PORTUGAL Law and Practice Contributed by: Benedita Aires and Orlando Vogler Guiné, VdA
passive and have no actual access to such data, except in cases of servicer event/default, which so far have not arisen). As far as is known, there has been no actual litigation where the principal servicing provisions have been discussed in court between transac - tion parties. When a possible matter arises, the transaction parties negotiate and have so far always reached an amicable outcome, including by granting waivers or amending the transaction documentation, with the benefit (where applica - ble) of a noteholders’ resolution. 3.6 Principal Defaults Under Portuguese law, it is not necessary for default provisions to be specified in a contract in order for a default to have legally taken place (and a claim to be based thereupon), if a given obligation that is written in or implied into that contract is breached. In any case, the docu - mentation will show the typical default events also found in the same type of agreements in other jurisdictions, and notably under English law, including the terms and conditions of the notes, the servicing agreement or the accounts agreement. These include default for non-pay - ment, a breach of other obligations and an insol - vency event, among others (sometimes a rating downgrade). Normally (except in some cases for insolvency), the occurrence of the event will not automatically lead to termination or acceleration, but will rather entitle the counterparty to serve a notice to that effect. It is also usual to find cer - tain default events being qualified by a material adverse effect concept. As far as is known, there has been no actual litigation where the principal servicing provisions have been discussed in court between trans - action parties. When a possible matter arises, the transaction parties negotiate and have so
far reached an amicable outcome, including by granting waivers or amending the transaction documentation, with the benefit (where applica - ble) of a noteholders’ resolution. 3.7 Principal Indemnities Under Portuguese law, the contracts are not required to contain indemnity language in order for a party that breaches its obligations to be legally required to indemnify the counterparty. In any case, and as one would expect in this sort of transaction, the agreements contain indemnity language (sometimes quite long lan - guage), which is a direct influence of the English law templates that inspired the first Portuguese securitisation documents. It is also common to include indemnity limitation language, including in terms of amount (eg, for certain matters the servicer is not required to indemnify above a certain multiple of the servicer fee) or in terms of conduct. In this latter respect, under Portuguese law, indemnification cannot be excluded if the default is wilfully attributable to the breaching party or if it acted with gross neg - ligence, but it is possible to exclude for “mere” negligence. It is also worth noting that indemni - ties by the issuer to other transaction parties are usually contained within the transaction and are payable as issuer expenses, and thus in priority over payments to noteholders in the payments waterfall and without contaminating other secu - ritisations or the issuer’s own funds. As far as is known, there has been no actual liti - gation where the indemnity provisions have been discussed in court between transaction parties. When a possible matter arises, the transaction parties negotiate and have so far reached an amicable outcome.
339 CHAMBERS.COM
Powered by FlippingBook