Linklaters has announced that it supported the International Swaps and Derivatives Association (ISDA) in the drafting of a new Indonesian law netting opinion. The ISDA Indonesia netting opinion clarified the validity and enforceability under Indonesia law of close-out netting under the ISDA Master Agreements, marking a milestone for Indonesia to become a clean netting jurisdiction.
The new opinion follows from the publication of the the Law No. 4 of 2023 on Financial Sector Development and Reinforcement (“PPSK Law”), an omnibus law that aims to strengthen and provide clarity to the financial sector notably the increased clarity on close-out netting and The Suspension of Debt Payment Obligations and Bankruptcy procedures.
Building on prior work done by ISDA, Linklaters and Widyawan & Partners have sought to strengthen the analysis around close-out netting and bank resolution and provided clarity as to the types of derivative transactions covered by the PPSK law.
The cross-jurisdictional team comprised Jakarta-based partner Adrian Pranata and associate Putri Meisita Kusuma from Widyawan & Partners, Linklaters’ formal association firm in Indonesia, and Hong Kong SAR-based partner I-Ping Soong from Linklaters.
Adrian Pranata, partner at Widyawan & Partners, commented:
“We were delighted to draft the new Indonesia law netting opinion for ISDA, which is a welcome addition to ISDA’s opinion library. Looking at Indonesia’s new omnibus law through the lens of derivatives, the complexity arises from adapting these reforms within the context of derivative markets while ensuring compliance with global standards, which is crucial for maintaining legal certainty and operational efficiency for transactions involving ISDA members and other stakeholders.”
I-Ping Soong, partner at Linklaters, added:
“We are always thrilled to support ISDA in navigating new frontiers of derivatives laws and regulations to promote the standardisation of derivatives documentation. The ISDA Indonesia netting opinion joined the other opinions that Linklaters’ global teams have worked with ISDA on across jurisdictions, including Hong Kong SAR, Japan, the UK and Germany.”
Linklaters has long been the principal counsel of ISDA in key Asian jurisdictions. Apart from drafting the netting opinions, Linklaters has provided a range of specialised opinions to ISDA, including on IM/VM implementation, Type 11 regulation, sanctions planning, electronic contracts and on both principal and agency model clearing. Linklaters has recently participated in the drafting of the ISDA Digital Asset Definitions, the 2022 ISDA Voluntary Carbon Credit Transactions Definitions and the clause library project for Sustainability-Linked Derivatives.
About Linklaters LLP
Linklaters LLP is a leading global law firm, advising the world’s leading companies, financial institutions and governments on their most important and challenging transactions and assignments. We combine legal expertise with a collaborative and commercial approach to help clients navigate constantly evolving markets and regulatory environments, pursuing opportunities and managing risk worldwide. With offices in major business and financial centres, we deliver an outstanding service to our clients anywhere in the world. Our 3,100 + lawyers, located across 31 offices in 21 countries, specialise in industry sectors as well as practice areas across three divisions: Corporate; Litigation, Arbitration and Investigations; and Finance.
