# Britain aims for global leadership role with AI safety summit Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-02-05 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Britain Hosts Global AI Safety Summit to Shape Post-Brexit Meta Description: Britain leads the way in AI regulation post-Brexit, aiming to ensure safety and international cooperation in the tech sector. Join the conversation with global URL: https://financedigest.com/britain-aims-for-global-leadership-role-with-ai-safety-summit-2html ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/1-7-1737287546826-compressed.jpg) _By **Robert Peat,** Consultant, D2 Legal Technology_ On 1 December 2020 ISDA published a high-level overview of certain considerations regarding contractual arrangements between EU/EEA-based counterparties and contractual arrangements governed by the law of an EU/EEA Member State in the light of the UK’s exit from the EU (“ **Brexit**”). The implications of Brexit will clearly have an obvious impact on many areas of the financial sector. This includes the [analysis conducted for regulatory](https://www.financedigest.com/analysis-rbc-tightens-grip-at-home-with-10-billion-hsbc-canada-bid-regulatory-risks-loom.html "Analysis-RBC tightens grip at home with billion HSBC Canada bid, regulatory risks loom") capital purposes through close-out netting legal opinions. Many, if not all, EU jurisdiction legal opinions will be impacted to some extent by Brexit’s impact on contractual arrangements. More specifically, ISDA focussed on outlining the impact on Directive 2002/47/EC (“ **Financial Collateral Directive**”) and Article 30 of Directive 2001/24/EC (the “ **Winding Up Directive**”) of Brexit.(1)(2) To a lesser extent, the impacts of Brexit on Article 16 of Regulation (EU) 2015/848 (“ **EIR Recast**” **)** and Directive 2014/59/EU (“ **BRRD**”) were also considered.(3)(4) All these EU legislative instruments provide certain benefits with respect to contractual relations between EU/EEA counterparties and relationships governed by the law of an EU/EEA Member State. **Bank Recovery and Resolution** BRRD entered into force in January 2015 and set out a common framework for recovery and resolution of [credit institutions and investment](https://www.financedigest.com/more-businesses-investing-in-assets-like-virtual-credit-cards.html "More Businesses Investing In Assets Like Virtual Credit Cards") firms within the EU. At its centre, BRRD allows regulatory and resolution authorities to protect critical functions of a large, failed credit institution by forcing [creditors and shareholders to bail-in the credit institution’s debt](https://www.financedigest.com/sri-lanka-to-unveil-debt-restructuring-plan-to-creditors.html "Sri Lanka to unveil debt restructuring plan to creditors"). Additionally, it requires credit institutions to draft [recovery and resolution plans](https://www.financedigest.com/worker-shortage-jeopardises-spains-eu-funded-recovery-plan.html "Worker shortage jeopardises Spain’s EU-funded recovery plan") to overcome liquidity stress situations and if required, ensure an orderly resolution if the institution fails. For BRRD, the [impact of Brexit is clear](https://www.financedigest.com/impact-of-new-cheque-clearing-system-discussed-at-leading-seminar.html "Impact of New Cheque Clearing System Discussed at Leading Seminar ") and consistent. BRRD [sets out the requirement that where an agreement is governed](https://www.financedigest.com/factbox-uk-government-sets-out-priorities-in-queens-speech.html "Factbox-UK government sets out priorities in Queen’s speech") by the law of a ‘third country’ (non-EU/EEA law) the contractual language must contain a bail-in clause. Therefore, any agreements governed by English law would, following Brexit, be required to include this language. **Recast European Insolvency** The EIR Regulation built on and enlarged an earlier EU framework on recognition of insolvency proceedings and serves to ensure that an insolvency proceedings started in one EU member state, is without formality, recognised in all other EU member states (excluding Denmark). It aims to ensure efficient cross border insolvency proceedings and to avoid parties [shifting assets](https://www.financedigest.com/how-to-best-protect-assets-following-major-global-shifts.html "How to Best Protect Assets Following Major Global Shifts") or proceedings across EU member jurisdictions to obtain more favourable treatment. Article 16 establishes an EU/EEA Member State requirement to create an exemption for detrimental acts. The impact of Brexit for the EIR Recast Regulations is mixed. In many instances, EU/EEA Member [States have not passed](https://www.financedigest.com/india-to-hold-one-day-state-mourning-on-passing-away-of-queen-elizabeth.html "India to hold one day state mourning on passing away of Queen Elizabeth") domestic legislation supplementing EIR Recast. This means that any person claiming an exemption in connection with a detrimental act, must show that the act is governed by the law of an EU/EEA Member [State and that this law does not allow any means of challenging the enforceability of the legal](https://www.financedigest.com/u-s-abortion-ruling-ignites-legal-battles-over-state-bans.html "U.S. abortion ruling ignites legal battles over state bans") act in question. ISDA’s publication [notes several jurisdictions where additional](https://www.financedigest.com/the-animal-feed-additives-market-to-simulate-on-a-stupendous-note.html "The Animal Feed Additives Market To Simulate On A Stupendous Note") considerations need to be accounted for. Markedly, Portugal does not require the law [governing the detrimental act](https://www.financedigest.com/factbox-governments-act-to-ease-inflation-pain.html "Factbox-Governments act to ease inflation pain") to be an EU/EEA Member State’s law. In Germany, the EIR Recast Regulation means that if the relevant assets are in an EU/EEA Member State, the opening of insolvency proceedings shall not affect the rights in rem of creditors or third parties in respect of tangible or intangible, moveable or immoveable assets belonging to the debtor which are situated within the territory of another Member State at the [time of the opening](https://www.financedigest.com/isnt-it-time-open-banking-delivered-for-businesses.html "Isn’t It Time Open Banking Delivered for Businesses?") of proceedings. Evidently with Brexit, in most circumstances EIR Recast will no longer enable the challenge of detrimental acts or their voidability on the basis that such an act was governed by English or Scottish law. **Winding Up Directive** The Winding Up Directive was created to ensure that a credit institution and its branches in other EU/EEA Member States are reorganised or wound up according to the principles of unity and universality. As such, the effect is aimed at ensuring there will only be one set of insolvency proceedings to which a credit institution is subject to and under such proceedings it will be treated as a single entity. Similar to EIR Recast, the Winding Up Directive allows for the disapplication of rules around voidness or unenforceability of legal acts detrimental to the creditors as a whole where such acts are subject to laws of other EU/EEA Member States. ISDA [notes that in the majority of Member States the effects](https://www.financedigest.com/the-npwt-suction-pads-market-to-grow-on-an-effective-and-accessible-note-backed-by-innovation.html "The Npwt Suction Pads Market to grow on an effective and accessible note backed by innovation") of the Winding Up Directive are limited to the laws of other Member States (with variation on whether this extends to both EEA and EU Member State laws). In these cases, jurisdictions are mixed in their approach, either applying the Winding Up Directive directly from EU law or transposing it with certain conditions. However, certain jurisdictions do not require a nexus to EU/EEA Member State law. Germany, for example, through Section 339 German Insolvency Code, does not limit the non-avoidance privilege to the law of Member States. In the Netherlands, the Dutch Bankruptcy Act draws distinctions for the types of protection offered and [applicable processes](https://www.financedigest.com/things-mortgage-lender-takes-into-account-when-processing-an-application.html "Things Mortgage Lender Takes Into Account When Processing an Application") based on whether the act was governed by EU/EEA or non-EU/EEA Member State laws. Clearly, the impact of Brexit on the Winding Up Directive will be very specific to the jurisdiction in question with the greatest impact being in jurisdictions which require an EU/EEA Member law nexus. **Financial Collateral Directive** Finally, the Financial Collateral Directive aimed to simplify the [process](https://www.financedigest.com/gary-mcgaghey-explains-how-cfos-can-strengthen-decision-making-processes-and-reimagine-the-finance-model.html "Gary McGaghey Explains How CFOs Can Strengthen Decision-Making Processes and Reimagine the Finance Model") for creating and enforcing financial collateral. The primary aim was harmonising the status of financial collateral arrangements [across](https://www.financedigest.com/open-finance-can-help-unlock-innovation-across-the-financial-ecosystem.html "Open Finance can help unlock innovation across the financial ecosystem") the EU. It additionally had the beneficial impact of ensuring the recognition of close-out netting for derivatives master agreements where there was a form of financial collateral arrangement in place. The Financial Collateral Directive provides significant [benefits](https://www.financedigest.com/the-four-benefits-of-digital-transformation-in-the-finance-industry.html "The Four Benefits of Digital Transformation in the Finance Industry") to contractual netting relationships where conditions are met. At an EU level, Article 1 of the Financial Collateral Directive requires the parties to belong to a stated category but there is **no** requirement in many EU/EEA Member States that each party be domiciled in the EU/EEA. Nevertheless, in Germany, the law is unclear on whether it includes collateral arrangements with non-member state collateral receivers and in Romania there is a more complex interpretive exercise to conduct against substantive Romanian law. Hence, while Brexit will seemingly have a minimal impact there may perhaps be some occasional complications. **Conclusion** Whilst the majority of the world understood Brexit to have been a relatively closed book from 1 January 2021, there is much excitement to come for law [firms due to the expected](https://www.financedigest.com/german-engineering-firms-expect-hit-from-supply-chain-bottlenecks-next-year.html "German engineering firms expect hit from supply chain bottlenecks next year") changes in the analysis regarding close-out netting legal opinions. Not unlike many other aspects of Brexit, we certainly believe there are stimulating developments to come as these new legal opinions are produced and reviewed by institutions. A more [detailed analysis](https://www.financedigest.com/automotive-chrome-trim-products-market-industry-analysis-and-detailed-profiles-of-top-industry-players.html "Automotive Chrome Trim Products Market: Industry Analysis and Detailed Profiles of top Industry Players") of the implications of Brexit with respect to each of these regulations can be found in ISDA’s paper \[ [https://www.isda.org/a/UUfTE/ISDA-Opinions-and-Brexit-Overview-Table-011220.pdf](https://www.isda.org/a/UUfTE/ISDA-Opinions-and-Brexit-Overview-Table-011220.pdf)\]. 1. Directive 2002/47/EC of the [European](https://www.financedigest.com/stellantis-reshuffles-european-financing-operations-through-new-jvs-with-banks.html "Stellantis reshuffles European financing operations through new JVs with banks") Parliament and of the Council of 6 June 2002 on financial collateral arrangements. 2. Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions. 3. Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast). 4\. Directive 2014/59/EU establishing a framework for the recovery and resolution of [credit institutions and investment firms](https://www.financedigest.com/bnp-paribas-buys-majority-stake-in-dutch-firm-dynamic-credit-group.html "BNP Paribas buys majority stake in Dutch firm Dynamic Credit Group"). --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---