Moreover, the Court was not prepared to base the presumption that a bank that lends money, whether in a syndicated loan or otherwise, must consider that it can take legal action to recover its money. If this had been a clear intention of the parties, they could have made that clear in the documents, but they did not. Provided that lenders have used their debts only through the collective enforcement mechanism, except in cases of illegality, change of control or other explicit rights of an individual lender to be reimbursed under the De Charmway Agreement. One of the main arguments put forward by minority lenders was that the ease-of-access agreement to grant a lender`s ease of access could take legal action, independently of other lenders, on the debts earned against it. Lenders attempted to rely on clause 2.2 of the Facility Agreement (“Rights and Obligations of The Financing Parties”) to support this argument. While the aforementioned problems are not only in the Asian syndicated lending market, Asia has only slowly developed market practices for these issues relative to the rest of the world. With the recent release of the facilities agreements, the Asian syndicated credit market is expected to quickly catch up with the LibOR Transition Highway. Advice to market participants who are considering entering into business with their Asian counterparts – close up! One of APLMA`s main areas of activity has been the creation, promotion and regular updating of standard documents for syndicated lending operations in APAC markets, and APLMA now has a wide range of credit documents subject to English, Hong Kong, Australian, Singaporean and Taiwanese legislation. These documents are the market standard in most jurisdictions in the APAC region and considerable effort is being made in the ongoing verification and update process to ensure that THE APLMA documents reflect best market practices and ongoing regulatory changes. The Charmway case raises the importance of clear language in syndicated lending contracts with respect to the individual rights of lenders.
APLMA is a professional (not-for-profit) trade association that represents the interests of institutions active in syndicated credit markets in the Asia-Pacific region. Its priority is to promote growth and liquidity in the syndicated credit markets (primary and secondary) that it strives to achieve by defending the best market standards and practices; Maintaining a number of highly professional standard documents; cooperation with regulators on key market issues; Organising conferences and knowledge exchanges in Member States; and the provision of a professional network platform for members from across the region. As a result, the LMA recently proposed amendments to the development of “financial parties rights and obligations” clauses to dispel any doubts, and this amendment was supported by THE APLMA. Lenders and their advisors should carefully consider the proposed wording and consider whether it (or any other language) should be included in their syndicated credit contracts.