EU Bail-In Rules: How Do They Impact Canadian Borrowers?

As of January 1, 2016, financial institutions from the European Economic Area (EEA) — which includes member states of the European Union, Iceland, Liechtenstein and Norway — are subject to new requirements under Article 55 of the European Union (EU) Bank Recovery and Resolution Directive (2014/59/EU) (BRRD). Such financial institutions are now required to include — in contracts governed by the laws of a non-EEA country — contractual terms recognizing the "bail-in" powers granted to European regulatory authorities in the event of a failing EU financial institution (EU Bail-In Rules).

The scope of the EU Bail-In Rules is broad. As such, they may apply to a credit agreement or another finance document governed by the laws of a Canadian province and entered into by a Canadian borrower.