Selection of teams in syndicated loans and bonds

Selection of teams in syndicated loans and bonds

All relationships between two entities, either persons or institutions, can not be determined except in accordance with certain rules. These rules may be unreasonable norms or duties for a group or community, or any express laws that have a binding and enforceable authority. A contract is a formal structure of a relationship between two or more parties, binding them in a contractual relationship. and impose certain obligations on them and give them certain rights over each other. In case of problems with these obligations or rights, the law of the country would come into effect. But if the contracting parties belong to different countries, there would be a question of law that would come into force. If the contracting parties do not previously agree on this issue, it is more likely that the problem remains unresolved. and one or more parties would suffer from the loss. Therefore, the need to determine at the time of the agreement, which law should be followed.

Similar is the case with the financial contract. Any legal matter under a financial contract must be determined in accordance with a legal system. An aspect of a contract can not exist in a legal vacuum. Syndicated loans and bonds are primarily international in their nature. They usually include borrowers and lenders from different countries. and the greater the number of countries involved, the greater the number of municipal legal systems that must be considered. Since there is no single set of international laws that can effectively manage the syndicated loans and bonds, it is necessary for the parties to these contracts to choose an agreed legal system.

A syndicated loan agreement is usually contracted between the highly sophisticated institutions such as banks, companies, government companies and even the sovereign states themselves. It is a number of legal systems (even if an international international bank can be covered by different legal systems) . The international bond issues include issuers and investment banks from different countries. In some respects, international bonds (Eurobonds) are even more international than syndicated loans, because they are sold to the general public, and individuals and other entities buy and sell them in several jurisdictions. During this business, a number of transactions occur with several legal documents. With these transactions, rights and liabilities move from one device to another very often. When it happens in different legal systems, it creates ambiguity about which law to apply in any case. This ambiguity makes the business exposed to unpredictable situations. Finally, the entire business market suffers seriously.

In order to minimize such uncertainty, one seeks to apply a legal system for the transaction and, as far as possible, rule out the application of other legal systems to which the transaction may be linked. This is generally attempted to be achieved in practice through the choice of law clause governed by a right of law - the right law - The validity, enforceability and interpretation of contractual and other legal documents constituting the transaction.

The term international, in syndicated loans and bonds, involves several laws, forums and jurisdictions. The law conflict is natural in such a case. The combination of laws, given their different approaches, is not a working proposal. Harmonization of financial laws at international level remains an idealistic proposal. So, to form, interpret and implement the international agreements there is a need to adopt a single legal system. This can be the parties to a contract at the time of the contract's conclusion. This is done to ensure the validity, enforceability and interpretation of all legal documents relevant to syndicated loan and bond agreements. It helps to eliminate the uncertainty and unpredictability of the fate of a contract. Ideally, it is an external law that is able to isolate the loan agreement from legal changes, especially in the borrowing countries. The English law worth playing such a role. There is another advantage of choosing it: it does not require any connection of the lender or borrower with England.

The fundamental importance of introducing the choice of law clause into the international syndicated loan agreements and the legal instruments of the bonds is to eliminate uncertainty about the expectations of the contract by providing a functioning legal mechanism to solve all the legal problems that would arise from time to time.

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