Absence of Litigation - ISDA Provision
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ISDA Anatomy™
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Reference to Affiliates can be controversial, particularly for hedge fund managers.
More generally, absence of litigation it is roundly pointless representation, but seeing as (other than unaffiliated Hedge Fund managers) no-one really complains about it, it is best to just leave well alone. It is one for the life’s too short file.
But if you do see your life stretching away unendingly to the horizon, and you haven’t got anything else in the calendar in the next half hour, go west, young man. If you can’t try this:
Absence of litigation generally
An absence of litigation representation seeks to address litigation carrying two particular risks:
- Enforceability: Litigation that could somehow undermine or prejudice the very enforceability of life was we know it (a.k.a the agreement you are presently negotiating);
- Credit deterioration: Litigation that is so monstrous in scope that it threatens to wipe your counterparty from the face of the earth altogether, while it still owes you under the agreement you’re negotiating.
====Enforceability-threatening litigation==== Firstly, Earth to Planet ISDA: what kind of litigation or regulatory action — we presume about something unrelated to this agreement since, by your theory, it doesn’t damn well exist yet — could adversely impact in the enforceability of this future private legal contract between one of the litigants and an unrelated, and ignorant, third party?
Search me. But still, I rest assured there will an ISDA boxwallah out there somewhere who could think of something.
====Existentially apocalyptic litigation==== Look, if your counterparty is banged up in court proceedings so awful to behold that an adverse finding might bankrupt it altogether, and your credit sanctioning team hasn’t got wind of it independently then, friend, you have way, way bigger problems than whether you have this feeble covenant. And, if you are only catching it at all thanks to a carelessly given absence of litigation rep, by the time said litigation makes itself known to you<ref>Judgment day, in other words.</re>won’t it be a bit late?
Pick your battles
All that said, and probably for all of the above reasons, parties tend not to care less about this representation too vehemently, so your practical course is most likely to leave it where you find it.