Absence of Litigation - 1992 ISDA Provision
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1992 ISDA Master Agreement A Jolly Contrarian owner’s manual™
3(c) in all its glory
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Overview
Section 3(c) was one of the bits of the 1992 ISDA that ISDA’s crack drafting squad™ “got mostly right” at the first time of asking. But still, some bright sparks on the ’Squad took it upon themselves, in the 2002 ISDA, to switch out reference to “Affiliates” which — I don’t know, might take in some distant half-bred cousin you don’t enormously care about and who doesn’t cast any real shadow on your creditworthiness — with “Credit Support Providers” and “Specified Entities” who no doubt more keenly do, but this leads to just more fiddliness in the Schedule over-stuffed with fiddliness, since one must then go to the trouble of specifying, and then arguing with your counterparties about, who should count as a Specified Entity for this remote and rather vacuous purpose.
Keeps the home fires burning in the hobbity shires where ISDA negotiators make their homes, we suppose.
Summary
Reference to Affiliates can be controversial, particularly for hedge fund managers.
More generally, absence of litigation is a roundly pointless representation, but seeing as (other than unaffiliated hedge fund managers) no-one complains about it, it is best to just leave well alone.
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- The JC’s famous Nutshell™ summary of this clause