See also: Energy - Commodities and Derivatives
Jackson Walker has extensive experience representing foreign and domestic market participants in derivative transactions. We assist our derivatives clients in a broad range of practice areas, including currency swaps, interest rate swaps, physical and financial energy commodity trades, domestic and international tax issues, litigation, arbitration (or other forms of alternative dispute resolution) and bankruptcy. In addition to our considerable energy derivative experience, our attorneys are also well-versed in almost every other swap transaction, including interest rate and currency swaps and weather derivatives. Reflecting this expertise, Jackson Walker is nationally ranked for Derivatives & Futures Law by U.S. News – Best Lawyers "Best Law Firms."
Our clients in the derivatives practice include energy trading companies, bank lenders, borrowers, municipalities, domestic utilities, hedge funds, oil and gas producers, gas pipeline companies, electricity generators, retail gas and electric providers, and end users of energy commodities.
Although we have worked on matters involving proprietary contracts, most of our clients' derivative transactions are documented under the Master Agreement published by the International Swaps and Derivatives Association, Inc. (the "ISDA"). We have assisted clients in drafting their standard ISDA elections and revisions and in reviewing and successfully negotiating the terms of both the 1992 ISDA and the 2002 ISDA forms, including all ancillary documents such as (i) the Schedule; (ii) the Credit Support Annex; (iii) various commodity annexes, including the Gas Annex, Power Annex, Coal Annex, Crude Annex, and Emissions Annex; (iv) Credit Support Documents supporting the parties' obligations under the ISDA, such as letters of credit, guaranties, and first-lien credit facilities; and (v) Confirmations documenting the specified terms of each ISDA transaction.
Our attorneys are intimately familiar with the nuances of trading both physical and financial products under the ISDA and the disputes that can arise in such transactions. We have assisted large banks and hedge funds in negotiating financial transactions specifically designed to mitigate portfolio risk, such as commodity swaps, interest rate swaps, currency swaps, options and other derivative products. We also have assisted clients dealing in physical energy commodities who enter into purchase and sale arrangements under the various ISDA commodity annexes, such as natural gas, power, coal and emissions.
We are thoroughly familiar with the various credit structures that are commonly used to support a party's obligations under the ISDA. We routinely handle some of the more sophisticated transaction structures related to derivative transactions, including first-lien credit facilities, first-lien monetization of mineral interests, and natural gas prepay transactions.
We have seen firsthand how ISDA transactions and the commodities and financial markets are being tested in the courts and by regulatory agencies. This experience gives Jackson Walker the ability to counsel clients on ways to mitigate contractual risk, avoid or deflect potential litigation, and establish efficient procedures for dispute resolution by means of private arbitration and other alternatives to judicial resolution, particularly in international transactions. For example, our attorneys have considerable experience in representing creditors in various derivative-related bankruptcy proceedings, including the management of contracts (e.g., energy contracts, financial transactions and fuel supply contracts) during the pendency of the bankruptcy, the termination and liquidation of forward contracts and swap agreements, and the defense and settlement of claims. On behalf of its clients, Jackson Walker has confronted positions taken by bankrupt debtors on issues of industry-wide significance, such as the right to enforce the provisions of master netting agreements. Our team-based collaborative practice enables us to incorporate this firsthand experience with derivatives-related litigation, arbitration and bankruptcy proceedings into the wording of our clients' contracts – which mitigates future risks in their derivatives transactions.
In addition to negotiating ISDA agreements, we assist clients in creating aspirational ISDA forms that are specifically tailored to address client needs. During this collaborative process, we advise clients on aligning their goals under the ISDA with applicable commercial, credit and legal policies. Our attorneys work closely with in-house counsel, credit managers and commercial personnel to minimize risk and streamline the process of negotiating, executing and implementing ISDA transactions. We understand both the intricate details that make successful trading organizations work and the legal, regulatory and administrative challenges inherent in the energy market. This knowledge and experience have proven invaluable to our clients in developing ISDA documents that best serve their business objectives.
Because of our detailed knowledge of the ISDA and its supporting documents, our Energy Trading section has provided ISDA training seminars for various clients covering topics ranging from basic elements of the ISDA to advanced discussions in ISDA litigation and bankruptcy. Such training gives our clients a working knowledge and better understanding of the complexities of the ISDA, and also allows them to ask questions relating to specific ISDA forms and common issues that arise in negotiations. We also have published numerous articles and resources relating to the ISDA to help our clients better understand the agreement and mitigate trading risk.