Force Majeure Event - ISDA Provision: Difference between revisions
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{{ISDAnumberingdiscrepancy}} | {{ISDAnumberingdiscrepancy}} | ||
==Section {{isdaprov|5(b)(ii)}} {{2002ma}}== | ===Section {{isdaprov|5(b)(ii)}} {{2002ma}}=== | ||
{{isdaquote|{{isdaprov|5(b)(ii)}} {{isdaprov|Force Majeure Event}}. After giving effect to any applicable provision, disruption fallback or remedy specified in, or <br>pursuant to, the relevant Confirmation or elsewhere in this {{isdaprov|Agreement}}, by reason of [[force majeure]] or act of state occurring <br>after a {{isdaprov|Transaction}} is entered into, on any day:― <br> | {{isdaquote|{{isdaprov|5(b)(ii)}} {{isdaprov|Force Majeure Event}}. After giving effect to any applicable provision, disruption fallback or remedy specified in, or <br>pursuant to, the relevant Confirmation or elsewhere in this {{isdaprov|Agreement}}, by reason of [[force majeure]] or act of state occurring <br>after a {{isdaprov|Transaction}} is entered into, on any day:― <br> | ||
:(1) the {{isdaprov|Office}} through which such party (which will be the {{isdaprov|Affected Party}}) makes and receives payments or deliveries with <br>respect to such {{isdaprov|Transaction}} is prevented from performing any absolute or contingent obligation to make a payment or delivery <br>in respect of such Transaction, from receiving a payment or delivery in respect of such {{isdaprov|Transaction}} or from complying with <br>any other material provision of this {{isdaprov|Agreement}} relating to such {{isdaprov|Transaction}} (or would be so prevented if such payment, <br>delivery or compliance were required on that day), or it becomes impossible or impracticable for such {{isdaprov|Office}} so to perform, <br>receive or comply (or it would be impossible or impracticable for such {{isdaprov|Office}} so to perform, receive or comply if such <br>payment, delivery or compliance were required on that day); or <br> | :(1) the {{isdaprov|Office}} through which such party (which will be the {{isdaprov|Affected Party}}) makes and receives payments or deliveries with <br>respect to such {{isdaprov|Transaction}} is prevented from performing any absolute or contingent obligation to make a payment or delivery <br>in respect of such Transaction, from receiving a payment or delivery in respect of such {{isdaprov|Transaction}} or from complying with <br>any other material provision of this {{isdaprov|Agreement}} relating to such {{isdaprov|Transaction}} (or would be so prevented if such payment, <br>delivery or compliance were required on that day), or it becomes impossible or impracticable for such {{isdaprov|Office}} so to perform, <br>receive or comply (or it would be impossible or impracticable for such {{isdaprov|Office}} so to perform, receive or comply if such <br>payment, delivery or compliance were required on that day); or <br> | ||
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so long as the force majeure or act of state is beyond the control of such Office, such party or such Credit Support <br>Provider, as appropriate, and such {{isdaprov|Office}}, party or {{isdaprov|Credit Support Provider}} could not, after using all reasonable efforts <br>(which will not require such party or {{isdaprov|Credit Support Provider}} to incur a loss, other than immaterial, incidental expenses), <br>overcome such prevention, impossibility or impracticability;|5(b)(ii)|2002}} | so long as the force majeure or act of state is beyond the control of such Office, such party or such Credit Support <br>Provider, as appropriate, and such {{isdaprov|Office}}, party or {{isdaprov|Credit Support Provider}} could not, after using all reasonable efforts <br>(which will not require such party or {{isdaprov|Credit Support Provider}} to incur a loss, other than immaterial, incidental expenses), <br>overcome such prevention, impossibility or impracticability;|5(b)(ii)|2002}} | ||
==Section {{isdaprov| | ==Section {{isdaprov|5(b)(ii)}} in the {{1992ma}}== | ||
There is no equivalent in the {{1992ma}}. An {{isdaprov|Impossibility}} clause was frequently written into the schedule, which endeavoured to do the same thing. | There is no equivalent to the {{isdaprov|Force Majeure Event}} in the {{1992ma}}. An {{isdaprov|Impossibility}} clause was frequently written into the schedule, which endeavoured to do the same thing. | ||
===Incorporating | ===Incorporating Force Majeure into the {{1992ma}}=== | ||
On the subject of incorporating Force Majeure into the 1992 Master: | On the subject of incorporating Force Majeure into the 1992 Master: | ||
Revision as of 14:06, 13 July 2012
Numbering Discrepancy: Note the numbering discrepancy in Section 5(b) between the 1992 ISDA and 2002 ISDA. This is caused by a new 5(b)(ii) (Force Majeure Event) in the 2002 ISDA before Tax Event, which is thus shunted from Section 5(b)(ii) (in the 1992 ISDA) to Section 5(b)(iii) (in the 2002 ISDA).
Section 5(b)(ii) 2002 ISDA
2002 ISDA
5(b)(ii) Force Majeure Event. After giving effect to any applicable provision, disruption fallback or remedy specified in, or
pursuant to, the relevant Confirmation or elsewhere in this Agreement, by reason of force majeure or act of state occurring
after a Transaction is entered into, on any day:―
- (1) the Office through which such party (which will be the Affected Party) makes and receives payments or deliveries with
respect to such Transaction is prevented from performing any absolute or contingent obligation to make a payment or delivery
in respect of such Transaction, from receiving a payment or delivery in respect of such Transaction or from complying with
any other material provision of this Agreement relating to such Transaction (or would be so prevented if such payment,
delivery or compliance were required on that day), or it becomes impossible or impracticable for such Office so to perform,
receive or comply (or it would be impossible or impracticable for such Office so to perform, receive or comply if such
payment, delivery or compliance were required on that day); or - (2) such party or any Credit Support Provider of such party (which will be the Affected Party) is prevented from performing
any absolute or contingent obligation to make a payment or delivery which such party or Credit Support Provider has under
any Credit Support Document relating to such Transaction, from receiving a payment or delivery under such Credit Support
Document or from complying with any other material provision of such Credit Support Document (or would be so prevented if
such payment, delivery or compliance were required on that day), or it becomes impossible or impracticable for such party or
Credit Support Provider so to perform, receive or comply (or it would be impossible or impracticable for such party or
Credit Support Provider so to perform, receive or comply if such payment, delivery or compliance were required on that day),
so long as the force majeure or act of state is beyond the control of such Office, such party or such Credit Support
Provider, as appropriate, and such Office, party or Credit Support Provider could not, after using all reasonable efforts
(which will not require such party or Credit Support Provider to incur a loss, other than immaterial, incidental expenses),
overcome such prevention, impossibility or impracticability;
(view template)
Section 5(b)(ii) in the 1992 ISDA
There is no equivalent to the Force Majeure Event in the 1992 ISDA. An Impossibility clause was frequently written into the schedule, which endeavoured to do the same thing.
Incorporating Force Majeure into the 1992 ISDA
On the subject of incorporating Force Majeure into the 1992 Master:
No problem including the concept but it then has to be carried through to its logical conclusion i.e.:
- hierachy of events,
- impact re deferral of Early Termination Amount etc.
The concept also impacts basis of Close Out because the 2002 requires use of true mids for valuation i.e, not the mean of each party's view of the bid/offer where a force majeure event (or illegality) occurs, which is what you effectively get under the 1992 "two affected parties" option.