Template:IETA Master Agreement Force Majeure and 13
“Force Majeure” means the occurrence of any event or circumstance, beyond the control of the FM Affected Party, that is not a Suspension Event, and that could not, after using all reasonable efforts, be overcome and which makes it impossible for the FM Affected Party to either (a) deliver the Period Traded Allowances from any Holding Account in any Registry (or if one or more Delivering Party's Holding Accounts are specified, from such Delivering Party's Holding Account(s)) or (b) accept the Period Traded Allowances into the Receiving Party's Holding Account(s), in accordance with the EU ETS. The inability of a Party to perform a relevant delivery or acceptance obligation as a result of it having insufficient Period Traded Allowances in the relevant Holding Account (whether caused by: the low or non-allocation of Allowances from a Member State, non-Member State or Central Administrator; the delay or failure of a Member State or Central Administrator to replace Allowances with Allowances for the subsequent Validity Period; or the failure of that Party to procure sufficient Allowances to meet its delivery obligations) shall not constitute a Force Majeure; provided, however, that this is not an exhaustive list of events which will not constitute a Force Majeure and is provided for the avoidance of doubt only.
Upon the occurrence of a Force Majeure, either Party may notify the other Party in writing of the commencement of the Force Majeure. Where the notification is from the Party affected by the Force Majeure (the “FM Affected Party”), to the extent available to such Party, it should also provide details of the Force Majeure and a non-binding estimate of the extent and the expected duration of its inability to perform its obligations due to the Force Majeure.
The obligations of both Parties under this Agreement with respect to the Transaction(s) affected by the Force Majeure (the “FM Affected Transactions”) will be suspended for the duration of the Force Majeure. During the continuation of the Force Majeure, the FM Affected Party shall use all reasonable endeavors to overcome the Force Majeure. Upon the Force Majeure being overcome or it ceasing to subsist, both Parties will, as soon as reasonably practicable thereafter, resume full performance of their obligations under this Agreement with respect to the FM Affected Transactions (including, for the avoidance of doubt, any suspended obligations).
Where a Force Majeure (a) continues for a period of nine (9) Delivery Banking Days or (b) continues up until three (3) Delivery Banking Days prior to any Validity Period Reconciliation Deadline (if sooner), either Party may, by written notice to the other Party, terminate all (but not less than all) FM Affected Transactions.
13.2 Force Majeure Termination Payment. If an FM Affected Transaction is terminated in accordance with Clause 13.1 (Force Majeure and Suspension Event), the Parties’ corresponding Transfer and acceptance obligations shall be released and discharged and the Force Majeure termination payment to be made between the Parties (if any) shall be calculated in accordance with paragraph (a), (b) or (c) below, as selected by the Parties in Schedule 2 (‘‘Elections’’).
- 13.2(a) No Termination Payment. No Force Majeure termination payment shall be made between Parties; provided, however, that the obligation to pay any Unpaid Amounts shall survive the termination of the FM Affected Transaction.
- 13.2(b) Two-way Market Quotation Termination Payment. Both Parties shall go into the market and obtain three (3) mid-market quotations in the Termination Currency from third party dealers for a replacement Transaction for the same amount of Period Traded Allowances (without taking into account the current credit-worthiness of the Requesting Party or any existing Credit Support Document). 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 so determined (the Party determining the higher amount being “X”) and the lower amount so determined (the Party determining the lower amount being “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 three (3) mid- market quotations cannot be obtained, all quotations will be deemed to be zero.
- 13.2(c) Two-way Loss Termination Payment. Each Party will determine its Loss in respect of the FM Affected Transaction and an amount will be payable in the Termination Currency 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.
13.3 Where an event or circumstance that would otherwise constitute or give rise to an Event of Default also constitutes a Force Majeure or a Suspension Event, it is to be treated as Force Majeure or a Suspension Event and not as an Event of Default. Where an event or circumstance that would otherwise constitute a Force Majeure also constitutes a Suspension Event, it is to be treated as a Suspension Event and not as a Force Majeure.