PRIME Finance issues model arbitration clauses for use with ISDA Master Agreements

The Panel of Recognised International Market Experts in Finance (“PRIME Finance“) recently issued a number of model arbitration clauses for use with the International Swaps and Derivatives Association (“ISDA“) Master Agreements, the market leading standard form agreements for documenting derivatives transactions. PRIME Finance, which was launched in January 2012, aims to provide a bespoke forum for the resolution of complex financial disputes.

The draft clauses have been issued to PRIME’s panel of experts for review and comment. There are two draft clauses at this stage. One is governed by English law and provides for arbitration in London, while the other is a New York law governed clause providing for arbitration in New York. Both clauses are framed as amendments to the relevant ISDA Master Agreement.

This development coincides with a consultation being undertaken by ISDA on the use of arbitration under the ISDA Master Agreements. ISDA is expected to release a number of model form arbitration clauses of its own later this year for use in conjunction with the Master Agreements. ISDA has previously indicated that arbitration under the PRIME Finance arbitration rules is one of the options under consideration, but has stressed that it is neutral as to the various arbitral institutions on offer. It is therefore expected that ISDA’s model clauses will cover a number of the major arbitral institutions and venues, including arbitration under the LCIA, ICC, HKIAC, SIAC and AAA/ICDR rules.

For more information, please see our previous blog posts on the ISDA Consultation and the launch of PRIME Finance. Alternatively, please contact your usual Herbert Smith Freehills contact, Nicholas Peacock, Partner, or Dominic Kennelly, Associate, London.

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