ISDA has released new model clauses and non-binding guidance in respect of Section 13 (a) and (b), dealing with choice of Governing Law and choice of court. The 15 page 2018 Choice of Court and Governing Law Guide (“the Guide”) contains the following:
- New exclusive jurisdiction model clauses. One in favour of the English courts, another for New York
- A new and simplified non-exclusive jurisdiction model clause
- A new definition of “Proceedings” in the model clauses with broader language to incorporate pre- or non-contractual matters
- A new Governing Law model clause expressly covering the choice of law for non-contractual obligations
ISDA is at pains “for the avoidance of doubt” to point out that the drafting changes are for clarification only, current language in the 1992 and 2002 Agreements should not be construed more narrowly as a result of the new Guide. The existing, now superseded, language contained a non-exclusive jurisdiction clause in favour of the contract’s governing law. The effect of the new model clauses is to make choice of jurisdiction exclusive, obviating potential conflict of law issues. The Guide notes that exclusivity is now the norm, but includes the non-exclusive model clause as an option. Unlike the ongoing work to add new Irish and French documentation, the issuance of the Guide was not explicitly prompted by Brexit considerations, arising instead from a July 2017 consultation with members on jurisdiction provisions and a perceived need to bring the clauses into line with 2005 amendments to Article 3 of the Hague Convention on Choice of Court Agreements.
Although a 13 year gap since the revised Hague Convention can hardly be construed as proactive, ISDA is to be congratulated on simplifying these clauses in good time before they potentially threaten to become more contentious in whatever context Brexit finally transpires.