Sullivan & Cromwell Discusses Sovereign Debt Litigation

In a December 22, 2016, decision in the long-running Argentine debt litigation, the United States District Court for the Southern District of New York spelled out significant limitations on prior rulings it had issued that were based on the pari passu clause in Argentina’s defaulted bonds.  In those earlier rulings, the court had imposed injunctions barring Argentina from performing on new debt unless it likewise paid the defaulted debt.  Those injunctions were lifted earlier last year in a settlement with most of the holdout creditors.  In the new decision, the court held that Argentina’s payments to creditors who participated in … Read more

Debevoise & Plimpton Discusses Prudential Regulation in an Age of Protectionism

The regulation of bank capital and liquidity has been in sharp focus ever since the financial crisis of 2008-09. The Basel Committee on Banking Supervision (“BCBS”) has led the work internationally to develop a revised set of capital and liquidity standards to update the then existing Basel II accord. These standards, dubbed Basel III, have to a large extent been adopted and enacted in the world’s major jurisdictions, including the United States and the European Union.

The development of Basel III did not complete the mandate given to the BCBS by the G20 to overhaul bank capital and liquidity. As … Read more

Gibson Dunn Discusses Trade Under Trump

While it remains too early to predict with any certainty, both allies and adversaries alike are anxiously scanning statements from the campaign and Trump’s past for any clues as to the policy directions his administration is likely to take.  In this update, we offer our initial expectations regarding the impact a Trump Presidency will have on economic sanctions and export controls.

Economic Sanctions

During the presidential campaign, Trump extensively criticized President Obama’s policies with respect to Iran, Russia, and Cuba – all policies in which the imposition or the easing of sanctions have played a key part.  Though it is Read more

Kirkland & Ellis Discusses President Obama Blocking a Chinese Takeover of a German Semiconductor Company

On December 2, 2016, President Obama issued an executive order (the “Order”) blocking the proposed acquisition of German semiconductor manufacturer Aixtron SE’s (“Aixtron”) U.S. business (“Aixtron U.S.”) by a group of Chinese investors led by Fujian Grand Chip Investment Fund LP (the “Buyers”).  This marks only the second time that a president has blocked a transaction since 2007, when CFIUS’s authority was codified by the Foreign Investment and National Security Act of 2007 (“FINSA”).[1]

In pertinent part, the Order declares that “credible evidence exists” that control of Aixtron U.S. by the Buyers would threaten to impair U.S. … Read more

Latham & Watkins Discusses How DOJ Credits Self-Disclosure of Export Controls and Sanctions Violations

The National Security Division (NSD) of the U.S. Department of Justice (DOJ) recently issued “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations” (the Guidance). The Guidance articulates NSD’s policy for granting credit to companies that voluntarily self-disclose and/or cooperate with respect to potential criminal conduct under U.S, sanctions or export control laws. The Guidance defines the key factors that NSD considers when assessing whether and to what extent a company should receive cooperation and mitigation credit. These circumstances include: (1) voluntary self-disclosure, (2) full cooperation, (3) timely and appropriate remediation and (4) … Read more

Adventures in Sovereign Debt: Enforcing Russia’s Loan to Ukraine

In December 2015, Ukraine defaulted on a $3 billion loan made two years previously by the Russian government. Governments lend to one another all the time, but this loan was extraordinary, and so were the events that followed in its wake.

Like most government-to-government loans, this one had political motivations. For Russia, these included the desire to reward President Victor Yanukovych for backing out of an Association Agreement that would have deepened Ukraine’s ties to the European Union. The structure, however, was unusual for a government-to-government loan. Whereas governments typically lend funds directly, the Russian loan took the form of … Read more

Shearman & Sterling Discusses U.S. Election’s Effect on International Sanctions

The election on November 8 has significant implications for international sanctions, particularly with respect to Iran, Cuba, and Russia. Although we do not want to be unduly alarmist, President-elect Trump’s statements on the campaign trail, should they be carried through to policy in his Administration, certainly suggest a U-turn in US policy. With respect to Iran and Cuba, the possibility of such a change in direction will need to be taken into account by persons and companies who have begun to enter into commercial arrangements with those countries in the expectation that the recent easing of sanctions would continue. With … Read more

Community Banks Play an Important Role in International Trade

Small and medium-size enterprises (SMEs) play a significant role in the global economy, accounting for a substantial portion of employment and domestic production. According to some estimates, SMEs’ contribution to gross domestic product exceeds 51 percent in high-income countries, consistent with the general consensus that SMEs are “engines” of economic growth. With an increasing number of SMEs engaging in international transactions, their influence on the volume of international trade has increased as well. In the U.S alone, SMEs represented 97 percent of all importers and 98 percent of all exporters, and accounted for 31 percent and 33 percent of imported … Read more

Restructuring Venezuelan Debt

As sovereign borrowers and their creditors know all too well, the legal framework governing their respective rights and obligations (the so-called international financial architecture) lacks an effective means to enforce payment in most circumstances or to modify payment obligations when the debtor is unable to honor the original terms of its debts. The recent case of Argentina exemplifies both of these shortcomings.  Venezuela’s debt instruments and debt management techniques developed over time nonetheless hold out the promise that the country may forge a path to a successful rearrangement of its debts when a government committed to sound economic policies and … Read more

Cleary Gottlieb Discusses Further Easing of Cuban Sanctions

On October 14, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the Department of Commerce’s Bureau of Industry and Security (“BIS”) announced revisions to the Cuban Assets Control Regulations (“CACR”) and the Export Administration Regulations (“EAR”), respectively, continuing the incremental easing of the U.S. embargo on Cuba.  Simultaneously, the President announced a new Presidential Policy Directive for U.S.-Cuba normalization (“Cuba PPD”), which aims to underpin the Obama Administration’s vision for normalizing relations with Cuba with government-wide guidance.  However, the vision remains in important respects aspirational; statutory constraints on Cuba policy continue to limit the … Read more

Arnold & Porter Discusses Proposed CFTC Rules for Cross-Border Swaps

The Commodity Futures Trading Commission (CFTC) recently proposed new regulations that will significantly affect international swap transactions.[1] At present, international swap market participants look to the CFTC’s 2013 Interpretive Guidance and Policy Statement Regarding Compliance With Certain Swap Regulations (Cross-Border Guidance or Guidance)[2] in order to determine whether they must register with the CFTC as Swap Dealers or Major Swap Participants (MSPs), and whether and how the CFTC’s business conduct standards apply to their businesses. The proposed new regulations would formally codify certain provisions of the Guidance while refining and superseding some others.

The CFTC has … Read more

The Last Days of Stock Exchange Listings for Sovereign Debt?

On October 25, 2016, the Argentine province of Santa Fe issued $250 million in international bonds. One aspect of this offering is highly unusual for international sovereign debt: the bonds are not listed on any of the major global stock exchanges.

Such offerings are almost always listed, and usually on the Luxembourg Stock Exchange. Why did Santa Fe decide to stray from the herd? Perhaps it realized that there was little value to be gained from listing on an exchange.

In our recent paper, “The Sovereign-Debt Listing Puzzle,” we investigate what purpose is served by listing sovereign bonds … Read more

Corporate Governance for a Changing World: Report of a Global Roundtable Series

Between 2014 and 2016, European law firm Frank Bold and the Modern Corporation Project at Cass Business School of City, University of London, hosted a global series of roundtables on corporate governance in which we engaged with over 260 practitioners, academics, and regulators. On the basis of these roundtables we have recently presented a report, available here, with concrete suggestions for the development of corporate governance.

Mainstream corporate governance models have been narrowing since the 1970s in order to put the maximisation of shareholder value at the centre of corporate attention. The resultant focus on short-term share price leads … Read more

Sullivan & Cromwell Discusses UK Court Ruling Giving Parliament a Say on Brexit

Following the referendum vote on June 23, 2016, the UK government proposed to notify the European Council by March 31, 2017 under article 50(2) of the Treaty on European Union of the UK’s decision to leave the EU.

The UK government’s proposal to give this notification without the prior approval of Parliament was challenged in the High Court in London.  Judgment was given by the Court on November 3.

The Court held that the UK government does not have the ability to use its residual powers under UK constitutional law (known as “prerogative powers”) to notify the UK’s withdrawal from … Read more

No Country Left Behind: History Complicates Efforts to Harmonize Global Regulation

The European Union (EU) enacted a series of regulations in the early 2000s to improve the financial markets of member states. While the new regulations were formally the same across the EU, member countries must individually implement, supervise, and enforce them. Our paper, recently published in the Review of Financial Studies and available here, uses this situation to estimate the causal effect of securities regulation on market liquidity and also to examine how prior conditions, implementation, and enforcement affect the results of new regulation.

In our study, we examined the liquidity effects of two EU directives on securities regulation. … Read more

Ropes & Gray Offers Update on Brexit and European Data Protection

Following the “Leave” result of the United Kingdom’s referendum on its membership in the European Union, there has been uncertainty regarding the implementation of the General Data Protection Regulation (GDPR) due to come into effect on 25 May 2018. Our report on the GDPR explains the key changes to Data Protection Law.

On 24 October 2016, the Secretary of State for Culture, Media and Sport, Karen Bradley MP, confirmed that the UK will still be in the EU in 2018 and will be opting-in to the GDPR. As a result, businesses collecting or using personal data while providing goods or … Read more

Shearman & Sterling discusses Brexit: a Financial Free Zone Within the City

The UK Government recently indicated that it intends to negotiate a unique EU-UK relationship post-Brexit. It is hoped that the arrangements will be appropriate for the UK and London’s position as a leading international financial centre. A number of existing models have been discussed and will no doubt be analysed, with variations, by the Government. This client note sets out a framework for new opportunities which could be developed in the UK post-Brexit, by establishing a “financial free zone” in London. This would enable the UK to take a bifurcated approach to financial services post-Brexit. The UK as a whole … Read more

Skadden Contrasts English And Delaware M&A Law

Skadden and Erskine Chambers recently hosted a series of comparative corporate law events in conjunction with the University of Pennsylvania Law School; Queen Mary University of London School of Law; New York University School of Law; Wachtell, Lipton Rosen & Katz; Slaughter and May; Morris, Nichols, Arsht & Tunnell; and Richards, Layton & Finger.

The mock trials held at Inner Temple, London, offered new insights into contrasting English and U.S. advocacy and judicial opinions on complex cross-border M&A issues. Arguments were made by Richards, Layton & Finger partner Greg Williams and Morris, Nichols partner Bill Lafferty for the Delaware mock … Read more

Kirkland & Ellis Discusses Russia Sanctions Developments

The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) has significantly expanded the number of entities and individuals subject to Russia sanctions and separately censured U.S. insurance and financial institution entities for failing to keep current with OFAC’s sanctions list to prevent transactions with sanctioned parties. Economic sanctions continue to evolve as political situations change in the comprehensively sanctioned jurisdictions of Cuba, Crimea, Iran, North Korea, Sudan and Syria, as well as in countries targeted by more limited but often more complicated sanctions such as those relating to Russia, Burma/Myanmar and many other countries. The recent actions by OFAC … Read more

Gibson Dunn offers 2016 Mid-Year Transnational Litigation Update

Earlier this year, Gibson Dunn published the latest installment of its annual Transnational Litigation Update.  See 2015 Year-End Transnational Litigation Update (February 17, 2016, accessible here).  This Mid-Year Update expands on certain key issues addressed by the 2015 Update, including recent case law related to general jurisdiction, the application of United States statutes to extraterritorial conduct, and cross-border discovery.  This Update also details Chevron’s decisive victory in the U.S. Court of Appeals for the Second Circuit against the perpetrators of an extortionate scheme against the company involving a multibillion-dollar Ecuadorian judgment, a scheme the Wall Street Journal characterized as … Read more