Template:EFET Allowance Annex 7

§ 7 Non-Performance Due to Force Majeure and Suspension Event
For purposes of Allowance Transactions, § 7 of the General Agreement is hereby deleted in its entirety and replaced with the following new § 7 (Non-Performance due to Force Majeure and Suspension Event):
§ 7.1 Definition of Force Majeure. “Force Majeure” in the context of an Allowance Transaction means the occurrence of an event or circumstance beyond the control of the Party affected by Force Majeure (the “Affected Party”) that cannot, after using all reasonable efforts, be overcome and which makes it impossible for the Affected Party to perform its Transfer or acceptance of Transfer obligations in accordance with the terms of this Agreement and the relevant Emissions Trading Scheme. For the avoidance of doubt, but without limitation, Force Majeure shall not include an event or circumstance where there are insufficient Allowances in the relevant Holding Account(s) to effect the required Transfer, whether that insufficiency is caused by the low or non-allocation of Allowances from a Member State or a Non-Member State, the delay or failure of a Member State or Central Administrator to replace Allowances of the Third Compliance Period with Allowances for the Fourth Compliance Period or the failure of that Party to procure sufficient Allowances to meet its Transfer obligations. If an event or circumstance which would otherwise constitute or give rise to Force Majeure also constitutes a Suspension Event, it will be treated as a Suspension Event and will not constitute a Force Majeure event.
§ 7.2 Suspension of Delivery and Acceptance Obligations. If a Party is fully or partly prevented due to Force Majeure from performing its obligations of Transfer or acceptance of Transfer, as applicable, under one or more Allowance Transactions, no breach or default on the part of the Affected Party shall be deemed to have occurred and the obligations of both Parties with respect to the relevant Allowance Transaction(s) will be suspended for the period of time and to the extent that such Force Majeure prevents their performance. During the continuation of Force Majeure, the Affected Party shall continue to use all reasonable endeavours to overcome the Force Majeure. Subject to § 7.4 (Settlement of Allowance Transaction Prevented by Force Majeure) below, upon the Force Majeure event being overcome or it ceasing to subsist, both Parties will, as soon as reasonably practicable thereafter (and in any event no later than the second Delivery Business Day following the cessation or Parties overcoming such Force Majeure event), resume full performance of their obligations under the Agreement in respect of the relevant Allowance Transaction(s) (including, For the avoidance of doubt, any suspended obligations).

§ 7.3 Notification and Mitigation of Force Majeure. The first Party learning of the occurrence of an event of Force Majeure shall, as soon as practicable, notify the other Party of the commencement of Force Majeure. Each Party shall then undertake in good faith to determine, and notify the other Party with, to the extent then available, a non-binding estimate of the extent and expected duration of the Force Majeure event and its impact on performance of all Allowance Transaction(s) affected by the event of Force Majeure. The Affected Party shall use all commercially reasonable efforts to mitigate the effects of Force Majeure and shall, during the continuation of Force Majeure, provide the other Party with reasonable updates, when and if available, of the extent and expected duration of its inability to perform.

§ 7.4 Settlement of Allowance Transaction Prevented by Force Majeure.

(a) Termination for Force Majeure. Where Force Majeure continues for a period of time ending on the earlier to occur of: (a) a period of nine (9) Delivery Business Days from the date that, but for Force Majeure, would have been the Delivery Date of the relevant Allowance Transaction(s); (b) the Reconciliation Deadline; or (c) the day which falls three (3) Delivery Business Days prior to the End of Phase Reconciliation Deadline, either Party may, by written notice to the other Party, terminate all (but not less than all) of the Allowance Transaction(s) affected by Force Majeure.

(b) Force Majeure Termination Payment. In the event and to the extent that an Allowance Transaction is terminated in accordance with § 7.4(a), the Parties’ corresponding Transfer and acceptance of Transfer obligations under the terminated Allowance Transaction(s) shall be released and discharged. By specifying in Part II of this Allowances Appendix which of the following subparagraphs (i), (ii) or (iii) they wish to be operative, the Parties shall designate the consequences that will follow as a result of the Force Majeure event and what, if any, rights and obligations they wish to apply between them in the event of termination of an Allowance Transaction due to Force Majeure:

(i) No Termination Payment. No Termination Payment or other financial settlement obligation shall be applicable (other than, For the avoidance of doubt, payment for any Allowances Transferred under such Allowance Transaction which were not prevented due to Force Majeure and/or payment of any damages due for non-performance of any portion of the terminated Allowance Transaction not excused due to Force Majeure (hereinafter collectively, “Unpaid Amounts”) and each Party shall be permanently released and discharged of any further obligations with respect to the Allowance Transaction terminated by reason of Force Majeure.

(ii) Two-Way Market Quotation Termination Payment. Each Party shall obtain three (3) mid-market quotations from Dealers for replacement Allowance Transaction(s) on the same terms as the unperformed portion(s) of the relevant Allowance Transaction(s) affected by Force Majeure (without taking into account the current credit-worthiness of the requesting Party or any Credit Support Documents or other Performance Assurance between the Parties). Each Party will then calculate the average of the quotations it obtained and the amount payable shall be equal to: (A) the sum of (i) one half of the difference between the higher amount determined by one Party (“X”) and the lower amount determined by the other Party (“Y”) and (ii) any Unpaid Amounts owing to X; less (B) any Unpaid Amounts owing to Y. If the resultant amount is a positive number, Y shall pay it to X; if it is a negative number, X shall pay the absolute value of such amount to Y. If the three (3) mid-market quotations cannot be obtained, all quotations will be deemed to be zero (0) and no payment shall be due in respect of the termination of such Allowance Transaction.

(iii) Two-Way Loss Termination Payment. Each Party will determine its Loss in respect of the relevant Allowance Transaction(s) and an amount will be payable equal to one half of the difference between the Loss of the Party with the higher Loss (“X”) and the Loss of the Party with the lower Loss (“Y”). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of such amount to Y.

Payments due under this § 7.4(b) shall, unless otherwise agreed, be invoiced and made in accordance with the requirements of the Payment Cycle selected by the Parties in respect of § 13.2 (Payment).

§ 7.5 Suspension Event.

(a) Definition of Suspension Event. “Suspension Event) means the occurrence of any of the following events which makes it impossible for a Party affected by the Suspension Event (the “SE Affected Party”) to perform its Transfer or acceptance of Transfer obligations in accordance with the terms of the Allowance Transaction and the relevant Emissions Trading Scheme, through a Relevant Registry:

(i) absence of Registry Operation; or

(ii) the occurrence of an Administrator Event.

(b) Suspension of Delivery and Acceptance Obligations. If a Party is prevented due to a Suspension Event from performing its obligations of Transfer or acceptance of Transfer, as applicable , under an Allowance Transaction (the “SE Affected Transaction), no breach or default on the part of the SE Affected Party shall be deemed to have occurred and the obligations of both Parties with respect to the Allowance Transaction affected by the Suspension Event will be suspended for the duration of the Suspension Event and, subject to § 7.5(e) (Settlement of Allowance Transaction Prevented by Suspension Event) below, will not be required to be performed until the day that is ten (10) Delivery Business Days after the Suspension Event is overcome or ceases to subsist (the “Delayed Delivery Date). Subject to § 7.5(e) (Settlement of Allowance Transaction Prevented by Suspension Event) below, upon the Suspension Event being overcome or ceasing to subsist, both Parties will resume full performance of their obligations (including, For the avoidance of doubt, any suspended obligations) under the Agreement in respect of the relevant Allowance Transaction.

(c) Notification and Mitigation of Suspension Event. The first Party learning of the occurrence of a Suspension Event shall, as soon as practicable, notify the other Party of the commencement of the Suspension Event. Each Party shall then undertake in good faith to determine, and notify the other Party with, to the extent then available, a non-binding estimate of the extent and expected duration of the Suspension Event and its impact on performance of all Allowance Transactions affected by the Suspension Event. The SE Affected Party shall use all commercially reasonable efforts to mitigate the effects of the Suspension Event and shall, during the continuation of the Suspension Event, provide the other Party with reasonable updates, when and if available, of the extent and expected duration of its inability to perform. Each Party agrees in good faith to immediately notify the other Party once the Suspension Event is overcome or ceases to subsist.

(d) Cost of Carry on Delayed Deliveries. In the event that all or part of the Contract Quantity of a SE Affected Transaction is Transferred to Buyer on or before the Delayed Delivery Date, Buyer shall pay to Seller an additional amount (the “Cost of Carry Amount”) calculated at the Cost of Carry Rate for the Cost of Carry Calculation Period on the product of the number of Allowances so Transferred and the Contract Price for the relevant Allowance Transaction, divided by three hundred and sixty (360). Such Cost of Carry Amount shall be identified in the relevant invoice.

(e) Settlement of Allowance Transaction Prevented by Suspension Event. Where a Suspension Event for a SE Affected Transaction continues to exist on the applicable Long Stop Date, the SE Affected Transaction shall be deemed an Allowance Transaction affected by Force Majeure and either Party may, by written notice to the other Party, terminate all (but not less than all) of the SE Affected Allowance Transaction(s) in accordance with § 7.4(b) (Force Majeure Termination Payment) of the Allowances Appendix and in such instance § 7.4(b)(i) (No Termination Payment) shall apply.