Event of Default and Illegality - 1992 ISDA Provision
Content and comparisons
A simple piddling match between Events of Default and Illegality in the 1992 ISDA makes way for a full-blown hierarchy of competing circumstances justifying closeout of the ISDA Master Agreement in the 2002 ISDA.
Summary
Compared with its Byzantine equivalent in section 5(c) of the 2002 ISDA this is a Spartan cause indeed: in 1992 ISDA’s crack drafting squad™ assumed all ISDA users would be cold, rational economists who instinctively appreciate the difference between causation and correlation — or hadn’t considered the virtual certainty that they might not be — and therefore did not spell it out, but we will: Section 5(c) will help you out where your Event of Default is itself, and of itself, the Illegality, but it will not help where your Breach of Agreement simply is coincidental with one.
Force Majeure upgrade
Note if you have retrofitted a Force Majeure clause (as is common amongst latter-day users of the 1992 ISDA) you will have quite the tedious job wiring the consequences of your new Force Majeure events into the existing close-out mechanics in the 1992 ISDA preprint, which doesn’t contemplate force majeure but will have to. You could always use the ISDA Illegality and Force Majeure Protocol for that, of course.