Waiver of Immunity - GMSLA Provision: Difference between revisions

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{{gmslaanat|26}}
{{gmslaanat|26}}
{{sovereign immunity}}
[[Sovereign immunity]] is a particular issue in an [[agency lending]] arrangement because:
[[Sovereign immunity]] is a particular issue in an [[agency lending]] arrangement because:
*Structurally, sovereigns will tend to be lenders in an agency set up
*Structurally, sovereigns will tend to be [[Agent lender|lenders]] in an [[Agent lending|agency]] set up
*The Borrower [[title transfer]]s away a bigger slug of {{gmslaprov|collateral}} away than it borrows from the sovereign {{gmslaprov|Lender}}.  
*The {{gmslaprov|Borrower}} [[title transfer]]s away a bigger slug of {{gmslaprov|collateral}} away than it borrows from the sovereign {{gmslaprov|Lender}}.  
*At any point, should the [[Sovereign]] decide to play [[who’s Queen]], the borrower is in the hole for 5.  
*At any point, should the [[Sovereign]] decide to play [[who’s Queen]], the {{gmslaprov|Borrower}} is in the hole for 5.  


Interestingly, a [[pledge GMSLA]] might fix this problem by never transferring collateral to the Sovereign in the first place.
Interestingly, a [[pledge GMSLA]] might fix this problem by never transferring collateral to the Sovereign in the first place.
{{contractual waiver of sovereign immunity}}
{{seealso}}
{{seealso}}
*[[Sovereign immunity]]
*[[Sovereign immunity]]
*[[Waiver of Immunity - Pledge GMSLA Provision]]
*[[Waiver of Immunity - Pledge GMSLA Provision]]

Revision as of 10:24, 31 May 2019

GMSLA Anatomy™


In a Nutshell Clause 26:

26. Waiver of Immunity
Each Party waives all immunity it might otherwise have in any legal action relating to this Agreement and agrees not to claim such an immunity during any such action.
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2010 GMSLA full text of Clause 26:

26. Waiver of Immunity
Each Party hereby waives all immunity (whether on the basis of sovereignty or otherwise) from jurisdiction, attachment (both before and after judgement) and execution to which it might otherwise be entitled in any action or proceeding in the courts of England or of any other country or jurisdiction relating in any way to this Agreement and agrees that it will not raise, claim or cause to be pleaded any such immunity at or in respect of any such action or proceeding.
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2010 GMSLA: Full wikitext · Nutshell wikitext | GMLSA legal code | GMSLA Netting

Pledge GMSLA: Hard copy (ISLA) · Full wikitext · Nutshell wikitext |
1995 OSLA: OSLA wikitext | OSLA in a nutshell | GMSLA/PGMSLA/OSLA clause comparison table
From Our Friends On The Internet: Guide to equity finance | ISLA’s guide to securities lending for regulators and policy makers

Navigation
2010 GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · Schedule · Agency Annex · Addendum for Pooled Principal Agency Loans

2018 Pledge GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · 28 · Schedule · Agency Annex

Stock lending agreement comparison: Includes navigation for the 2000 GMSLA and the 1995 OSLA

Index: Click to expand:
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Sovereign immunity is a particular issue in an agency lending arrangement because:

Interestingly, a pledge GMSLA might fix this problem by never transferring collateral to the Sovereign in the first place. The great question of whether one should specifically exclude sovereign immunity from a commercial contract governed by English law.

Spoiler: No.

Twist: Industry-standard commercial contracts[1] do anyway. This creates more problems than it solves.

General

Waiving sovereign immunity is a faintly stupid thing to do if your commercial contract happens to be governed by English law, since the Sovereign Immunity Act 1978 excludes any immunity of a state to a commercial contract. Now, to be sure, here arises a great opportunity for the chicken lickens in your litigation department to pipe up. “What if,” they will say, “the sovereign ignores the exclusive jurisdiction clause, and takes action against you in its own court? What then, say ye?”

You got me. But hang on a minute: can you really launch an action in your own court and, by the same lights, claim immunity from suit? Is this not having your Brexit cake and eating it too? And even if it isn’t[2] we are talking here about a sovereign who has, with the complicity of its own court system, already ignored one term of your contract (exclusive jurisdiction). Why would it respect the rest any way?

Sovereign immunity and the Cassanova problem

The fact that (unless agreed otherwise) Sovereign Immunity generally doesn’t apply to commercial contracts doesn’t stop industry standard commercial contracts purporting nonetheless waive that immunity which, in a ghastly ironic turn, makes sovereign immunity more likely to apply. For you may be sure agents, when representing sovereigns, will protest they do not have their client’s authority to waive its sovereign privileges. They will find themselves compelled, by the terms of their agency, to insist the waiver is deleted.

Now in the architecture of the ISDA Master Agreement this involves writing in the Schedule, something like “Section 13(d) shall not apply to Party A or Party B”. Is this mere silence on the matter, or is it an explicit agreement to contract out of it?

Had the ISDA Master Agreement only had the sense to shut up about sovereign immunity in the first place, there would have been no problem: what the eye don’t see the chef gets away with.

This will still be the stance you find yourself having to adopt. “I am not agreeing that sovereign immunity applies,” you will find yourself maintaining to the insistent gaze of your credit officer. “I am simply not saying that it doesn’t apply.”

This falls short of what the Sovereign Immunity Act 1978 requires for sovereign immunity to kick in. Hold that confident smile until it hurts.

See also

  1. E.g.,the ISDA Master Agreement and the 2010 GMSLA.
  2. SIT DOWN AT THE BACK with all your talk about counterclaims and enforcement of judgments.