Template:M summ GMRA 19: Difference between revisions

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[[19 - GRMA Provision|For]] a wealth of reasons we obsess far more than we need about [[sovereign immunity]] in global markets contracts than we should — it is all good fun, though, and keeps more pedestrian legal eagles busy worrying about things. Even though the {{gmra}} is designed as a self-help remedy contract which should not need litigation, and even though there is generally no immunity from suit under a commercial contract under English law, and even though your geopolitical risk when dealing with sovereigns dwarfs your contractual one, people still insist. It will be annoying when you are asked to strike the clause, by an actual sovereign, and you find you have contracted out of your protections under the [[Sovereign Immunity Act 1978]] though, won’t it.  
[[19 - GMRA Provision|For]] a wealth of reasons we obsess far more than we need about [[sovereign immunity]] in global markets contracts than we should — it is all good fun, though, and keeps more pedestrian legal eagles busy worrying about things. Even though the {{gmra}} is designed as a self-help remedy contract which should not need litigation, and even though there is generally no immunity from suit under a commercial contract under English law, and even though your geopolitical risk when dealing with sovereigns dwarfs your contractual one, people still insist. It will be annoying when you are asked to strike the clause, by an actual sovereign, and you find you have contracted out of your protections under the [[Sovereign Immunity Act 1978]] though, won’t it.  


{{sovereign immunity and closeout}}
{{sovereign immunity and closeout}}

Latest revision as of 11:01, 27 May 2022

For a wealth of reasons we obsess far more than we need about sovereign immunity in global markets contracts than we should — it is all good fun, though, and keeps more pedestrian legal eagles busy worrying about things. Even though the Global Master Repurchase Agreement is designed as a self-help remedy contract which should not need litigation, and even though there is generally no immunity from suit under a commercial contract under English law, and even though your geopolitical risk when dealing with sovereigns dwarfs your contractual one, people still insist. It will be annoying when you are asked to strike the clause, by an actual sovereign, and you find you have contracted out of your protections under the Sovereign Immunity Act 1978 though, won’t it.

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, Q.E.D., waives her immunity. Sorry, Your Majesty: I don’t make the rules.

  1. ↑ 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.
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