Rating agencies cannot exclude liability through clauses

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Three people are affected by ratings: the person being rated (e.g. an initiator) with the rating subject (e.g. the current account), the person being rated (the rating agency) and the readers/users of the rating. The resulting question of the liability of the rating agency is clarified by Johannes Fiala, lawyer (Munich), M.B.A. (Univ.Wales), M.M. (Univ.), certified financial and investment advisor (A.F.A.), EC expert (C.I.F.E.), banker in a report (?No global exemption from liability by rating/analyst agencies?), which can be found underwww.fiala.de is to be downloaded. According to § 675 II of the German Civil Code (BGB), a person who gives advice or a recommendation to another is generally not liable. This does not apply if a contractual or tortious legal claim exists against the rating agency. Thus, the bases for claims against the agency are the information or consultancy liability contract, the guarantee contract, another contractual relationship or any quasi-contractual relationships. Rating agencies like to use clauses like ‘Liability claims against the rating agency … are excluded in principle. According to case law, an internal intention of the rating agency not to be liable for advice and information is irrelevant. I.e. despite these clauses the rating agency is liable. It is liable even for slight negligence, since the proper preparation of a rating according to scientific methods is one of the cardinal obligations. Cardinal obligations are all essential obligations that are owed by the client (the CRA) on the basis of the individual contract and are of eminent importance for the achievement of the objective of the contract. Thus, the credit rating agency is obliged to provide a sufficiently comprehensive, i.e. complete and correct, presentation, to make use of available knowledge and to provide an answer to the question of the degree of uncertainty of the result of its own assessment. Jurisprudence developed the legal institution of the ?contract with protective effect in favour of third parties? Here, liability is imposed on persons with whom no contractual relationship exists, such as between the rating agency and the readers of the rating. Thus, according to the Federal Court of Justice (BGH), liability arises vis-à-vis the readers and users of ratings if the information or advice was recognisably of considerable importance to the recipient from the perspective of the rating agency. In addition, the recipient must have made it the basis of his decision. The BGH presupposes that the rating agency was aware that the information would be significant for further circles and would serve as a basis for asset dispositions. Contributory negligence on the part of the third party is usually excluded if the third party refers to the special technical and expert knowledge of the rating agency. This is emphasised by almost all rating agencies. According to Johannes Fiala, useless liability clauses are a typical indication of inadequate risk management or awareness on the part of a rating agency. Another indication of poor quality or uselessness in practice is the lack of an exact date of preparation. Here discussions open over the question, which state of information was the basis? so Fiala. An indication of a serious rating, on the other hand, could be the rating agency’s own handling of transparency, according to Fiala: Were the annual reports properly filed with the commercial register? Is the name of a responsible author or a signature available? If a rating is (also) the basis for decisions, the quality should be questioned just as much as the creditworthiness of the agency and the insurance cover that is usually required. These are simple considerations in the context of the plausibility check. This must be particularly important to the intermediary, because clients ? according to the motto ?who pays, creates? ? are often those companies that wish to have a favourable image in the public eye or among investors and brokers,” Fiala concludes.

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Über den Autor

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala ist seit mehr als 25 Jahren als Jurist und Rechts­anwalt mit eigener Kanzlei in München tätig. Er beschäftigt sich unter anderem intensiv mit den Themen Immobilien­wirtschaft, Finanz­recht sowie Steuer- und Versicherungs­recht. Die zahl­reichen Stationen seines beruf­lichen Werde­gangs ermöglichen es ihm, für seine Mandanten ganz­heitlich beratend und im Streit­fall juristisch tätig zu werden.
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