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Contracts, counterparties and other legal issues in the eurozone

The complicated legal issues arising from changes to the eurozone would be many and varied, with the outcome in some areas likely to come down to the wording of individual corporate contracts. On this page you can find a selection of articles and guides which highlight the potential danger lurking in existing contracts and agreements along with suggestions of key areas that companies should review.

UK Government

The Department for Business, Innovation & Skills and HM Treasury have published guidance for businesses who may be affected by the introduction of capital controls and its impact on contracts, payments and supply chains.

The guidance includes sources of support available from the government, ranging from HMRC support for businesses affected by cash flow difficulties to help with insurance for exports to Greece.

Guides and publications

A number of top international law firms have produced client briefings, checklists and guides that provide more detail on potential legal issues for companies in scenarios ranging from the introduction of capital controls to a Eurozone exit. Links to a selection of these guides can be found below.

Eurozone Bulletin: Legal implications of the Greek debt crisis
Linklaters, 30 June 2015
A fifteen page briefing from Linklaters which analyses the Greek capital controls, discusses the impact the Greek measures may have on contracts and looks at the issues surrounding potential payment defaults by the Greek government.

The Eurozone crisis: corporate briefing
Hogan Lovells, June 2015
Briefing from international law firm Hogan Lovells which highlights some key legal issues that businesses might face in the event of a country exiting the euro. Areas covered by the guide include:

  • Impact on business structure, cash flow and trading operations
  • How to identify contracts at risk of redenomination
  • The 'ripple effect' - dealing with wider risk issues
  • The impact on mergers and acquisitions and joint ventures
  • Indicative overview of key risks to be considered by businesses

Greek financial crisis – what next?
Allen & Overy, June 2015
Briefing note from Allen & Overy which includes a section looking at how the imposition of capital controls could affect commercial agreements.

The euro area and capital controls
Clifford Chance, 29 May 2015
A briefing from Clifford Chance which considers the implications of capital controls, whether in the context of a default or a departure from the euro area. In particular, the authors look at how capital controls could affect a party's ability to enforce its contractual rights.

Greece three years on
Clifford Chance, 29 May 2015
Client briefing from Clifford Chance which considers the new scenarios introduced by the change in circumstances since 2011-12 with a recommendation that contingency plans should be updated to take account of these.

Clifford Chance have also produced a series of additional briefings which include their updated answers to key questions concerning a potential Greek exit from the euro, which touch on the implications of the more intermediate possibilities of sovereign default and imposition of capital controls:

The Eurozone crisis: checklist of issues for finance documentation
Hogan Lovells, January 2015
A short briefing from international law firm Hogan Lovells which looks at the impact of a member state departure on euro denominated loans, bond documentation and derivative transactions with suggested actions/points to review. The publication also considers what would happen if an obligor in a departing member state was unable to comply with its obligations.

Sovereign default, bank default, eurozone exit and related issues: is your business prepared?
Slaughter & May, July 2012.
A 60 page practical guide to eurozone contingency planning and legal risk management from Slaughter and May, published in July 2012. The publication includes a sample legal due diligence checklist.

The euro: the ultimate crib
Allen & Overy, July 2012.
A summary paper from Allen & Overy which provides a summary of the legal risks associated with a breakup of the currency union, including the approach that might be taken for due diligence on counterparties.

Eurozone bulletin – updating contingency plans
Linklaters, June 2012 Bulletin from Linklaters which presents an overview of the key risks to consider in relation to a potential eurozone exit.

International contracts and the Eurozone crisis
Ashurst, January 2012
A short publication from international law firm Ashurst which is intended to help parties to international contracts and securities analyse their exposure and consider steps which could mitigate key legal risks.

Potential break-up of the Eurozone: overview of tax implications
PWC, January 2012.
The possibility of a Eurozone break up is considered in this article from PWC, focusing on the tax implications that might arise from contractual changes.

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