DORA: Contract Clauses: Exit Strategies and Contractual Resilience in Resolution Scenarios

Contracts drafted under the framework of the DORA Regulation, beyond establishing the minimum requirements for the digital operational resilience of financial entities, must necessarily address the need to ensure the continuity of critical services, even in resolution scenarios. In this context, exit strategies and contractual resilience acquire particular relevance.

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Exit Strategies: A Buffer Against Changes and Contingencies

Contractual agreements with third-party providers of ICT services must include specific exit strategies designed to minimize the impact of a potential change of provider or service interruption. These strategies should encompass:

• Mandatory Transitional Periods: These periods allow the financial entity to manage the transition to a new provider or an internal solution in an orderly manner, minimizing the risk of disruptions to its operations.
• Flexibility to Change Providers: Contractual clauses must enable the financial entity to effectively change providers, considering the complexity of the ICT service in question.
• Adaptation to Internal Solutions: In some cases, the financial entity may opt to internalize certain services. Exit strategies should facilitate this transition.

Contractual Resilience in Resolution Scenarios

For financial entities within the scope of the BRRD Directive (2014/59/EU), contractual resilience takes on an additional dimension. ICT service contracts must be robust enough to withstand a resolution process. This entails:

1. Applicability in Case of Resolution: Contracts must remain fully valid and enforceable, even in a resolution scenario.
2. Non-Termination, Non-Suspension, and Non-Modification Clauses: These clauses ensure that the ICT service provider cannot interrupt or modify the service due to reasons related to the restructuring or resolution of the financial entity, provided the latter fulfills its payment obligations.
3. Alignment with Resolution Authorities’ Expectations: Contractual clauses must be designed to facilitate the intervention of resolution authorities and minimize the impact of such intervention on the continuity of critical services.

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DORA: Contract Clauses. Beyond the Basics: Deepening Contractual Requirements for Robust Digital Resilience

The DORA Regulation, in its effort to ensure the digital operational resilience of the financial sector, establishes a set of fundamental contractual requirements for relationships between financial entities and third-party ICT service providers.

Why Are These Provisions Important?

1. Continuity of Services: They ensure that critical services remain operational, even in crisis situations, thereby protecting clients’ interests and contributing to the stability of the financial system.
2. Protection of the Financial Entity: They minimize the risk of financial and reputational losses associated with ICT service interruptions.
3. Facilitation of Resolution: They contribute to a more orderly and efficient resolution process.

In conclusion, the DORA Regulation underscores the importance of exit strategies and contractual resilience in agreements with third-party providers of ICT services. By incorporating these provisions into their contracts, financial entities can strengthen their operational resilience and contribute to the stability of the financial system.

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DORA: key contractual clauses for access, inspection and audit of ICT providers