Template:Nutshell EUA Annex Settlement Disruption
Settlement Disruption Event: Something beyond the affected party’s control that, having used all reasonable efforts, it cannot overcome and which makes it impossible to perform its obligations to deliver or to accept Allowances under an EU Emissions Allowance Transaction. The following will not count as Settlement Disruption Events if they cause an inability to deliver Allowances in the affected party’s Specified Holding Account:
- (a) the low or non-allocation of Allowances by any state;
- (b) a Member State or Central Administrator not replacing Third Compliance Period Allowances with Fourth Compliance Period Allowances; or
- (c) any party’s failure of a party to procure sufficient Allowances to meet its delivery obligations.
Something which otherwise would be a Settlement Disruption Event and a Suspension Event, will count as a Suspension Event and not a Settlement Disruption Event.
(d)(i)(4) Settlement Disruption Event
- (A) Notification: Either party may notify the other party in writing of a Settlement Disruption Event and the impacted Transactions. If it is the affected party, it must also give details of the Settlement Disruption Event and a non-binding estimate of the extent and likely duration of the disruption on its obligations.
- (B) Effect: Upon a Settlement Disruption Event both parties’ obligations will be suspended, subject to Continuing Settlement Disruption Event below, until the Settlement Disruption Event no longer prevents settlement. During the Settlement Disruption Event, the affected party must use all reasonable endeavours to settle.
- (C) Delayed Performance: Subject to Continuing Settlement Disruption Event below, once the Settlement Disruption Event no longer prevents settlement, both parties must, promptly and within two Delivery Business Days, resume their obligations under the Transactions.
- (D) Continuing Settlement Disruption Event: Where a Settlement Disruption Event continues:
- (I) for 9 Delivery Business Days after the originally scheduled Delivery Date; or, if shorter:
- (II) until a Reconciliation Deadline falling on or after the original Delivery Date; or, if shorter:
- (III) until the day 3 Delivery Business Days before the End of Phase Reconciliation Deadline falling on or after the original Delivery Date:
- then at that time there will be an Illegality where the affected Transaction is the sole Affected Transaction, both parties are Affected Parties, there is no Waiting Period and, if an Early Termination Date results, when determining the Early Termination Amount the suspended obligations will resume on the Early Termination Date, if “Payment on Termination for Settlement Disruption” applies, and if it does not the parties will have no further obligations after the Settlement Disruption Event other than for Unpaid Amounts and provided that (other than in respect of already-delivered Allowances)
- (i) Delivering Party must promptly refund any amount Receiving Party it was paid under a Allowance Forward Transaction or Call; and
- (ii) Receiving Party must promptly refund any amount Delivering Party it was paid under a Put
- together with interest from the payment date until the termination date of the Transaction at the overnight deposit rate for the relevant currency.