Jurisdiction refers to the legal system that governs the securitisation transaction. The jurisdiction of the securitisation transaction is important because it determines the laws that will apply to the transaction, such as the laws governing the formation of contracts, the enforcement of security interests, and the bankruptcy of the parties involved.
The choice of jurisdiction for a securitisation transaction is a complex decision that should be made on a case-by-case basis. Some factors that may be considered in making this decision include:
- The location of the underlying assets: If the underlying assets are located in a particular jurisdiction, then it may be beneficial to choose that jurisdiction for the securitisation transaction. This is because the laws of that jurisdiction will be familiar to the parties involved and the assets may be more easily protected in that jurisdiction.
- The laws of the jurisdiction: The laws of the jurisdiction should be considered when choosing a jurisdiction for the securitisation transaction. Some jurisdictions have laws that are more favourable to securitisation transactions than others. For example, some jurisdictions have laws that provide for a high level of investor protection, while other jurisdictions have laws that allow for more flexibility in the structuring of securitisation transactions.
- The cost of doing business in the jurisdiction: The cost of doing business in the jurisdiction should also be considered when choosing a jurisdiction for the securitisation transaction. Some jurisdictions have higher costs than others, such as higher taxes or regulatory fees.
The jurisdiction of the securitisation transaction is an important factor that should be considered when structuring and documenting the transaction. The choice of jurisdiction can have a significant impact on the legal rights and obligations of the parties involved, as well as the enforceability of the transaction.