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The draft Directive on settlement finality, incorporating amendments proposed by the European parliament, was approved by the Council of Ministers at the end of April 1998. It provides for legislation to deal with the position of cross-border payments when a bank or securities firm cannot meet its obligations. It aims to cut the systemic risk in payment and securities settlement systems and to minimize the disruption to a system caused by insolvency proceedings against a participant in the system.

A judgment of a foreign court will not be recognized and enforced in Switzerland if it was made in disregard of a valid arbitration clause in place between the parties, as long as the defendant duly objects to the foreign court assuming jurisdiction, the Swiss Federal Tribunal recently ruled (Ruling 124 III 83).

The parliamentary committee reviewing the Swedish Companies Act published a report (SOU 1997:168) late last year on profit distributions. The report addresses the uncertainty as to whether profit distributions may be decided at extraordinary shareholders meetings and suggests that additional distributions may be decided after the annual general meeting. No advance distributions were proposed. The present veto of the board of directors was proposed to be abolished. Another proposal was to abolish the restriction on parent companies' right to distribute profits in excess of the free equity on the consolidated group balance sheet, leaving the parent company's own free equity freely distributable. However, the so-called prudence rule was kept, stating that a profit distribution may not be so high as to contravene generally accepted business practices in view of the company's or group's consolidation needs, liquidity or financial position. This rule was tightened by dropping the reference to business practice and making its application to any form of transfer of values to shareholders or others clear.

On January 1 1998, the new Law on Register Liens and the Pledge Register (Ustawa o zastawie rejestrowym i rejestrze zastawow) entered into effect. The Polish parliament followed the example of other (romanic) countries to establish a pledge registry and replace the pledging-privileges of Polish banks which lost effect on December 31 1997. Under the old Article 308 of the Polish Civil Code (Kodeks Cywilny), it was sufficient for the bank to register the pledge of an asset in its own register to establish a valid lien over movables in favour of a bank. The bank was then entitled to issue an enforceable title on its own behalf. These provisions were made invalid by the entry into force of the new statute.

One year after its enactment, Decree-Law 70/97 of April 3 (Netting Law) has fulfilled many of its expectations. A formidable increase in derivative documentation efforts clearly shows the renewed interest of derivatives transaction agents dealing with Portuguese residents to make use of the advantages arising from Portugal's entry in the netting jurisdictions' league.

In early March 1998, the German federal government published a draft statute for the implementation of EC directives on deposit guarantee schemes (94/19/EC) and investor compensation schemes (97/9/EC). The statue will create a whole new system of compensation schemes. The existing (private and voluntary) deposit protection scheme of the association of private banks in Germany (Einlagensicherungsfonds), offering an exceptionally high degree of protection (ie each deposit is insured up to an amount equivalent to 30% of the bank's liable capital) will remain in place with the new compensation schemes.

On April 2 1998, the House of Representatives passed the new Patent Law 16(1)/98. The main provisions of the new law which are significantly different from the old law are as follows:

The proposed cut of the 1.5% stamp duty payable on credits granted by Finnish credit institutions will effect major changes on credit granting. Under the government bill, stamp duty will no longer be levied on loan agreements and mortgages. The amendment is proposed to be retroactive, enabling creditors to proceed an action ex post facto for the stamp duty paid in connection with the granting of the loan if the loan agreement has been signed on or after April 29 1998.

The merger of two New York energy companies, Con Edison and Orange and Rockland Utilities, announced May 11 1998, is expected to increase efficiency and result in net savings of up to US$50 million a year. Cravath Swaine and Moore, New York, is advising Con Edison in the US$790 million acquisition of O&R. The team of lawyers from Cravath Swaine is headed by M&A partner George Belicic.

Daimler-Benz and Chrysler have announced on May 7 the largest industrial merger ever. The deal values Chrysler at US$39 billion. The new group, known as Daimler-Chrysler, is estimated to be worth US$92 billion and will be the world's fifth-largest vehicle maker.