2006 Fiscal Year Final Research Report Summary
"Collective Settlement and Applicable Law of Credit in International Finance Contracts"
| Project/Area Number |
16330010
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| Research Category |
Grant-in-Aid for Scientific Research (B)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
International law
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| Research Institution | Osaka University |
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Principal Investigator |
NOMURA Yoshiaki Osaka University, Osaka School of International Public Policy, Professor, 大学院国際公共政策研究科, 教授 (20144420)
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| Co-Investigator(Kenkyū-buntansha) |
MORISHITA Tetsuo Sophia University, Graduate school of Law, Assistant professor, 法学研究科, 助教授 (80317502)
KUBOTA Takashi Waseda University, school of law, Professor, 大学院法務研究科, 教授 (50311709)
KOZUKA Souichiro Sophia University, Graduate school of Law, Professor, 法学研究科, 教授 (30242085)
DOGAUCHI Hiroto University of Tokyo, Graduate schools of Law and Politics, Professor, 大学院法学政治学研究科, 教授 (40155619)
TAZAWA Motoaki Meijyo University, Faculty of Law, Professor, 法学部, 教授 (20281751)
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| Project Period (FY) |
2004 – 2006
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| Keywords | International Finance / Financial Contract / Syndicated Loan / Contract Law / Trust / Mandatory Rules / Applicable Law / International Private Law |
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| Research Abstract |
In the collective settlement of credit in international finance contracts, problems can arise in both syndicate loans (including loan partitions) and public bond contracts (bond issuance). In syndicate loans, creditors/lenders can be split into two categories: arranger and agents, and general lenders i.e. general financial institutions.
According to UK case law, arranger banks are recognized to owe fiduciary duties as the leading bank to the assignees of syndicate loan credit. The reason why these duties cannot be recognized in regards to bonds is due to the existence of legal regulations such as information disclosure provisions and the Securities Law. Next, in regards to agent banks, a conflict of interest occurs when agent banks share a transactional relationship with the borrower. The validity of the exemption clause becomes an issue. Although Article 710 of the Corporate Law of Japan (Article 311-2 of the Commercial Code) stipulates the responsibilities of the commissioned companie
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s for bondholders, a comparison is needed in regards to the responsibilities towards other lenders of the agent.
In regards to the collective settlement of credit, the limitation on majority vote becomes an issue. If the majority of creditors exercise their authority in good faith, then even if it results in a loss of profit to the minority due to a change in contract, this exercise of authority by the majority will not be considered inappropriate.
Compared to a non-partitioned loan, when a loan is partitioned the relationship with the borrower becomes complex. Especially in regards to the confidentiality of the borrower's information, the disclosure of information to funds and undertaking enterprises becomes an issue in relation to the breach of the duty of explanation. This relationship has yet to be adequately examined.
In Japan, there is no model contract that suits a syndicate loan contract. Further work is needed to develop a "Model Contract" based on the standardization of syndicate loans. Taking the relationship with the currency market into consideration, the acceptability of the present state of corporate bond regulations also needs to be questioned. Less
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