Indemnifiable Tax - 1992 ISDA Provision

1992 ISDA Master Agreement A Jolly Contrarian owner’s manual™ Resources and navigation Resources Wikitext | Nutshell wikitext | 2002 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA Navigation Preamble | 1 • (a) (b) (c) | 2 • (a) (b) (c) (d) (e) | 3 • (a) (b) (c) (d) (e) (f) | 4 • (a) (b) (c) (d) (e) | 5 • 5(a) Events of Default: 5(a)(i) Failure to Pay or Deliver 5(a)(ii) Breach of Agreement 5(a)(iii) Credit Support Default 5(a)(iv) Misrepresentation 5(a)(v) Default Under Specified Transaction 5(a)(vi) Cross Default 5(a)(vii) Bankruptcy 5(a)(viii) Merger Without Assumption 5(b) Termination Events: 5(b)(i) Illegality 5(b)(ii) Tax Event 5(b)(iii) Tax Event Upon Merger 5(b)(iv) Credit Event Upon Merger 5(b)(v) Additional Termination Event (c) | 6 • (a) (b) (c) (d) (e) | 7 | 8 • (a) (b) (c) (d) | 9 • (a) (b) (c) (d) (e) (f) (g) | 10 | 11 | 12 • (a) (b) | 13 • (a) (b) (c) (d) | 14 | Index: Click ᐅ to expand: 2002 ISDA 1992 ISDA Definition Indemnifiable Tax in a Nutshell™ Use at your own risk, campers! An Indemnifiable Tax is any Tax that is not a Stamp Tax that is not a tax that would not be imposed if there were not a connection between the taxing authority’s jurisdiction and the recipient that did not arise solely from the recipient having performed any part of this Agreement in that jurisdiction. view template Full text of Definition Indemnifiable Tax “Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document). view template Related agreements and comparisons Related Agreements Click here for the text of Section Indemnifiable Tax in the 2002 ISDA Comparisons There is no difference between the versions. Click to compare this section in the 1992 ISDA and 2002 ISDA. Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Content and comparisons

The joyous expression first found voice in the 1987 ISDA and somewhat undercuts JC’spet theory that the absurd prolixity of modern commercial drafting is the fault of word processing. There wasn’t any word processing in 1986. It was all typewriters, carbon paper and Tipp-Ex.

Anyhow, you would like to think as the generations rolled on ISDA’s crack drafting squad™ could do something to improve a passage with a quintuple negative, wouldn’t you? Even, if, bloody-mindedly, to add a sixth negative, just to underline how scanty is the damn they give about the neurotic whinings of those, like JC, who are always simpering on about more economical expressions. In your face, prose stylists, such a stance might say. Actually, since I’m here, have a fricking seventh negative, punk, and brand it on your forehead so all who look upon you will know who it was who schooled you.

We can but dream, possums. We can only imagine what might have been. but no; they left the ghastly tract inviolate. In this place, at least the innocent spirit of 1987’s Children of the Forest — for this is their text.

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Summary

Negatives, negatives, everywhere

Without wishing to be overly negative, this one truly comes from the "wow" file in indefensible drafting:

... other than a tax which would not be imposed but for...

Not only a triple negative, but since the squad’s definition of Tax already contains a negative (being any tax that isn’t a Stamp Tax) and “Indemnifiable Tax” is itself often used in the negative (e.g. “a tax which is not an Indemnifiable Tax”) — or even double negative (e.g. “other than a tax which is not an Indemnifiable Tax”) in the body of the ISDA Master Agreement. That makes it a sextuple negative. Beat that ISLA.

Now: as we know, HAL 9000 is coming to a legal workspace near you and will soon deliver us from these noisome legal curlicues. The JC fed this language into the “OpenAI” text generator, and asked for a summary that a second grader (in old money, an eight-year-old) could understand and, well, the outcome is impressive:

Indemnifiable Tax is a kind of tax that is different from other taxes. It is a tax that is only imposed when someone is connected to the country or state that imposes the tax. This connection could be because the person is from the country, does business there, or has gotten money from there.

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General discussion

Stamp Taxes are not Indemnifiable Taxes

Stamp Taxes are not Indemnifiable Taxes. They are covered by Section 4(e) and not the general gross-up in Section 2(d). They are not covered by Payee Tax Representations.

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See also

• Section 2(d) (Deduction or Withholding for Tax).

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