7.1 Article 55 of BRRD relates to liabilities within the scope of the bail-in powers but governed by the law of a third country. It requires that any such liabilities, issued or entered into after implementation, include a contractual term which states that the liability may be subject to the write-down and conversion powers, and that the creditor agrees to be bound by any actions of the resolution authority in relation to the liability.
7.2 BRRDII updates Article 55 to recognise that in practice, this requirement can be difficult to implement. It therefore specifically addresses the scenario in which it is impracticable for entities to include such contractual recognition clauses within liabilities contracts governed by third country law, and allows firms to not include such contractual terms in certain unsecured liabilities contracts.
7.3 The UK previously implemented Article 55 of BRRD through the PRA Rulebook; Contractual Recognition of Bail in and FCA Handbook (IFPRU 11.6.3R) as w
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