UK Law and Practice Contributed by: Fergus Wheeler, Paul Yin, Tracy Liu and Medha Vikram, Latham & Watkins
6.2 Foreign Law and Jurisdiction Choice of Foreign Law
security interests on trust for the benefit of the secured creditors. This allows the holder of the security (ie, the security trustee or security agent) to remain the same and any associated hardening periods will not restart where there are any changes to the lenders. 6. Enforcement 6.1 Enforcement of Collateral by Non-Bank Secured Lenders In private credit transactions, a “single point of enforcement” is common, typically involving a share charge over the shares in a key holding company. This allows the secured lender to appoint a fixed charge receiver (FCR) over the shares or an administrator over the parent company to dispose of the shares of the holding company (and operating group subsidiaries). Enforcement of the share pledge takes control of the group away from the sponsor in order to deliver a going concern sale of the operating group. Asset level security is increasingly rare and usually limited to subsidiary level bank accounts and intel - lectual property. Enforcement typically involves an insolvency office - holder, being either: • an FCR appointed out of court under the security document; or • an administrator appointed out of court if lend - ers have a “qualifying floating charge” over most assets, or by court application. An FCR, appointed by lenders that hold a fixed charge over specified debtor assets, has enforcement powers under the security document, such as taking custody or managing or selling assets to satisfy secured debt. An administrator has broader legal duties to all credi - tors. Administration is a more public process and trig - gers a moratorium. With adequate planning and some board or manage - ment co-operation, enforcement sales can often be pre-packaged, minimising the taint of insolvency.
Contracting parties can choose the governing law and jurisdiction for any contractual disputes. The choice of law may mirror the jurisdiction. If the governing law differs from the jurisdiction hearing the dispute, the foreign court may require expert evidence on the rel - evant law. However, English courts will not uphold a choice of law for contractual obligations if to do so would be inconsistent with or overridden by Regulation (EC) No 593/2008 (Rome I) or for non-contractual obliga - tions if it conflicts with Regulation (EC) No 864/2007 (Rome II), both as amended by the UK’s post-Brexit The Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU Exit) Regulations 2019. Submission to a Foreign Jurisdiction Usually, when parties agree to submit disputes to a foreign court’s exclusive jurisdiction, a party cannot bring proceedings in England and Wales in breach of that agreement. If parties choose non-exclusive jurisdiction, this allows disputes to be heard in the jurisdiction specified in the clause, or the parties may be entitled to take disputes to other jurisdictions. If a claim is filed in England and challenged for jurisdic - tion, the English court will decide if it is competent to determine the dispute. Waiver of Immunity The enforcement of a waiver of immunity clause depends on its wording. The courts of England and Wales take a restrictive approach to state immunity under the State Immunity Act 1978 (SIA), which con - fers general immunity from English court jurisdic - tion on foreign states with certain exceptions. These exceptions include where the state agrees to submit to the jurisdiction or to submit a dispute to arbitration and the relevant court proceedings relate to that arbi - tration. The SIA also provides immunity from execu - tion, with exceptions including for written consent to execution or commercial transactions involving prop - erty used for commercial purposes.
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