It is starting to feel as if we are nearing the end of a long climb, in fact the end of a long period of uncertainty, for financial institutions and businesses alike, on how to deal with LIBOR transition. Having to keep an eye on regulators' statements, legislation, market developments and a large number of publications and webinars from trade bodies, takes quite an effort and indeed a considerable amount of time, not least when parties are also dealing with the economic fallout of the pandemic and trying to keep trade going. So, are we nearly there?

By Amanda Montano, associate, and Stefan Bateson, trainee

At the latest Trade & Export Finance webinar, Geoff Wynne, head of the Trade & Export Finance Group and Sullivan's London office, gave a whistle-stop tour of recent developments in digital options available in trade finance, including the multi-jurisdictional efforts to recognise electronic transferable records.

By Jacqueline Cook, Senior Knowledge Development Lawyer

Following much anticipation, the Alternative Reference Rate Committee (ARRC) has announced its official recommendation of the CME Group’s forward-looking Secured Overnight Financing Rate (SOFR) term rates (SOFR Term Rates). Market participants should now have "all the tools"[1] needed to transition to US dollar (USD) SOFR.

Earlier this week, ARRC issued two press releases:

• publishing (a) conventions for SOFR Term Rates and (b) best practice recommendations for the use of SOFR Term Rates, and announcing the SOFR First Convention switch for USD linear swap trading;[2] and
• recommending CME Group SOFR Term Rates and publishing a factsheet on key steps and milestones for the LIBOR transition.[3]

ARRC’s announcement has been welcomed as "an important milestone for the industry and the continued development of the broader SOFR ecosystem."[4]

By Amanda Montano, Associate, and Raghav Vohora, Trainee

This blog post is the second instalment of our two-part series covering our June 2021 Trade & Export Finance Webinar, "Payments, Problems and Practical Solutions for Trade and Export Finance Transactions".

Following on from our recent coverage of the Revlon loan dispute[1], we briefly consider the nature of payments, as well as the consequences of making an erroneous or late payment. We also address the ways in which parties risk payments being diluted by virtue of forces beyond their control or as a result of common contractual provisions.

Few cases in recent memory have stirred up as much concern and controversy in the syndicated loan market—on both sides of the Atlantic—as the Revlon case.[1] The ruling of the New York federal court in Revlon was that the recipients of erroneous wire transfers made by Citibank N.A. (Citibank), acting in its capacity as administrative agent for a syndicated loan facility made available to Revlon, Inc., were entitled to keep almost $500 million of Citibank’s own money. This was notwithstanding the fact that Citibank had only intended to transfer $7.8 million in interest payments and not the $900 million or so that was actually transferred by mistake. Indeed, had it not been for some of the recipients returning the mistaken payment they received, Citibank’s losses could have been even more significant.

By Amanda Montano, Associate

Following Sullivan’s recognition as a Leader in Trade for Innovation by Global Trade Review (GTR) for recent contributions to the digitalisation of trade finance, this is an opportune moment to recap the progress that has been made in this space over the past 18 months.

The various local and global lockdowns forced by the COVID-19 pandemic, which no one could have foreseen at the beginning of 2020, have put the spotlight firmly on the challenges of operating a paper-based industry—such as is international trade finance—in the 21^st century and the practicalities of obtaining original documents (e.g. bills of lading and warehouse receipts) and wet ink signatures in a world where many are working from home. In considering how the industry has adapted, one thing has become clear—there is certainly scope to improve the manner in which trade transactions are conducted going forward.

By Jacqueline Cook, Senior Knowledge Development Lawyer

The uneasy rumblings in the media recently on whether the UK would be welcomed back by the European Union (EU) into the Lugano Convention family were confirmed on 4 May 2021, when the European Commission issued its 'Communication from the Commission to the European Parliament and the Council'[1] with its assessment on the application of the UK to accede to the 2007 Lugano Convention on the jurisdiction and recognition and enforcement of judgments (Lugano Convention). It recommended that the EU should not give its consent to UK accession. This communication has been met with disappointment by the legal profession[2] and characterised by the media as a political decision, rather than one based on common sense. However, there is room for hope — this is not quite the last chapter in the saga of the EU/UK relationship in the area of choice of court agreements, jurisdiction and judgments.

By Amanda Montano, Associate, and Theodora Okocha, Trainee

Although parties rarely consider dispute resolution provisions in any great detail at the contractual negotiation stage of a transaction, they should. Time spent on considering these issues at the outset will ultimately prove to be invaluable down the road should a dispute occur, saving time, costs and energy in the long run.

At the latest Trade & Export Finance Webinar, we looked at key considerations parties should take into account when opting for litigation versus arbitration and offered some practical tips to bear in mind for drafting dispute resolution provisions for your contracts.

By Amanda Montano, Associate and Andrew Thompson, Trainee

At the latest Trade & Export Finance webinar, partners Geoffrey Wynne and Sam Fowler-Holmes delved into the topic of receivables financing. Given the manner in which COVID-19 has impacted businesses’ cash flow and supply chains, financing receivables has, perhaps unsurprisingly, accelerated over the past year. With the recent fallout of Greensill, the ideal opportunity arose to discuss the nature of receivables finance, the challenges facing the industry and key factors in mitigating risks and achieving the benefits the industry has to offer.

By Jacqueline Cook, Senior Knowledge Development Lawyer

The end of March has welcomed Spring, and this year it marks a new era for the financial markets, particularly for loans and financial products which would usually use Sterling LIBOR as the benchmark for calculation of interest, default interest or to calculate a discount rate. After 31 March 2021, alternative rates or benchmarks should be used in place of Sterling LIBOR.