Jurisdiction - ISDA Provision

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2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual

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Events of Default: 5(a)(i) Failure to Pay or Deliver5(a)(ii) Breach of Agreement5(a)(iii) Credit Support Default5(a)(iv) Misrepresentation5(a)(v) Default Under Specified Transaction5(a)(vi) Cross Default5(a)(vii) Bankruptcy5(a)(viii) Merger without Assumption
Termination Events: 5(b)(i) Illegality5(b)(ii) Force Majeure Event5(b)(iii) Tax Event5(b)(iv) Tax Event Upon Merger5(b)(v) Credit Event Upon Merger5(b)(vi) Additional Termination Event

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Section 13(b) in a Nutshell
Use at your own risk, campers!

13(b) Jurisdiction. For any proceedings under this Agreement (“Proceedings”), each party irrevocably:―

13(b)(i) submits to:―
(1) for English law-governed Agreements, the non-exclusive jurisdiction of the English courts (or their exclusive jurisdiction where Proceedings involve a Convention Court); or
(2) for New York law-governed Agreements, the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in Manhattan;
13(b)(ii) waives its right to object to such court as a venue for any Proceedings brought in, or claim it is an inconvenient forum, or that it has no jurisdiction; and
13(b)(iii) agrees that Proceedings brought in one jurisdictions will not preclude Proceedings in any other jurisdiction.

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Full text of Section 13(b)

13(b) Jurisdiction. With respect to any suit, action or proceedings relating to any dispute arising out of or in connection with this Agreement (“Proceedings”), each party irrevocably:―

13(b)(i) submits:―
(1) if this Agreement is expressed to be governed by English law, to (A) the non-exclusive jurisdiction of the English courts if the Proceedings do not involve a Convention Court and (B) the exclusive jurisdiction of the English courts if the Proceedings do involve a Convention Court; or
(2) if this Agreement is expressed to be governed by the laws of the State of New York, to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City;
13(b)(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party; and
13(b)(iii) agrees, to the extent permitted by applicable law, that the bringing of Proceedings in any one or more jurisdictions will not preclude the bringing of Proceedings in any other jurisdiction.

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Related agreements and comparisons

Related Agreements
Click here for the text of Section 13(b) in the 1992 ISDA
Comparisons
Click to compare this section in the 1992 ISDA and 2002 ISDA.

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Content and comparisons

Largely the same, in practical effect, between the two versions: the clause grants the non-exclusive jurisdiction of the courts of the governing law you have chosen: you can launch proceedings wherever you like, but you can’t complain if they are launched in a home court, which leaves open that you might complain if they are launched in some other, inconvenient, court.

No doubt a litigation lawyer would be outraged at this suggestion that the versions mean different things, but life’s too short.
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Summary

On the disapplication of 13(b)(iii)

Where you wish to elect the exclusive jurisdiction of (say) English courts in your Schedule, you may wish to explicitly disapply the proviso to 13(b) which provides that nothing in this clause precludes the bringing of Proceedings in another jurisdiction (in the flush language of the 1992 ISDA version; in 13(b)(iii) of the 2002 ISDA version).

Strictly speaking you shouldn't need to do this: Section 1(b) provides that the inconsistency created by the use of the expression “exclusive jurisdiction” in the Schedule will prevail over the text the Master Agreement. But that won’t stop officious attorneys the world over trying.

But, counselor, be warned: if you do try to explicitly override it — you know, for good measure and everything — and your counterparty pushes back, having deliberately taken the clarifying language out of a draft, you may be in a ;;worse position when interpreting the meaning of “exclusive jurisdiction", precisely because the counterparty refused to rule out the use of other jurisdictions. A cracking example of the anal paradox at work.

Don’t be too clever by half, in other words.
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See also

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References