Template:Sovereign immunity and closeout: Difference between revisions
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===[[Sovereign immunity]] and [[close-out netting]]=== | ===[[Sovereign immunity]] and [[close-out netting]]=== | ||
Does the fact that a counterparty may have, or may claim, sovereign immunity from legal proceedings before a foreign court (or its own courts, for that matter) invalidate a close-out netting clause? | Does the fact that a counterparty may have, or may claim, [[sovereign immunity]] from legal proceedings before a foreign court (or its own courts, for that matter) invalidate a [[close-out netting]] clause? | ||
We think not: the [[close-out]] mechanism does not require the intervention of any court to work: it is a self-help remedy. You terminate, net off and walk away.<ref>Only if you are still owed money might you seek a court’s assistance, but that is ''post'' netting debt recovery, when you were ''still'' owed money after netting had worked its wristy magic.</ref> To the contrary, it would only come before a court were the {{isdaprov|Defaulting Party}} to apply to the court to challenge its exercise. And you can’t | We think not: the [[close-out]] mechanism does not require the intervention of any court to work: it is a self-help remedy. You terminate, net off and walk away.<ref>Only if you are still owed [[money]] might you seek a court’s assistance, but that is ''post'' netting [[debt]] recovery, when you were ''still'' owed money after [[netting]] had worked its wristy magic.</ref> To the contrary, it would only come before a court were the {{isdaprov|Defaulting Party}} to apply to the court to challenge its exercise. And you can’t have it both ways: a [[sovereign immunity]] right only avails you ''if you stay away from court''. The moment Queenie puts the matter before a court she submits to the court and, QED, waives her immunity. Sorry, Your Majesty: I don’t make the rules. <br> | ||
Revision as of 12:58, 6 April 2021
Sovereign immunity and close-out netting
Does the fact that a counterparty may have, or may claim, sovereign immunity from legal proceedings before a foreign court (or its own courts, for that matter) invalidate a close-out netting clause?
We think not: the close-out mechanism does not require the intervention of any court to work: it is a self-help remedy. You terminate, net off and walk away.[1] To the contrary, it would only come before a court were the Defaulting Party to apply to the court to challenge its exercise. And you can’t have it both ways: a sovereign immunity right only avails you if you stay away from court. The moment Queenie puts the matter before a court she submits to the court and, QED, waives her immunity. Sorry, Your Majesty: I don’t make the rules.