Waiver of Immunity - Pledge GMSLA Provision
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2018 Global Master Securities Lending Agreement (Pledge Version)
Clause 26 in a Nutshell™ Use at your own risk, campers!
Full text of Clause 26
Related agreements and comparisons
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Content and comparisons
Clause 26 of the 2010 GMSLA is identical to the Clause 26 of the 2018 Pledge GMSLA.
Summary
Given that the sovereign is almost certainly going to be Lender not Borrower, one wonders whether a pledge GMSLA ameliorates the problems on has transferring title outright to an entity who has refused to waive sovereign immunity.
Sovereign immunity and the Cassanova problem
The fact that (unless agreed otherwise) Sovereign Immunity generally doesn’t apply to commercial contracts doesn’t stop industry standard commercial contracts purporting nonetheless waive that immunity which, in a ghastly ironic turn, makes sovereign immunity more likely to apply. For you may be sure agents, when representing sovereigns, will protest they do not have their client’s authority to waive its sovereign privileges. They will find themselves compelled, by the terms of their agency, to insist the waiver is deleted.
Now in the architecture of the ISDA Master Agreement this involves writing in the Schedule, something like “Section 13(d) shall not apply to Party A or Party B”. Is this mere silence on the matter, or is it an explicit agreement to contract out of it?
Had the ISDA Master Agreement only had the sense to shut up about sovereign immunity in the first place, there would have been no problem: what the eye don’t see the chef gets away with.
This will still be the stance you find yourself having to adopt. “I am not agreeing that sovereign immunity applies,” you will find yourself maintaining to the insistent gaze of your credit officer. “I am simply not saying that it doesn’t apply.”
This falls short of what the Sovereign Immunity Act 1978 requires for sovereign immunity to kick in. Hold that confident smile until it hurts.