Definitions and Inconsistency - IM CSD Provision

2018 ISDA Credit Support Deed (IM) (English law) A Jolly Contrarian owner’s manual™ Resources and navigation Resources: 2018 CSD Wikitext | 2018 CSD Nutshell Wikitext Navigation 1 (Interpretation) | 2 (Security) | 3 (Credit Support Obligations) | 4 (Conditions Precedent, Transfers, Timing, Calculations and Substitutions) | 5 (Dispute Resolution) | 6 (Custody Arrangements and the Control Agreement) | 7 (Default) | 8 (Certain Rights and Remedies) | 9 (Representation) | 10 (Expenses) | 11 (Other Provisions) | 12 (Definitions) | 13 (Elections and Variables) Index: Click ᐅ to expand: 2018 CSD Paragraph 1(a) in a Nutshell™ Use at your own risk, campers! 1(a) Definitions and Inconsistency. Terms defined in the Agreement have the same meanings in this Deed. There are other definitions in Paragraph 12. If this Deed conflicts with the Agreement or an Other CSA, this Deed will prevail to the extend contemplated by this Deed (and where it purports to amend them, the Agreement or any Other CSA). Definitions in Paragraph 13 override any contrary provisions elsewhere in this Deed. view template Full text of Paragraph 1(a) 1(a) Definitions and Inconsistency. Unless otherwise defined in this Deed, capitalised terms defined in the Agreement have the same meanings in this Deed. Capitalised terms not otherwise defined in this Deed or in the Agreement have the meanings specified pursuant to Paragraph 12, and all references in this Deed to Paragraphs are to Paragraphs of this Deed. In the event of any inconsistency between this Deed and the provisions of the Agreement or any Other CSA, this Deed will prevail in the case of (i) matters concerning regulatory initial margin requirements relating to Covered Transactions (IM) posted by a Chargor and (ii) specific amendments made herein to the Agreement, the Schedule to the Agreement or any Other CSA, and in the event of any inconsistency between Paragraph 13 and the other provisions of this Deed, Paragraph 13 will prevail. view template Related agreements and comparisons Related Agreements Click here for the text of Section 1(a) in the 2016 ISDA VM CSA Comparisons 2016 VM CSA and 2018 English law IM CSD: click for comparison 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.

Content and comparisons

If sparse, staccato-style drafting is your kind of thing — it is mine — it is never an encouraging sign when the first words in an agreement are “Unless otherwise defined in this Deed”.

Here, we think, this leaden proviso is to account for the tedious fact that a credit support deed is not a mere appendage to the ISDA Master Agreement, but its own independent legal construct, able to stand on its own two feet and makes its own way in the world, not tied to the apron strings of mother ISDA, whereas a credit support annex is forever a part of the ISDA Master Agreement with no ontological existence beyond its loving arms. So, that “defined terms in the ISDA apply here” follows as a matter of logic for an annex, but not a self-supporting, suffrage-enjoying, deed of the realm, even if it does — or should — still go without saying. It is said; so be it. Nobody — but a part inside every prose stylist — died.

In the 2018, there is a pitifully specific articulation of something else that should, but alas does not, go without saying, but it manages to refrain from explaining what it means by “transfer” — a pledge, of course, not really being a transfer.

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Summary

I don’t know about you, but to me, this has the hallmarks of a group of legal ninjas who are procrastinating before getting on with a job they really don’t want to have to do.

You can almost see ISDA’s crack drafting squad™ rearranging the photos of the mother-in-law on the mantelpiece, dusting the lavatory cistern and organising the spice rack in the pantry, all the while knowing that eventually, inevitably — tomorrow, maybe, just as soon as someone has swept out the garden shed and polished the cutlery — they will have to get on with the tedious business of writing a special credit support document for regulatory margin.

There is real pathos here, though it elides gradually into bathos by the time we’re contemplating inconsistency fallbacks between inconsistency fallbacks. Beware, a rent in the space-tedium continuum that way lies.

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See also

• Hierarchy of Events in the ISDA Master Agreement
• Inconsistency in the ISDA Master Agreement

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