Cross-Border Agreements and Closing Requirements
Cross-border agreements serve as the basis for international transactions involving parties from different jurisdictions. Forms of international agreements vary greatly from country to country, but a typical provision included in many international agreements is the appointment of an agent for service of process or commonly known as a “process agent.” The process agent designation may be included in the section of the agreement entitled “Consent to Jurisdiction,” “Governing Law” or some variation of those titles.
In addition to completing all the pre-closing issues, careful attention needs to be paid to the formal, but necessary, details required for completion of the transaction. These include, but are not limited to:
- execution of agreements and supporting documents across time zones
- obtaining required signatures
- correctly following multi-location closing procedures
- coordinating wire transfers through international banks
- ensuring that the process agent appointed for all required parties delivers its acceptance to serve as process agent
Types of Transactions that Require a Process Agent
Process agents are typically appointed as part of cross-border financial transactions involving commercial banks, sovereign states, multilateral lending agencies, export credit agencies and corporate entities.
A process agent appointment is often required in global transactions, including credit financing, aviation leasing/financing, debt/equity capital market offerings, Rule 144A, Regulation S offerings and private placements. Types of agreements that include the appointment of a process agent include Loan and Credit Agreements, ISDA Master Agreements, import/export financing agreements, Indentures, Stock Purchase Agreements, Intercreditor Agreements and others. In addition, a U.S. process agent is required to be named in certain SEC filings; for example, certain foreign registration statements such as SEC Forms F-1 to F-6 series and SEC Form F-X, which is filed concurrently with several SEC filings, including Form CB in connection with a tender offer, rights offering or business combination.
Choice of Law for International Agreements: New York and the United Kingdom (U.K.)
Parties to an agreement negotiate a choice of law clause that specifies that any dispute arising under the agreement shall be determined in accordance with the law of a particular jurisdiction. While the choice of law can vary depending on the country of origin of the parties to the transaction, New York and the U.K. are commonly chosen due to their established bodies of commercial law and precedents applicable to commercial agreements. Attorneys drafting international agreements often choose New York or U.K. law as the governing law even when the underlying transaction may have minimal contact with those jurisdictions.
The choice of either New York or U.K. law to govern an international agreement can be driven by the jurisdiction of the parties engaged in the transaction. For example, parties in Latin American countries often choose New York as the governing law for their cross-border transactions and parties in European countries frequently choose the U.K. In Asia, international agreements for transactions in Tokyo and Hong Kong may designate New York as the choice of law. In a transaction where there is a syndicate of lenders from varied global jurisdictions, the decision on choice of law will be negotiated among the parties.
For more details on the role of a process agent, who can act as one and steps to appoint a process agent, download the full text of this article.
Future blog postings and articles will include a discussion on what occurs when a process agent receives service of process, what happens if a process agent resigns, a discussion of who typically is responsible for engaging the process agent and other issues and considerations related to this important role in international transactions. Your comments and suggestions on what you would like to see included are welcome.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.