Cross Border Derivative Transactions—Issues to Consider—Checklist

Drafting notes

This Checklist identifies the key issues that need to be kept in mind when working on a derivatives transaction in which different jurisdictions are involved.

Checklist

Issue	What should be considered?
Enforceability of the master agreement	Will the local law of a foreign counterparty to a derivative contract uphold the terms of an agreement in full? Will the standard contract provisions seen in derivatives' markets such as netting, set off or the use of a Master Agreement to govern multiple transactions be enforceable in foreign courts? Can the provisions of the agreement be challenged by a local insolvency practitioner in the event that a counterparty is in financial difficulty? Consider the International Swaps and Derivatives Association's (ISDA) netting opinions and if these do not cover the particular jurisdiction and/or counterparty, obtain a separate legal opinion. Is the foreign counterparty acting within its powers in entering into a financial derivative contract? Are there any local law restrictions or regulations which impact certain elements only of the contract?

Issue

What should be considered?

Enforceability of the master agreement

Will the local law of a foreign counterparty to a derivative contract uphold the terms of an agreement in full?

Will the standard contract provisions seen in derivatives' markets such as netting, set off or the use of a Master Agreement to govern multiple transactions be enforceable in foreign courts?
Can the provisions of the agreement be challenged by a local insolvency practitioner in the event that a counterparty is in financial difficulty?

Consider the International Swaps and Derivatives Association's (ISDA) netting opinions and if these do not cover the particular jurisdiction and/or counterparty, obtain a separate legal opinion.

Is the foreign counterparty acting within its powers in entering into a financial derivative contract?

Are there any local law restrictions or regulations which impact certain elements only of the contract?