Offices; Multibranch Parties - ISDA Provision: Difference between revisions

Paragraph 10 of the {{isdama}} allows parties to specify whether they are multibranch parties or not.

Electing “multibranch party” status allows a [[counterparty]] to transact swap confirms out of various different [[branch]]es of the same [[legal entity]]. Details fans will immediately note that, from the point of view of legal and corporate philosophy — surely a subject dear to every attorney’s heart — the differing [[branch]]es of a [[legal entity]] have no distinct [[legal personality]] any more than does a person’s arm or leg have different personality from {{sex|her}} head. So being a “multibranch” party seems immaterial.

Those details fans will have overlooked the strange, parallel universe of [[tax|taxation]]. Here physical presence and not [[legal personality]] is what matters. Specifying that your counterparty may trade from its offices in, for example, [[Prague]], [[Kabul]] or [[The Sudan]] may impact the [[tax]] payable on payments under the relevant transactions under the [[ISDA]]. Where both parties are multibranch parties and have numerous overseas branches, a complex multilateral analysis of all the different permutations is assured.

:“Of course there are other ways to get around it:  disclosure of the branch in a Confirmation (operational risk, and of no use in electronically booked txns), or more detailed [[reps]] in Part 5 - but none is as simple or uncomplicated as simply putting “New York” in the Multibranch election”

While, by dint of the legal personality, it wouldn’t make any difference under English or New York law, and really shouldn’t anywhere else, there are those jurisdictions which are not so theroetically pure in their conceptualisation of the corporate form. Your counterparty may have the misfortune to be incorporated in such a place.