Talk:Force Majeure - EFET Allowance Provision: Difference between revisions

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EFET
ISDA


§ 7.4 Settlement of Allowance Transaction Prevented by Force Majeure.
(d)(i)(4) Settlement Disruption Event


(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.
(A) Notification of Settlement Disruption Event: Upon the occurrence of a Settlement Disruption Event, either party may notify the other party in writing of the commencement of the Settlement Disruption Event and the EU Emissions Allowance Transaction(s) affected by that Settlement Disruption Event. Where the notification is from the party affected by the Settlement Disruption Event, to the extent available to such party, it shall also provide details of the Settlement Disruption Event and a non-binding estimate of the extent and the expected duration of its inability to perform its obligations due to the Settlement Disruption Event.
(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:
(B) Effect of Settlement Disruption Event: If a Settlement Disruption Event occurs, the obligations of both parties which would otherwise be required to be performed with respect to the EU Emissions Allowance Transaction(s) affected by the Settlement Disruption Event will be suspended for the duration of the Settlement Disruption Event and, subject to (d)(i)(4)(D) (Continuing Settlement Disruption Event) below, will not be required to be performed until the Settlement Disruption Event is overcome or ceases to exist. During the continuation of the Settlement Disruption Event, the party affected by the Settlement Disruption Event shall continue to use all reasonable endeavours to overcome the Settlement Disruption Event.
(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.
(C) Settlement Disruption Event Delayed Performance: Subject to Part (d)(i)(4)(D)(Continuing Settlement Disruption Event) below, upon the Settlement Disruption Event being overcome or ceasing to subsist, both parties will be required, as soon as reasonably practicable but not later than the second Delivery Business Day following the date upon which the Settlement Disruption Event has been overcome or ceases to exist, to resume full performance of their obligations under this Agreement in respect of the relevant EU Emissions Allowance Transaction(s) (including, for the avoidance of doubt, any suspended obligations).
(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.
(D) Continuing Settlement Disruption Event: In respect of an EU Emissions Allowance Transaction affected by a Settlement Disruption Event, where the Settlement Disruption Event continues:
(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.
(I) during the period ending 9 Delivery Business Days after the original date that, but for the Settlement Disruption Event, would have been the Delivery Date for an EU Emissions Allowance Transaction; or
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).
(II) if such 9 Delivery Business Day period would end after the Reconciliation Deadline on or immediately following the original date that, but for the Settlement Disruption Event, would have been the Delivery Date for an EU Emissions Allowance Transaction, during the period ending on that Reconciliation Deadline; or
(III) if such 9 Delivery Business Day period would end after the day that is 3 Delivery Business Days preceding the End of Phase Reconciliation Deadline on or immediately following the original date that, but for the Settlement Disruption Event, would have been the Delivery Date for an EU Emissions Allowance Transaction, during the period ending on the day that is 3 Delivery Business Days preceding that End of Phase Reconciliation Deadline,
then on that 9th Delivery Business Day, Reconciliation Deadline or day that is 3 Delivery Business Days preceding the End of Phase Reconciliation Deadline (as the case may be), an [Additional Termination Event][Illegality][1] shall be deemed to have occurred in respect of which the relevant EU Emissions Allowance Transaction is the sole Affected Transaction, both parties are Affected Parties[, no Waiting Period will apply] and, if an Early Termination Date results from that Termination Event, then, for purposes of determining any amount payable under Section 6(e) in respect of that Early Termination Date:
(i) if “Payment on Termination for Settlement Disruption” is specified to be applicable in the Annex to this Part 5 or the Confirmation for the relevant EU Emissions Allowance Transaction, it will be deemed that the requirement to perform the suspended obligations resumed on the Early Termination Date; or
(ii) if “Payment on Termination for Settlement Disruption” is specified to be inapplicable in the Annex to this Part or the Confirmation for the relevant EU Emissions Allowance Transaction, it will be deemed that the parties had no further delivery or payment obligations in respect of the EU Emissions Allowance Transaction after the occurrence of the Settlement Disruption Event (other than in respect of any payment due by one party in connection with delivery obligations already performed by the other party); provided, however, that
(i) Delivering Party shall promptly refund to Receiving Party any amount that may have been paid by Receiving Party in respect of the EU Emissions Allowance Transaction that is an Allowance Forward Transaction or a Call and
(ii) Receiving Party shall promptly refund to Delivering Party any amount that may have been paid by Delivering Party in respect of an EU Emissions Allowance Transaction that is a Put (in each case, other than in respect of delivered Allowances) together with interest on that amount in the same currency as that amount for the period from (and including) the date that amount was paid to (but excluding) the date of termination of such EU Emissions Allowance Transaction, at the rate certified by the party required to refund the amount to be a rate offered to such party by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by that party for purposes of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in the relevant market.

Latest revision as of 11:50, 21 November 2023

ISDA

(d)(i)(4) Settlement Disruption Event

(A) Notification of Settlement Disruption Event: Upon the occurrence of a Settlement Disruption Event, either party may notify the other party in writing of the commencement of the Settlement Disruption Event and the EU Emissions Allowance Transaction(s) affected by that Settlement Disruption Event. Where the notification is from the party affected by the Settlement Disruption Event, to the extent available to such party, it shall also provide details of the Settlement Disruption Event and a non-binding estimate of the extent and the expected duration of its inability to perform its obligations due to the Settlement Disruption Event. (B) Effect of Settlement Disruption Event: If a Settlement Disruption Event occurs, the obligations of both parties which would otherwise be required to be performed with respect to the EU Emissions Allowance Transaction(s) affected by the Settlement Disruption Event will be suspended for the duration of the Settlement Disruption Event and, subject to (d)(i)(4)(D) (Continuing Settlement Disruption Event) below, will not be required to be performed until the Settlement Disruption Event is overcome or ceases to exist. During the continuation of the Settlement Disruption Event, the party affected by the Settlement Disruption Event shall continue to use all reasonable endeavours to overcome the Settlement Disruption Event. (C) Settlement Disruption Event Delayed Performance: Subject to Part (d)(i)(4)(D)(Continuing Settlement Disruption Event) below, upon the Settlement Disruption Event being overcome or ceasing to subsist, both parties will be required, as soon as reasonably practicable but not later than the second Delivery Business Day following the date upon which the Settlement Disruption Event has been overcome or ceases to exist, to resume full performance of their obligations under this Agreement in respect of the relevant EU Emissions Allowance Transaction(s) (including, for the avoidance of doubt, any suspended obligations). (D) Continuing Settlement Disruption Event: In respect of an EU Emissions Allowance Transaction affected by a Settlement Disruption Event, where the Settlement Disruption Event continues: (I) during the period ending 9 Delivery Business Days after the original date that, but for the Settlement Disruption Event, would have been the Delivery Date for an EU Emissions Allowance Transaction; or (II) if such 9 Delivery Business Day period would end after the Reconciliation Deadline on or immediately following the original date that, but for the Settlement Disruption Event, would have been the Delivery Date for an EU Emissions Allowance Transaction, during the period ending on that Reconciliation Deadline; or (III) if such 9 Delivery Business Day period would end after the day that is 3 Delivery Business Days preceding the End of Phase Reconciliation Deadline on or immediately following the original date that, but for the Settlement Disruption Event, would have been the Delivery Date for an EU Emissions Allowance Transaction, during the period ending on the day that is 3 Delivery Business Days preceding that End of Phase Reconciliation Deadline, then on that 9th Delivery Business Day, Reconciliation Deadline or day that is 3 Delivery Business Days preceding the End of Phase Reconciliation Deadline (as the case may be), an [Additional Termination Event][Illegality][1] shall be deemed to have occurred in respect of which the relevant EU Emissions Allowance Transaction is the sole Affected Transaction, both parties are Affected Parties[, no Waiting Period will apply] and, if an Early Termination Date results from that Termination Event, then, for purposes of determining any amount payable under Section 6(e) in respect of that Early Termination Date: (i) if “Payment on Termination for Settlement Disruption” is specified to be applicable in the Annex to this Part 5 or the Confirmation for the relevant EU Emissions Allowance Transaction, it will be deemed that the requirement to perform the suspended obligations resumed on the Early Termination Date; or (ii) if “Payment on Termination for Settlement Disruption” is specified to be inapplicable in the Annex to this Part or the Confirmation for the relevant EU Emissions Allowance Transaction, it will be deemed that the parties had no further delivery or payment obligations in respect of the EU Emissions Allowance Transaction after the occurrence of the Settlement Disruption Event (other than in respect of any payment due by one party in connection with delivery obligations already performed by the other party); provided, however, that (i) Delivering Party shall promptly refund to Receiving Party any amount that may have been paid by Receiving Party in respect of the EU Emissions Allowance Transaction that is an Allowance Forward Transaction or a Call and (ii) Receiving Party shall promptly refund to Delivering Party any amount that may have been paid by Delivering Party in respect of an EU Emissions Allowance Transaction that is a Put (in each case, other than in respect of delivered Allowances) together with interest on that amount in the same currency as that amount for the period from (and including) the date that amount was paid to (but excluding) the date of termination of such EU Emissions Allowance Transaction, at the rate certified by the party required to refund the amount to be a rate offered to such party by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by that party for purposes of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in the relevant market.

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