2002 ISDA Master Agreement

ISDA Anatomy™ →Go uptown Index: Click ᐅ to expand: ISDA Navigation See ISDA Comparison for a comparison between the 1992 ISDA and the 2002 ISDA. The Varieties of ISDA Experience Subject 2002 (wikitext) 1992 (wikitext) 1987 (wikitext) Preamble Pre Pre Pre Interpretation 1 1 1 Obligns/Payment 2 2 2 Representations 3 3 3 Agreements 4 4 4 EODs & Term Events 5 Events of Default: FTPD • Breach • CSD • Misrep • DUST • Cross Default • Bankruptcy • MWA Termination Events: Illegality • FM • Tax Event • TEUM • CEUM • ATE 5 Events of Default: FTPD • Breach • CSD • Misrep • DUST • Cross Default • Bankruptcy • MWA Termination Events: Illegality • Tax Event • TEUM • CEUM • ATE 5 Events of Default: FTPD • Breach • CSD • Misrep • DUSS • Cross Default • Bankruptcy • MWA Termination Events: Illegality • Tax Event • TEUM • CEUM Early Termination 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations; Payment Date • Payments on ET • Set-off 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations • Payments on ET • Set-off 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations • Payments on ET Transfer 7 7 7 Contractual Currency 8 8 8 Miscellaneous 9 9 9 Offices; Multibranch Parties 10 10 10 Expenses 11 11 11 Notices 12 12 12 Governing Law 13 13 13 Definitions 14 14 14 Schedule Schedule Schedule Schedule Termination Provisions Part 1 Part 1 Part 1 Tax Representations Part 2 Part 2 Part 2 Documents for Delivery Part 3 Part 3 Part 3 Miscellaneous Part 4 Part 4 Part 4 Other Provisions Part 5 Part 5 Part 5 Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

The 2002 ISDA is the current version of the ISDA Master Agreement. It succeeded the 1992 ISDA some twenty-two years ago now, though a bit like Logan Roy in Succession, the old buzzard is having trouble letting go.

As such, both agreement versions are still in use for existing and new business in the market, though — and not before time — the 1992 ISDA is dying out and is only really used by Amish and Mennonite communities, people who think geodesic domes are a neat idea and, er, Americans. But even the Americans are struggling to see the funny side.

If you want to see the funny side, you really should go see our ISDA Anatomy which breaks it down, clause by clause, and even gives you a nice and easy plain English version of each provision.

Why they introduced the 2002 ISDA Master Agreement

The 2002 ISDA was introduced, primarily, to:

• Loss/MQ begone: Finally take out to the woodshed the whole Loss/Market Quotation farrago (and all that First Method and Second Method nonsense) by introducing the Close-out Amount.
• Reference market makers, Settlement Amounts also begone: That meant no need for Reference Market-makers, Settlement Amounts and so on so they went too.
• Force majeure: finally make an honest man out of , well, God, by adding a Force Majeure Event under Section 5(b)(ii) — hitherto parties had boshed up something custom each time.
• Waiting Time for Illegality: The 2002 ISDA builds out Illegality to include the Waiting Period concept (also used in Force Majeure Event come to think of it).
• Set-off: To finally end the gruesome cottage industry of half-arsed, half-witted set-off provisions that don’t really work, by providing an express, fully-arsed half-witted set-off provision that doesn’t really work (Set-off under Section 6(f)).

That table of contents in full

1 Interpretation

1(a) Definitions
1(b) Inconsistency
1(c) Single Agreement

2 Obligations

2(a) General Conditions (incl Section 2(a)(iii))
2(b) Change of Account
2(c) Netting
2(d) Deduction or Withholding for Tax

3 Representations

3(a) Basic Representations
3(b) Absence of certain events
3(c) Absence of litigation
3(d) Accuracy of Specified Information
3(e) Payer Tax Representations
3(f) Payee Tax Representations
3(g) No Agency (2002 ISDA only)

4 Agreements

4(a) Furnish Specified Information
4(b) Maintain Authorisations
4(c) Comply with Laws
4(d) Tax Agreement
4(e) Payment of Stamp Tax

5 Events of Default and Termination Events

5(a) Events of Default

5(a)(i) Failure to Pay or Deliver

5(a)(ii) Breach of Agreement

5(a)(iii) Credit Support Default

5(a)(iv) Misrepresentation

5(a)(v) Default Under Specified Transaction

5(a)(vi) Cross Default

5(a)(vii) Bankruptcy

5(a)(viii) Merger without Assumption

5(b) Termination Events

5(b)(i) Illegality

5(b)(ii) Force Majeure Event

5(b)(iii) Tax Event

5(b)(iv) Tax Event Upon Merger

5(b)(v) Credit Event Upon Merger

5(b)(vi) Additional Termination Event

5(c) Hierarchy of Events

5(d) Deferral of Payments and Deliveries During Waiting Period

5(e) Inability of Head or Home Office to Perform Obligations of Branch

6 Early Termination

6(a) Right to Terminate following Event of Default

6(b) Right to Terminate following Termination Event

6(b)(i) Notice (of Termination Event)

6(b)(ii) Transfer to Avoid Termination Event

6(b)(iii) Two Affected Parties

6(b)(iv) Right to Terminate

6(c) Effect of Designation

6(d) Calculations

6(e) Payments on Early Termination

6(e)(i) Events of Default (Early Termination Payments)

6(e)(ii) Termination Events (Early Termination Payments)

6(e)(iii) Adjustment for Bankruptcy (Early Termination Payments)

6(e)(iv) Adjustment for Illegality or Force Majeure Event

6(e)(v) Pre-Estimate (Early Termination Payments)

6(f) Set Off

7 Transfer

8 Contractual Currency

8(a) Payment in Contractual Currency
8(b) Judgments
8(c) Separate Indemnities
8(d) Evidence of Loss

9 Miscellaneous

9(a) Entire Agreement
9(b) Amendments
9(c) Survival of Obligations
9(d) Remedies Cumulative
9(e) Counterparts and Confirmations
9(f) No Waiver of Rights
9(g) Headings
9(h) Interest and Compensation (2002 ISDA only)

10 Offices; Multibranch Parties

11 Expenses

12 Notices

12(a) Effectiveness
12(b) Change of Addresses

13 Governing Law and Jurisdiction

13(a) Governing Law
13(b) Jurisdiction
13(c) Service of Process
13(d) Waiver of immunities

14 Definitions

Additional Representation
Additional Termination Event
Affected Party
Affected Transactions
Affiliate
Agreement
Applicable Close-out Rate
Applicable Deferral Rate
Automatic Early Termination
Burdened Party
Change in Tax Law
Close-out Amount
Confirmation
consent
Contractual Currency
Convention Court
Credit Event Upon Merger
Credit Support Document
Credit Support Provider
Cross-Default
Defaulting Party
Designated Event
Determining Party
Early Termination Amount
Early Termination Date
electronic messages
English law
Event of Default
Force Majeure Event
General Business Day
Illegality
Indemnifiable Tax
law
Local Business Day
Local Delivery Day
Master Agreement
Merger Without Assumption
Multiple Transaction Payment Netting
Non-affected Party
Non-default Rate
Non-defaulting Party
Office
Other Amounts
Payee
Payer
Potential Event of Default
Proceedings
Process Agent
rate of exchange
Relevant Jurisdiction
Schedule
Scheduled Settlement Date
Set-off
Specified Entity
Specified Indebtedness
Specified Transaction
Stamp Tax
Stamp Tax Jurisdiction
Tax
Tax Event
Tax Event Upon Merger
Terminated Transactions
Termination Currency
Termination Currency Equivalent
Termination Event
Termination Rate
Threshold Amount
Transaction
Unpaid Amounts
Waiting Period

Part 1 - Termination Provisions

(a) Specified Entity
(b) Specified Transaction
(c) Cross Default
(d) Credit Event Upon Merger
(e) Automatic Early Termination
(f) Termination Currency
(g) Additional Termination Event

Part 2 - Tax Representations

(a) Payer Tax Representations
(b) Payee Tax Representations

Part 3 - Agreement to Deliver Documents

(a) Tax forms, documents or certificates to be devlivered
(b) Other documents to be delivered

Part 4 - Miscellaneous

(a) Addresses for Notices
(b) Process Agent
(c) Offices
(d) Multibranch Party
(e) Calculation Agent
(f) Credit Support Document
(g) Credit Support Provider
(h) Governing Law
(i) Netting of Payments
(j) Affiliate

Part 5 - Other Provisions

See also

• Our somewhat sardonic comparison of the 1992 and 2002 ISDA forms