Clifford Chance

Secondary Loan Trading – Implications of Proposed EU Regulation on Assignments

1 May 2018

The European Commission has adopted a legislative proposal laying down new conflict of laws rules designating which national law applies to determine who has the superior title to an assigned claim. Subject to three exceptions, the relevant law would be that of the assignor's "habitual residence". If adopted, this would cut across existing loan market practice, which looks to the governing law of the underlying debt on these matters, would lead to an increase in settlement times whilst the perfection requirements in the habitual residence of the assignor are investigated and complied with, and would bring additional costs.

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