Swiss loans may struggle with Libor transition, warn lawyers

Lack of standardisation means fallback clauses may be unable to handle move to Saron

Photo of Swiss franc

Fallback provisions in legacy Swiss floating-rate loan contracts may not be robust enough to handle a move away from the Libor benchmark after 2021, lawyers have warned, which could see local courts decide whether the replacement rate is applicable on a case-by-case basis.

“My view is that those provisions will not be effective to address the switch to a new rate and would have to go back to general principles and move to the Swiss Code of Obligation,” said Thomas Werlen, a Swiss-based partner

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