Inter-affiliate ISDA negotiation: Difference between revisions

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{{g}}On such an afternoon some score of members of the Contract Negotiation Specialists Group ought to be — as here they are — mistily engaged in one of the ten thousand stages of an endless cause, tripping one another up on the slippery slope of [[precedent]], groping knee-deep in [[Escalation|escalations]], running their heads against unpunctuated walls of words and making a great pretence of commercial point and counterpoint, as players might.
{{g}}
''With apologies to [http://www.gutenberg.org/files/1023/1023-h/1023-h.htm Charles Dickens]''


On such an afternoon the various [[paralegal]]s, [[negotiator]]s, [[alternative legal service provider]]s, [[credit officer]]s in the cause, some two or three of whom have inherited it from a parent, who also made a living out of it, ought to be — as are they not? — arranged in a line, with [[Side letter|side-letter]]s, [[Margin lock-up|margin lock-ups]], [[Credit support document|credit support documents]], [[SFTR disclosures|title-transfer collateral arrangement disclosures]], [[Threshold Amount - ISDA Provision|Cross Default thresholds]], [[Additional Termination Events - ISDA provision|additional termination events]], [[conditions precedent]], [[conditions subsequent]], [[Authorised signatory lists|authorised signatory lists]], audited financial statements, mountains of costly nonsense all, piled before them. Well may the commercial objective be dim; well may the fog of war hang heavy in the recycled tropes grown calcific through loyal, time-tested abeyance, their original purpose now so encrusted it would never escape; well may the accretive communiques by which these agents articulate the obstacles to consensus as they find them, submitting these conundra to those further up the reporting line for adjudication; well may the uninitiated from the streets, were they allowed to peep in through the glass panes in the door, be deterred from entrance by its owlish aspect and by the drawl, languidly echoing to the roof from the padded dais where the Lord High Chancellor looks into the lantern that has no light in it and where the attendant wigs are all stuck in a fog-bank!
On such an afternoon some score of members of the Contract Negotiation Specialists Group ought to be — as here they are — mistily engaged in one of the ten thousand stages of an endless cause, tripping one another up on the slippery slope of [[precedent]], groping knee-deep in [[Escalation|escalations]], running their heads against unpunctuated walls of words and making a great pretence of commercial point and counterpoint, as players might.


no point of principle is ever sufficiently grave to put an end to this whole edifice.
On such an afternoon the various [[paralegal]]s, [[negotiator]]s, [[alternative legal service provider]]s, [[credit officer]]s in the cause, some two or three of whom have inherited it from a parent, who also made a living out of it, ought to be — as are they not? — arranged in a line, with [[Side letter|side-letter]]s, [[Margin lock-up|margin lock-ups]], [[Credit support document|credit support documents]], [[SFTR disclosures|title-transfer collateral arrangement disclosures]], [[Threshold Amount - ISDA Provision|Cross Default thresholds]], [[Additional Termination Event - ISDA provision|Additional Termination Events]], fee schedules, [[conditions precedent]], [[conditions subsequent]], [[Authorised signatory lists|authorised signatory lists]], audited financial statements, mountains of costly nonsense all, piled before them.  


This is the Court of Chancery, which has its decaying houses and its blighted lands in every shire, which has its worn-out lunatic in every madhouse and its dead in every churchyard, which has its ruined suitor with his slipshod heels and threadbare dress borrowing and begging through the round of every man's acquaintance, which gives to monied might the means abundantly of wearying out the right, which so exhausts finances, patience, courage, hope, so overthrows the brain and breaks the heart, that there is not an honourable man among its practitioners who would not give—who does not often give—the warning, "Suffer any wrong that can be done you rather than come here!"
Well may the commercial objective be dim; well may the fog of war saturate the recycled tropes have grown calcific through time-tested abeyance, their original purpose now so encrusted in soporific text it can not escape, and no [[negotiator]] has the disposition, let alone a mandate, let alone the ''fortitude'', to go in after it with the hammer and chisel it deserves. Instead, countless [[disempowered]] agents will lay yet more silt upon the accretive communiques by which they relay their halting progress back to countless [[disempowered]] superiors, bewildering may the obstacles to [[Consensus ad idem|consensus]] described within them be that they may pass uncomprehended and therefore unresolved amongst those occupying the higher rungs whose designated role is adjudication; well may we uninitiated from the streets, were we yet allowed to slip those security-controlled doors, gather up a printed sheaf and peruse its labyrinthine figures, be deterred from going on by its owlish aspect and by the simple acreage of black 11 point Times New Roman on white on a scale that presents as entropic blur, an invariant shade of grey that crisply snuffs what wick the lantern of curiosity might ever have possessed.


Who happen to be in the Lord Chancellor's court this murky afternoon besides the Lord Chancellor, the counsel in the cause, two or three counsel who are never in any cause, and the well of solicitors before mentioned? There is the registrar below the judge, in wig and gown; and there are two or three maces, or petty-bags, or privy purses, or whatever they may be, in legal court suits. These are all yawning, for no crumb of amusement ever falls from Jarndyce and Jarndyce (the cause in hand), which was squeezed dry years upon years ago. The short-hand writers, the reporters of the court, and the reporters of the newspapers invariably decamp with the rest of the regulars when Jarndyce and Jarndyce comes on. Their places are a blank. Standing on a seat at the side of the hall, the better to peer into the curtained sanctuary, is a little mad old woman in a squeezed bonnet who is always in court, from its sitting to its rising, and always expecting some incomprehensible judgment to be given in her favour. Some say she really is, or was, a party to a suit, but no one knows for certain because no one cares. She carries some small litter in a reticule which she calls her documents, principally consisting of paper matches and dry lavender. A sallow prisoner has come up, in custody, for the half-dozenth time to make a personal application "to purge himself of his contempt," which, being a solitary surviving executor who has fallen into a state of conglomeration about accounts of which it is not pretended that he had ever any knowledge, he is not at all likely ever to do. In the meantime his prospects in life are ended. Another ruined suitor, who periodically appears from Shropshire and breaks out into efforts to address the Chancellor at the close of the day's business and who can by no means be made to understand that the Chancellor is legally ignorant of his existence after making it desolate for a quarter of a century, plants himself in a good place and keeps an eye on the judge, ready to call out "My Lord!" in a voice of sonorous complaint on the instant of his rising. A few lawyers' clerks and others who know this suitor by sight linger on the chance of his furnishing some fun and enlivening the dismal weather a little.
In this way [[negotiation]] acquires its own life, its own interests, its own corporeal ''form''. It has a personality; it has its own interests, quite distinct from those whose fussy ministrations give it life. As a [[negotiation]] endures, it grows stronger — every extra effort in its cause expands it mass and lends it gravity, such that those who people its onward trajectory fall under its influence and then into its orbit: they can no more escape it than can they slip the surly bonds of Earth and dance the skies. Nor would they care to do so, for in its silken folds lie safety, security, nourishment and warmth — as long as the negotiation is on foot, their basest needs are met.  


Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it. Scores of persons have deliriously found themselves made parties in Jarndyce and Jarndyce without knowing how or why; whole families have inherited legendary hatreds with the suit. The little plaintiff or defendant who was promised a new rocking-horse when Jarndyce and Jarndyce should be settled has grown up, possessed himself of a real horse, and trotted away into the other world. Fair wards of court have faded into mothers and grandmothers; a long procession of Chancellors has come in and gone out; the legion of bills in the suit have been transformed into mere bills of mortality; there are not three Jarndyces left upon the earth perhaps since old Tom Jarndyce in despair blew his brains out at a coffee-house in Chancery Lane; but Jarndyce and Jarndyce still drags its dreary length before the court, perennially hopeless.
But all things are mortal — when counterparts are so far apart that no path to consensus remains, a negotiation should, in theory, die. But one sufficiently established, in whose ongoing progress enough [[stakeholder]]s have a personal interest, may have the momentum to survive even this. For — when a [[platinum client]] promises yearly returns best expressed as exponents, to hope is too faint not to keep plugging away; no point of juridical principle ever so grave as to put an end to the whole monstrous edifice.


Jarndyce and Jarndyce has passed into a joke. That is the only good that has ever come of it. It has been death to many, but it is a joke in the profession. Every master in Chancery has had a reference out of it. Every Chancellor was "in it," for somebody or other, when he was counsel at the bar. Good things have been said about it by blue-nosed, bulbous-shoed old benchers in select port-wine committee after dinner in hall. Articled clerks have been in the habit of fleshing their legal wit upon it. The last Lord Chancellor handled it neatly, when, correcting Mr. Blowers, the eminent silk gown who said that such a thing might happen when the sky rained potatoes, he observed, "or when we get through Jarndyce and Jarndyce, Mr. Blowers"—a pleasantry that particularly tickled the maces, bags, and purses.
This is the world of master agreement negotiation, which has its dreary templates and its blighted forms for every outcome; which has its mis-scanned faxed amendments and redundant, dead [[novation]]s logged, misfiled and clogging every client identifier, every one with mis-keyed client static data; which has its ruined netting designation feeds, running this way and that, haywire into financial reporting systems; which has its deluded [[salespeople]] with their threadbare grasp of crucial points; which relaxes red-line protections for [[really important client]]s intent on running outsized risks — the call it “[[leveraged alpha]]” — on which one would not dream of compromising for more timid clients who trade with un-geared circumspection; which so exhausts [[Financial reporting|Finance Reporting]]s, [[Legal]], [[Compliance]] and [[Credit]] — which so overthrows the brain and breaks the heart, that there is not one among its practitioners who would not say—who does not often say — the "Suffer any wrong that can be done you rather than come here!"


How many people out of the suit Jarndyce and Jarndyce has stretched forth its unwholesome hand to spoil and corrupt would be a very wide question. From the master upon whose impaling files reams of dusty warrants in Jarndyce and Jarndyce have grimly writhed into many shapes, down to the copying-clerk in the Six Clerks' Office who has copied his tens of thousands of Chancery folio-pages under that eternal heading, no man's nature has been made better by it. In trickery, evasion, procrastination, spoliation, botheration, under false pretences of all sorts, there are influences that can never come to good. The very solicitors' boys who have kept the wretched suitors at bay, by protesting time out of mind that Mr. Chizzle, Mizzle, or otherwise was particularly engaged and had appointments until dinner, may have got an extra moral twist and shuffle into themselves out of Jarndyce and Jarndyce. The receiver in the cause has acquired a goodly sum of money by it but has acquired too a distrust of his own mother and a contempt for his own kind. Chizzle, Mizzle, and otherwise have lapsed into a habit of vaguely promising themselves that they will look into that outstanding little matter and see what can be done for Drizzle—who was not well used—when Jarndyce and Jarndyce shall be got out of the office. Shirking and sharking in all their many varieties have been sown broadcast by the ill-fated cause; and even those who have contemplated its history from the outermost circle of such evil have been insensibly tempted into a loose way of letting bad things alone to take their own bad course, and a loose belief that if the world go wrong it was in some off-hand manner never meant to go right.
Who happen to be engaged on an [[all-hands conference call]] this murky afternoon? There is the [[negotiator]], his boss, a chap from [[tax]], two or three from [[operations]] who, as best the remainder know, are never otherwise occupied but to participate on calls like this, and a brace calling in from an outsourced [[credit]] risk team in Gdansk. The transition manager makes his way through a twelve-point list in dour monotone. The rest, not talking, yawn; those not yawning multi-task; those not multitasking have disabled cameras and gone on mute while they book last-minute weekend breaks in the vain hope of restoring sagging spirits, for on no account will spiritual redemption be found in the matter at hand: it was squeezed dry, dusted with lime and buried months ago. Salespeople, normally so animated, invariably decamp when this [[negotiation]] an ISDA Master Agreement between two wholly-owned subsidiaries of the same firm, comes on.  


Thus, in the midst of the mud and at the heart of the fog, sits the Lord High Chancellor in his High Court of Chancery.
It drones on. The points of contention in this scarecrow of a deal have, over time, become so complicated that no soul alive now knows in detail what they are. The negotiation teams least of all, but it has been observed that no two stakeholders discuss it for five minutes without coming to a total disagreement as what remains outstanding. Innumerable third parties have, through is tedious course, been dragged in. A [[custodian]] here, a [[process agent]] there; a third-party bank to intermediate journal entries between branches of the same entity, to help the financial reporting right. Some of these have merged, consolidated, changed business model or just fallen outright into bankruptcy along the way. The [[indemnities]], [[disclaimer]]s, keep-wells and [[covenant]]s they extracted — these, and other textual flourishes on which they in their pomp insisted, by way of [[For the avoidance of doubt|doubt avoidance]], [[Incluso|inclusion]] or [[Limitation of recourse|recourse limitation]] and which made it into the draft remain embedded, so structurally critical to the architecture of the document that no-one dares to take them out lest the whole edifice collapses under its gargantuan weight. There is not a single representative of either party who attended the birth of this monster and who is still in situ in the same role now. Dozens have resigned, a few retired, at least one has died: but the Wickliffe Hampton Agency ISDA still drags its dreary length before the market, perennially hopeless.
 
"Mr. Tangle," says the Lord High Chancellor, latterly something restless under the eloquence of that learned gentleman.
 
"Mlud," says Mr. Tangle. Mr. Tangle knows more of Jarndyce and Jarndyce than anybody. He is famous for it—supposed never to have read anything else since he left school.

Revision as of 12:34, 14 November 2020

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With apologies to Charles Dickens

On such an afternoon some score of members of the Contract Negotiation Specialists Group ought to be — as here they are — mistily engaged in one of the ten thousand stages of an endless cause, tripping one another up on the slippery slope of precedent, groping knee-deep in escalations, running their heads against unpunctuated walls of words and making a great pretence of commercial point and counterpoint, as players might.

On such an afternoon the various paralegals, negotiators, alternative legal service providers, credit officers in the cause, some two or three of whom have inherited it from a parent, who also made a living out of it, ought to be — as are they not? — arranged in a line, with side-letters, margin lock-ups, credit support documents, title-transfer collateral arrangement disclosures, Cross Default thresholds, Additional Termination Events, fee schedules, conditions precedent, conditions subsequent, authorised signatory lists, audited financial statements, mountains of costly nonsense all, piled before them.

Well may the commercial objective be dim; well may the fog of war saturate the recycled tropes have grown calcific through time-tested abeyance, their original purpose now so encrusted in soporific text it can not escape, and no negotiator has the disposition, let alone a mandate, let alone the fortitude, to go in after it with the hammer and chisel it deserves. Instead, countless disempowered agents will lay yet more silt upon the accretive communiques by which they relay their halting progress back to countless disempowered superiors, bewildering may the obstacles to consensus described within them be that they may pass uncomprehended and therefore unresolved amongst those occupying the higher rungs whose designated role is adjudication; well may we uninitiated from the streets, were we yet allowed to slip those security-controlled doors, gather up a printed sheaf and peruse its labyrinthine figures, be deterred from going on by its owlish aspect and by the simple acreage of black 11 point Times New Roman on white on a scale that presents as entropic blur, an invariant shade of grey that crisply snuffs what wick the lantern of curiosity might ever have possessed.

In this way negotiation acquires its own life, its own interests, its own corporeal form. It has a personality; it has its own interests, quite distinct from those whose fussy ministrations give it life. As a negotiation endures, it grows stronger — every extra effort in its cause expands it mass and lends it gravity, such that those who people its onward trajectory fall under its influence and then into its orbit: they can no more escape it than can they slip the surly bonds of Earth and dance the skies. Nor would they care to do so, for in its silken folds lie safety, security, nourishment and warmth — as long as the negotiation is on foot, their basest needs are met.

But all things are mortal — when counterparts are so far apart that no path to consensus remains, a negotiation should, in theory, die. But one sufficiently established, in whose ongoing progress enough stakeholders have a personal interest, may have the momentum to survive even this. For — when a platinum client promises yearly returns best expressed as exponents, to hope is too faint not to keep plugging away; no point of juridical principle ever so grave as to put an end to the whole monstrous edifice.

This is the world of master agreement negotiation, which has its dreary templates and its blighted forms for every outcome; which has its mis-scanned faxed amendments and redundant, dead novations logged, misfiled and clogging every client identifier, every one with mis-keyed client static data; which has its ruined netting designation feeds, running this way and that, haywire into financial reporting systems; which has its deluded salespeople with their threadbare grasp of crucial points; which relaxes red-line protections for really important clients intent on running outsized risks — the call it “leveraged alpha” — on which one would not dream of compromising for more timid clients who trade with un-geared circumspection; which so exhausts Finance Reportings, Legal, Compliance and Credit — which so overthrows the brain and breaks the heart, that there is not one among its practitioners who would not say—who does not often say — the "Suffer any wrong that can be done you rather than come here!"

Who happen to be engaged on an all-hands conference call this murky afternoon? There is the negotiator, his boss, a chap from tax, two or three from operations who, as best the remainder know, are never otherwise occupied but to participate on calls like this, and a brace calling in from an outsourced credit risk team in Gdansk. The transition manager makes his way through a twelve-point list in dour monotone. The rest, not talking, yawn; those not yawning multi-task; those not multitasking have disabled cameras and gone on mute while they book last-minute weekend breaks in the vain hope of restoring sagging spirits, for on no account will spiritual redemption be found in the matter at hand: it was squeezed dry, dusted with lime and buried months ago. Salespeople, normally so animated, invariably decamp when this negotiation an ISDA Master Agreement between two wholly-owned subsidiaries of the same firm, comes on.

It drones on. The points of contention in this scarecrow of a deal have, over time, become so complicated that no soul alive now knows in detail what they are. The negotiation teams least of all, but it has been observed that no two stakeholders discuss it for five minutes without coming to a total disagreement as what remains outstanding. Innumerable third parties have, through is tedious course, been dragged in. A custodian here, a process agent there; a third-party bank to intermediate journal entries between branches of the same entity, to help the financial reporting right. Some of these have merged, consolidated, changed business model or just fallen outright into bankruptcy along the way. The indemnities, disclaimers, keep-wells and covenants they extracted — these, and other textual flourishes on which they in their pomp insisted, by way of doubt avoidance, inclusion or recourse limitation and which made it into the draft remain embedded, so structurally critical to the architecture of the document that no-one dares to take them out lest the whole edifice collapses under its gargantuan weight. There is not a single representative of either party who attended the birth of this monster and who is still in situ in the same role now. Dozens have resigned, a few retired, at least one has died: but the Wickliffe Hampton Agency ISDA still drags its dreary length before the market, perennially hopeless.

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