Template:M comp disc 2002 ISDA 6(b)(iv)

The additions for Illegality and Force Majeure in the 2002 ISDA afford spectacular insight into the paranoid mind of ISDA’s crack drafting squad™, and the sort of rabbit hole one can find oneself falling down if one tries to over-think disaster scenarios. The contingencies the new wording addresses — none of which really bear much resemblance to the commercial world — are as follows:

• What happens if a party early terminates only some, but not all, Affected Transactions — which, sure, it is entitled to do but nonetheless, in most cases, would be a dick move: here the terminating party must give two extra Local Business Days’ notice over what it would have to give if it were terminating all Affected Transactions, to allow the Affected Party to respond to the notice closing out the remaining Affected Transactions.
• Being clear that where an Illegality or Force Majeure relates to a Credit Support Document, only the beneficiary of the afforded by that Credit Support Document can call for early termination. This stands to reason since the guaranteed party does not itself suffer any loss as a result of the failure of that credit support document, so should not be entitled to use it as an excuse to terminate Transactions (well — not unless and until that beneficiary has been a dick as contemplated above and terminated only some of the Affected Transactions. At this point, all bets are off.