French Monetary and Financial Code
In forceI. - Provided that the guarantee or payment and financial instrument delivery obligations under the contract continue to be performed, the resolution college may suspend the termination rights of any party to a contract entered into with:
1° A person referred to in I of Article L. 613-34 subject to a resolution procedure ;
2° A subsidiary of the person mentioned in 1° when the following conditions are met:
a) Performance of the obligations under the contract is guaranteed by that person ;
b) The termination rights provided for in the contract may only be exercised in the event of the insolvency of that person or a deterioration in its financial situation;
c) In the event that the assets, rights or obligations of that person have been transferred or are likely to be transferred:
- either all the assets and liabilities of the subsidiary relating to that contract have been or may be transferred to the acquirer and the obligations arising therefrom shall be performed by the acquirer ;
- or the measures taken by the resolution college enable these obligations to be performed.
The suspension takes effect from the publication of the notice of suspension referred to in III of Article L. 613-58 and ends at midnight on the business day following such publication. When it concerns the parties to a contract concluded by a subsidiary established in another Member State of the European Union, the term of the suspension is determined according to the working days in that State and local time.
When deciding to suspend termination rights, the resolution college shall take into account the possible impact of this decision on the orderly functioning of the financial markets.
No suspension of termination rights shall apply to the systems mentioned in I of Article L. 330-1 or their managers, central banks, or central counterparties within the meaning of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012.
II. - Subject to the provisions of Articles L. 613-45-1 and L. 613-50-4, termination rights that have been suspended pursuant to I may be exercised upon expiry of the suspension period under the following conditions:
1° Where the rights and obligations arising from the contract have been transferred to another entity, a person acting as counterparty may exercise the termination rights in accordance with the terms of the contract only in the event of the continuation or subsequent occurrence of an event constituting an event giving rise to termination of the contract;
2° Where the person referred to in 1° of I retains the rights and obligations arising from the contract and the resolution college has not implemented internal bailout measures pursuant to 1° of I of Article L. 613-55, a person having the status of counterparty may exercise termination rights in accordance with the terms of this contract.
III. - By way of derogation from I and II, a person may exercise a right of termination provided for in a contract before the expiry of the suspension period referred to in I if the resolution college advises it that the rights and commitments resulting from this contract are not transferred to another entity or are not likely to be the subject of an internal bail-out measure pursuant to 1° of I of Article L. 613-55.
IV. - A decision taken under II of Article L. 613-56-2 or Article L. 613-56-4 does not constitute a contractual breach of the guarantee or payment and financial instrument delivery obligations mentioned in I.
