Absence of Litigation - ISDA Provision

2002 ISDA Master Agreement A Jolly Contrarian owner’s manual™ 3(c) in a Nutshell™ The JC’s Nutshell™ summaries are moving to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get them here. Sign up at Substack. 3(c) in all its glory 3(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it, any of its Credit Support Providers or any of its applicable Specified Entities any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. edit Related agreements and comparisons Click here for the text of Section 3(c) in the 1992 ISDA Click to compare this section in the 1992 ISDA and 2002 ISDA. Resources and Navigation This provision in the 1992 Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project Navigation Preamble | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 Events of Default: 5(a)(i) Failure to Pay or Deliver • 5(a)(ii) Breach of Agreement • 5(a)(iii) Credit Support Default • 5(a)(iv) Misrepresentation • 5(a)(v) Default Under Specified Transaction • 5(a)(vi) Cross Default • 5(a)(vii) Bankruptcy • 5(a)(viii) Merger without Assumption • Termination Events: 5(b)(i) Illegality • 5(b)(ii) Force Majeure Event • 5(b)(iii) Tax Event • 5(b)(iv) Tax Event Upon Merger • 5(b)(v) Credit Event Upon Merger • 5(b)(vi) Additional Termination Event Index: Click ᐅ to expand: 2002 ISDA - Premium 1992 ISDA - Premium Premium version of this page

Overview

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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

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Reference to Affiliates can be controversial, particularly for hedge fund managers.

More generally, absence of litigation it is roundly pointless representation, but seeing as (other than unaffiliated Hedge Fund managers) no-one really complains about it, it is best to just leave well alone. It is one for the life’s too short file.

But if you do see your life stretching away unendingly to the horizon, and you haven’t got anything else in the calendar in the next half hour, go west, young man. Or woman.

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• The JC’s famous Nutshell™ summary of this clause
• Absence of litigation representation generally: what is is there fore; what it tries to achieve.
• Some perspective seeking: What types of litigation are we talking about here: it is not just any old litigation.
• On “enforceability-threatening” and “existentially-threatening” litigation.
• The peril of deemed repetition — a potential risk, but really?
• On picking battles to fight, ditches to die in, etc.

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See also

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• Representations and Warranties Anatomy