of the master agreement will enable parties to continue to transact derivatives under the laws of an European Union member state and benefit from automatic recognition and enforcement throughout the EU.
"A particular focus for us is Brexit and while we can't predict its outcome with certainty, we can prepare for some of the possible outcomes," said ISDA chief executive Scott O'Malia.
"The launch of the new master agreement is intended to provide additional options to users, so they can trade under whatever agreement best meets their needs."
The Irish law version of the agreement was launched at the offices of law firm McCann FitzGerald. Junior Justice Minister David Stanton described the move as a "tremendous vote of confidence not just in Ireland but in Irish law and in the Irish courts system".
Brexit is widely seen as an opportunity to grow the Irish legal services industry by attracting business which normally goes to London.
The Cabinet is shortly due to consider proposals aimed at attracting more international dispute resolution work to Ireland following Brexit.
At present, the UK is believed to account for 20pc of the EU's legal services fee revenue and London is the major centre for international disputes.