ISDA code project

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The Devil’s AdvocateTM

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ISDA code project

Index — Click ᐅ to expand:

This is the JC’s running attempt to codify a well-known and much-loved master agreement — in this case the dear old 2002 ISDA into a set of formal logical propositions. The idea is to test the hunch that there are a limited number of basic legal propositions — let’s call them “standard propositions” — that cover a great deal of the word count in the average legal document.

Even though the ways, as a matter of syntax, of validly articulating those standard propositions may be infinite, they boil down to the same essential thing. So, for example, a definition has a “term”, an “operator”, (which may be either “means” (exclusive) or “includes” (non-exclusive) and a “definition”, and they all work the same way:

“[MiFID]” [means] Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.

See also

For what this is all about see Semantic code project

ISDA 2002 2002 Code 2002 Essential Grammar

1 Interpretation
1(a) Definitions

1(a) Definitions. The terms defined in Section 14 and elsewhere in this Master Agreement will have the meanings therein specified for the purpose of this Master Agreement.
application [
label ISDA 2002 1(a) app
what Definitions
which Section 14 and Master Agreement
where Master Agreement] edit
Code application
1(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement, such Confirmation will prevail for the purpose of the relevant Transaction.
inconsistency 2 [
label ISDA 2002 1(b)1 inc 2
subject Master Agreement
first Schedule
second Master Agreement]

inconsistency 2 [

label ISDA 2002 1(b)2 inc 2
subject Transaction
first Confirmation
second Master Agreement] edit
Template:Semantic ISDA 2002 1(b)
1(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement”), and the parties would not otherwise enter into any Transactions.
condition precedent [
label ISDA 2002 1(c)2 cp
beneficiary [howmany: either] Party
action Beneficiary enter into [howmany: any] Transactions
condition Agreement is [howmany: one] agreement between Party A and Party B]

definition [

label ISDA 2002 1(c)2 def
term Agreement
operator means
scope Master Agreement
definition Master Agreement and [howmany: all] Confirmations.] edit
Template:Semantic ISDA 2002 1(c)
2 Obligations

2(a) General Conditions

2(a)(i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.
obligation [
label ISDA 2002 2(a)(i)1 ob
who either Party
operator must
action pay or deliver
how Per Confirmation
when Per Confirmation
condition Per Section 2(a)(iii)]edit
Template:Semantic ISDA 2002 2(a)(i)
2(a)(ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.
obligation [
label ISDA 2002 2(a)(ii)1 ob
who Party A and Party B
operator must
action make [howmany: each] payment due by who under Agreement
how for value in specified currency in freely transferable funds and in the place of the account described in Confirmation or Agreement
when when due
condition ]

obligation [

label ISDA 2002 2(a)(ii)2 ob
who Party A or Party B
operator must
action make [howmany: each] delivery due by who under Agreement
how for receipt
when When due
condition ] edit
Template:Semantic ISDA 2002 2(a)(ii)
2(a)(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement.
condition precedent [
label ISDA 2002 2(a)(iii)1 cp
beneficiary either Party
action exists for Other Party
condition any of
Event of Default or Potential Event of Default; or
Early Termination Date for Transaction; or
Other Condition Precedent] edit
Template:Semantic ISDA 2002 2(a)(iii)
2(b) Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the Scheduled Settlement Date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change.
right [
label ISDA 2002 2(b) rt
who either Party
action change payment or delivery account details
how written notice to other Party
when [minimum: five] Local Business Days before Scheduled Settlement Date
condition written notice of reasonable objection from other Party to operator] edit
2(c) Netting of Payments. If on any date amounts would otherwise be payable:―
(i) in the same currency; and
(ii) in respect of the same Transaction,

by each party to the other, then, on such date, each party’s obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by which the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. The parties may elect in respect of two or more Transactions that a net amount and payment obligation will be determined in respect of all amounts payable on the same date in the same currency in respect of those Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or any Confirmation by specifying that “Multiple Transaction Payment Netting” applies to the Transactions identified as being subject to the election (in which case clause 2(c)(ii) above will not apply to such Transactions). If Multiple Transaction Payment Netting is applicable to Transactions, it will apply to those Transactions with effect from the starting date specified in the Schedule or such Confirmation, or, if a starting date is not specified in the Schedule or such Confirmation, the starting date otherwise agreed by the parties in writing. This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries.

Template:Code ISDA 2002 2(c)

2(d) Deduction or Withholding for Tax

2(d)(i) Gross-Up. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party (“X”) will:―
(1) promptly notify the other party (“Y”) of such requirement;
(2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:―
(A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, after a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law.
Template:Code ISDA 2002 2(d)(i)
2(d)(ii) Liability. If:―
(1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
Template:Code ISDA 2002 2(d)(ii)


3 Representations

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4 Agreements

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