Two Affected Parties - ISDA Provision: Difference between revisions

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Replaced content with "{{manual|MI|2002|6(b)(iii)|Section|6(b)(iii)|short}}"
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{{isdaanat|6(b)(iii)}}
{{manual|MI|2002|6(b)(iii)|Section|6(b)(iii)|short}}
Be careful here: Under the {{1992ma}}, if your {{isdaprov|Failure To Pay}} is also an {{isdaprov|Illegality}} it is treated as an {{isdaprov|Illegality}}: if there are two {{isdaprov|Affected Parties}} you will face a significant delay when closing out. A bit of a {{t|trick for young players}}.
 
===Differences between {{1992ma}} and {{2002ma}}===
Note also that reference to {{isdaprov|Illegality}} has been excised from the {{2002ma}} version.
 
They changed this because in practice, it turned out to too be hard to implement a transfer or amendment after an {{isdaprov|Illegality}}.  Folks realised that if an {{isdaprov|Illegality}} happens you don’t want to have to wait 30 days to terminate, especially if you can’t rely on {{isdaprov|2(a)(iii)}} to withhold payments in the meantime.

Revision as of 17:56, 12 April 2020

2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual™

Resources and navigation

[[{{{1}}} - 1992 ISDA Provision|This provision in the 1992]]

Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project
Navigation Preamble | 1 • (a) (b) (c) | 2 • (a) (b) (c) (d) | 3 • (a) (b) (c) (d) (e) (f) (g) | 4 • (a) (b) (c) (d) (e) | 5 • 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 (c) (d) (e) | 6 • (a) (b) (c) (d) (e) (f) | 7 | 8 • (a) (b) (c) (d) | 9 • (a) (b) (c) (d) (e) (f) (g) (h) | 10 | 11 | 12 • (a) (b) | 13 • (a) (b) (c) (d) | 14 |

Index: Click ᐅ to expand:
2002 ISDA
1992 ISDA

Section 6(b)(iii) in a Nutshell™

Use at your own risk, campers!
6(b)(iii) Two Affected Parties. If there is a Tax Event with two Affected Parties, each must use all reasonable efforts agree within 30 days after the Termination Event Notice to avoid it.

Full text of Section 6(b)(iii)

6(b)(iii) Two Affected Parties. If a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice of such occurrence is given under Section 6(b)(i) to avoid that Termination Event.

Related agreements and comparisons

Click here for the text of Section 6(b)(iii) in the 1992 ISDA
Click to compare this section in the 1992 ISDA and 2002 ISDA.

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Summary

Handwaving appeals to one another’s good natures with this talk of reasonableness and, of course, both parties will probably be incentivised to keep the trade on foot if some unfortunate tax eventuality comes about — seeing as they were incentivised enough to start it —but ultimately, this is an agreement to agree, however you dress it up, and is as contractually enforceable as one. That is, not very.

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See also

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References

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