The Faculty warmly welcomes the announcement that PhD candidate Narine Lalafaryan has won the prestigious 2021 Best Paper Prize award of the Society of Legal Scholar’s Annual Conference, for her working paper 'Orchestrating Finance with Material Adverse Changes'.
Narine (Sidney Sussex College) is a PhD candidate in financial law, a Hogan Lovells Scholar, and Life Member of Clare Hall College.
The Society of Legal Scholars' selection panel for the 2021 Best Paper Prize comprised:
- Professor Catharine MacMillan (King’s College London), President of the Society 2021/22
- Natalie Wortley (Northumbria University), Acting Subject Sections Secretary
- John Pearson (Manchester Metropolitan University), nominee of the editors of Legal Studies
The panel said they were "...impressed with the originality and reach of Narine’s paper, which they felt makes an important contribution to scholarship in the field".
Responding to her award, Narine said "I am honoured and excited to receive the SLS 2021 Best Paper Prize award. I would especially like to thank my PhD supervisor Dr Felix Steffek for his unparalleled mentorship, encouragement, and constructive feedback throughout my doctorate studies. I am also grateful for the support that I received as a Cambridge doctoral student to Harvard Law School (2021) and the Max Planck Institute for Comparative and International Private Law (Hamburg) (2019), where the research for a chapter of my doctoral dissertation, forming the initial basis of this paper, was conducted. I would also like to thank Hogan Lovells LLP in partnership with the Cambridge Law Faculty for its generous support of my doctoral studies. All the views expressed in the paper are mine alone and do not necessarily reflect that of Hogan Lovells LLP".
Narine's law and economics paper is the first to investigate the pre-contractual (“ex-ante”) and contractual (“ex-post”) protection of lenders and borrowers in commercial debt financing agreements by way of Material Adverse Change/Effect (“MAC”) clauses. It proposes a novel Multifunctional Effects Approach of MAC clauses in debt finance. The paper aims to explain why the commercial parties attach high importance to the vague and uncertain MAC clauses in debt financing agreements but hardly rely on them. First, the paper argues that apart from acceleration of the credit facilities, MAC clauses have various beneficial effects. They include screening and signalling effects. Second, MAC clauses should be regarded not only as mechanisms to solve information asymmetry. They can also have the following effects: improving governance, decoupling debt, providing restructuring impulses, countering uncertainty, contributing to the information sharing regime. From a functional perspective, potentially MAC clauses also have the effect of a penalty default rule.
The need for such research is emphasised by the fact that major financing agreements have an immediate impact not only on the contracting parties but also the other market participants, employees, customers, and society. The importance of studying these effects of MAC clauses in debt finance is further reinforced by the COVID-19- driven crisis, that, at the same time as emphasising the significance of this research, provides a variety of cases and extensive data for analysis.
In due course, the paper will be published in the Society’s publication, Legal Studies. For more information please see the SLS website.