The Association of Financial Markets in Europe has published the Model clause for the contractual recognition of bail-in under Article 55 BRRD (the Model Clause).
Article 55 of the Bank Recovery and Resolution Directive (BRRD) requires European banks and large investment firms to include contractual recognition clauses in a broad range of contracts governed by non-EU law. The intention is to ensure that in the event that the bank is placed into resolution and a bail-in is conducted, this would be effective in respect of liabilities governed by foreign law. The requirements of Article 55 come into effect from 1 January 2016 at the latest.
The Model Clause, which is intended for UK issuers of New York governed debt securities subject to the requirements of Article 55, is intended to help ensure the cross-border effectiveness of resolution and provide banks and counterparties with model drafting to assist with the significant challenges of implementation.