Waiver of immunity - GMRA Provision

2000 Global Master Repurchase Agreement
A Jolly Contrarian owner’s manual™

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Resources: 2010 GMRA: Full wikitext · Nutshell wikitext Navigation 2000 GMRA Table of Contents · 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · Schedule · Equities Annex: EA 1 · EA 2 · EA 3 · EA 4 · EA 5 · Buy/Sellback Annex · BSA 1 · BSA 2 · BSA 3 · BSA 4 · BNA 5 Index: Click ᐅ to expand: GMRA

Paragraph 19 in a Nutshell™

Use at your own risk, campers!

19. Waiver of immunity Each party hereby waives all immunity from jurisdiction, attachment and execution to which it might otherwise be entitled in any proceeding relating to this Agreement, may not plead immunity in any such proceeding. view template

Full text of Paragraph 19

19. Waiver of immunity Each party hereto hereby waives, to the fullest extent permitted by applicable law, all immunity (whether on the basis of sovereignty or otherwise) from jurisdiction, attachment (both before and after judgment) and execution to which it might otherwise be entitled in any action or proceeding in the Courts of England or of any other country or jurisdiction, relating in any way to this Agreement or any Transaction, and agrees that it will not raise, claim or cause to be pleaded any such immunity at or in respect of any such action or proceeding. view template

Related agreements and comparisons

Related agreements: Click here for the same clause in the 1996 MRA, when we get round to finding out the first thing about it. Comparison: Knowing and, really, caring very little about other kinds of repo agreement, we have nothing presently to compare the Global Master Repurchase Agreement with.

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Content and comparisons

Template:M comp disc GMRA 19

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Summary

For a wealth of reasons we obsess far more than we need about sovereign immunity in global markets contracts than we should — it is all good fun, though, and keeps more pedestrian legal eagles busy worrying about things. Even though the Global Master Repurchase Agreement is designed as a self-help remedy contract which should not need litigation, and even though there is generally no immunity from suit under a commercial contract under English law, and even though your geopolitical risk when dealing with sovereigns dwarfs your contractual one, people still insist. It will be annoying when you are asked to strike the clause, by an actual sovereign, and you find you have contracted out of your protections under the Sovereign Immunity Act 1978 though, won’t it.

Sovereign immunity and close-out netting

Does the fact that a counterparty may have, or may claim, sovereign immunity from legal proceedings before a foreign court (or its own courts, for that matter) invalidate a close-out netting clause?

We think not: the close-out mechanism does not require the intervention of any court to work: it is a self-help remedy. You terminate, net off and walk away.^[1] To the contrary, it would only come before a court were the Defaulting Party to apply to the court to challenge its exercise. And you can’t have it both ways: a sovereign immunity right only avails you if you stay away from court. The moment Queenie puts the matter before a court she submits to the court and, Q.E.D., waives her immunity. Sorry, Your Majesty: I don’t make the rules.