This clause is intended for parties who have chosen either English or New York law and who consider that their non-contractual obligations are governed by the same right as that which applies to the contract. The inclusion of “non-contractual obligations” provides security for both parties and the court when litigation is ongoing, both cost-effective and less time-consuming. ISDA has developed four new model clauses that, at the parties` choice, can replace sections 13 (a) and/or b) relating to applicable legislation and the jurisdiction (or) of the 1992 and 2002 ISDA steering contract. These include optional models of exclusive and non-exclusive jurisdiction clauses and an alternative clause in section 13 (a), which explicitly covers the choice of non-contractual obligations. The main driver of the consultation was the modernization and simplification of the current clauses to ensure security through changes to international law, which made it difficult to interpret existing clauses. The ISDA specifies that these editorial changes should only be used for clarification purposes and should not be interpreted in such a way that the current language is (or should be) interpreted restrictively in masteragrements. While the review of the choice of court and the choice of legislation was not initiated by Brexit, the reduction of the “potential risk of uncertainty” and the “unnecessary complexity” of these provisions is a very welcome development. ISDA is also working on a project to include EU Member States (French and Irish) in their documentary offers as a direct consequence of Brexit, with legal options and competences. More information on Brexit, the Hague Convention and dispute settlement clauses can be found in our letter to clients.
These options should, in most cases, be the two most relevant final options for most parties and allow for greater flexibility. THE ISDA acknowledged that, in the past, the principle of judicial decision-making attacked derinklusivity, but that the market now seemed in favour of exclusivity. However, ISDA felt that it would be premature to completely remove the non-exclusion option at this stage. Exclusive jurisdiction clauses have also been formulated in such a way as to fall within the scope of the 2005 Hague Convention on the choice of judicial agreements, so that members can benefit, if necessary, from them.