Governed by English law and designed for non-US central counterparties (CCPs), the 2017 ISDA/FIA Cleared Derivatives Execution Agreement – or “CDEA” – is a template that participants in the cleared swaps markets can use to negotiate execution-related agreements for swaps intended to be cleared.
The bodies behind the CDEA are the Futures Industry Association (FIA) and the International Swaps and Derivatives Association, Inc.
The document was developed with the help of a committee consisting of representatives from buy-side as well as sell-side firms with expertise in both futures and OTC derivatives.
Is a process agent service essential for agreements based on the CDEA?
A question that is commonly asked about the CDEA is whether transactions based on this framework need to involve a UK-based process agent being appointed.
The short answer to this question is that there is no blanket requirement for all parties using the CDEA template to ensure a process agent service is used when they come to an agreement.
However, the approach that is ultimately taken will depend on the specific circumstances – not least the jurisdictions of the parties to a given transaction.
Process agents in the UK play a crucial role in all manner of contractual arrangements
Before we proceed further in relation to the CDEA in particular, it is worth reminding ourselves exactly what a process agent is.
A process agent – also sometimes referred to as a “registered agent” or an “agent for service of process” – is a representative appointed to receive legal documents, such as court papers or notices, on a company or individual’s behalf.
It tends to become particularly important for a process agent to be appointed, in situations where the prospective parties to an agreement are not based in the same jurisdiction.
If, for instance, one party to a transaction is situated in the UK and the other party is based outside of the UK, if the non-UK party has agreed to appoint a UK-based process agent at the outset of the contract, this will make it easier for the UK-based party to take legal action later, in the (hopefully unlikely) event of this being required at some stage.
So, in what circumstances does the appointment of a UK process agent become necessary under the CDEA?
A relatively “obvious” example of a situation in which a UK process agent service would not be required for an agreement based on the CDEA, would be if both parties have a registered office in the UK. In such a scenario, a given party’s UK address can be used for service of process.
Alternatively, it may be the case that one or both parties to a CDEA transaction are based outside of the UK. If so, and bearing in mind that the contract is based on English jurisdiction, the appointment of a UK process agent will be a standard requirement. In addition, the agreement itself may incorporate a clause stipulating the appointment of a UK-based process agent to allow for the efficient serving of legal documents at the process agent’s address.
Remember: under English court procedure rules, service at the address of the counterparty’s UK-based process agent would constitute proper service.
It is important to reiterate that where a process agent needs to be appointed, this is not a requirement imposed by the CDEA template itself. Ultimately, it will be the need to adhere to the relevant court procedural rules under the applicable local jurisdiction that will dictate whether a process agent service becomes necessary.
If you are in any doubt, please don’t hesitate to contact us
To discuss the relevance of a process agent service like ours to an agreement that you are looking to enter – perhaps because you have been told by the other party that you agreeing to the appointment of a process agent will be necessary – please don’t hesitate to contact London Registrars.
When you do so, we will also be pleased to provide you with a quote for our comprehensive and cost-effective service as an agent for service of process.