Party Autonomy in International Property Law - Peace Palace Library

11. Financial Collateral Arrangements and Party Autonomy
problem because then the balance of the relevant elements of the transaction
could well shift in favour of either England or New York. Perhaps, if
the reference entity or the protection seller were a non-Dutch entity, the
balance would shift even more. But this sort of scheming, which would
only be possible if the transaction is entered into for speculative reasons
because only then might it be possible to choose a different reference
entity, should not be necessary. Because the documentation that is used
for these types of transactions has been developed in an international context,
and these types of contracts are therefore inherently international,
the mere fact that there happen to be two Dutch parties that have entered
into the contract should not deprive them from the option of choosing
an applicable law other than Dutch law. The provisions of articles 3(3)
and 3(4) of Rome I were developed to prevent parties from abusing the
possibility to choose the applicable law to avoid certain requirements of
mandatory law, but that is clearly not what happens in our scenario. The
parties may simply want to use standard form documentation and avoid
the uncertainty that might result from applying Dutch law to documentation
that was designed for English law or the costs involved in amending
the documents for Dutch law. 30
Another restriction on the freedom to choose the law applicable to the
contractual elements of the collateral arrangement can be found in article
9 Rome I, dealing with mandatory provisions crucial for safeguarding
public law interests, which can never be deviated from by a choice of
law. These types of provisions are usually not relevant for collateral arrangements
due to the narrow scope of their application. There would
seem to be no mandatory provisions of such a grave nature that could
interfere with the type[s] of contracts that we are currently dealing with.
The restriction to party autonomy imposed by article 9 Rome I is therefore
unlikely to be relevant to the types of transactions described above.
30
This is not to say that choosing Dutch law as the law applicable to the arrangements
will not also offer benefits, depending on the exact circumstances of the
case. It is not very difficult to adapt the ISDA documentation in such a way
that it can be governed by Dutch law. If this is combined with submission to
the jurisdiction of the Dutch courts, the cost benefits may be substantial. The
main topic of this chapter is parties’ autonomy in arranging their collateral
structures and evidently there would be no problems in this respect if two
Dutch entities were to choose Dutch law and submit to the jurisdiction of the
courts of the Netherlands.
Reinout M. Wibier
237
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