Equator Principles Financings – Mitigating Potential Legal Risks for Canadian Banks

Alison FitzGerald and Michael Torrance of Norton Rose Fulbright Canada discuss the legal risks for Canadian Financial Institutions associated with the recently revised Equator Principles (“EP”), whose third iteration (“EP III”) took effect on June 4th, 2013. The new EP appears to have caused little stir in the Canadian financial services sector or the legal community that serves it. The muted reaction might lead one to believe that EP III presents no significant legal risks for financial institutions (“FIs”). Alternatively, it may suggest that many of the risks inherent to the EP are poorly understood. This article looks at the EP framework and innovations to this framework adopted in EP III. We consider the potential legal risks presented by EP III for Canadian FIs and their clients, and offer some simple strategies to mitigate these risks.

New Sustainability Rules Requiring Legal Strategy Rethink

This article considers the legal implications of new rules of the recently revised Equator Principles (EP), whose third iteration (“EP III”) took effect on May 14th, 2013. The Equator Principles is a framework agreed upon by 79 global financial institutions to identify, assess and manage environmental and social risk in certain types of financings around the world.  The goal is to provide an overview of the EP III with discussion of steps that counsel to EP Financial Institutions (EPFI) might consider to minimize potential legal risks and update contractual documentation.

Managing Lender Liability in Equator Principles Implementation - Third Party Beneficiary Rights in Contract Law

I read an interesting and provocative journal article by Marissa Marco, published in the Fordham International Law Journal in 2011, entitled "Accountability in International Project Finance: The Equator Principles and the Creation of Third-Party Beneficiary Status for Project-Affected Communities".  The article discusses the law on third party beneficiary rights under US contract law and considers whether the provisions of the Equator Principles (EP) relating to Affected Communities might create enforceable rights for those communities under those principles.

This article will discuss this issue and suggest a risk management strategy for EP Financial Institutions (EPFI - i.e. EP signatories) addressing and managing such risks in Equator Principles implementation.