Paris – Dentons has advised the European Federation of Energy Distributors (EFET) and has published, on behalf of EFET members, French legal opinions on the applicability of certain provisions of the efET general agreements on the supply and acceptance of electricity and natural gas. THE EFET encourages competition, transparency and open access in Europe`s energy sectors. EFET agreements are used to document transactions between parties in different jurisdictions for the supply and acceptance of electricity and gas. The European Federation of Energy Traders (EFET) was established in 1999 and brings together more than 100 energy distributors in 27 European countries active in the wholesale electricity and gas market. The reason for its creation was the easing of restrictions on the electricity and gas markets in the European Union. The EFET agreement is a compensation-master contract that can cover an unlimited number of trades defined as «individual contracts.» Each contract includes the economic conditions of each trade (for example. B start and end date, delivery plans, contract capacity and quantity, price and total cost). EFET has commissioned legal opinions on the applicability of general power and gas agreements for many European countries, which are available to EFET members. The applicability of the general terms of sale of EFET in each country may vary according to local laws and customs. A list of countries and the cost of obtaining such legal advice are available on the EFET website (www.efet.org).
These standardized management contracts for the supply and receipt of electricity or natural gas offer a structure similar to that of master`s contracts for OVER-the-counter derivatives published by the International Swaps and Derivatives Association Inc. (ISDA). In any event, the general agreements set out the concept of a single agreement on the document at an early stage (point 1.1), which means that all transactions are interdependent and that a failure in a transaction is considered a default for all transactions covered by the agreement, as well as the promotion of regulatory measures allowing the free flow of electricity and gas in a balanced risk environment. EFET has also established standard legal documents for the energy trade. EfET contracts are generally processed by physical delivery different from the normal method of billing goods transactions under an ISDA management contract. The general agreement contains a number of standard conditions for delivery conditions, payments, delivery defects and completion. These conditions apply to any underlying transaction. EFET has published two main documents: the EFET electricity (electricity) and gas agreements, which are standard contractual contracts for use by distributors, in order to increase liquidity in the wholesale market by setting standard conditions for underlying transactions. The agreements and the EFET library associated with it, with additional documentation, are currently the industrial standards applied throughout Europe to the trade in physical energy and gas.
Dentons Paris` capital markets team discussed, among other things, the «close-out netting», the validity, applicability and guarantees of the EFET`s general agreements. THE EFET has commissioned legal advice on the applicability of the EFET`s general agreements and guarantee agreements in various legal systems. The general agreement consists of 23 sections and an electoral ballot (similar to an ISDA master-convention plan) in which the agreed complements and amendments to this general agreement are made. Changes to the standard text should be made to the election newspaper and not to the main part of the general agreement. The main benefits of using these documents are a reduction in trading time when few or no changes are made and the standardization of documentation in this market.