Sovereign immunity: Difference between revisions

[[Sovereign immunity]] can’t immunise a sovereign against parts of a commercial contract she has already performed, since the commoner doesn’t have to take action in that case. If the sovereign pays a sum owed, it stays paid. The sovereign cannot — by legal means — require those moneys to be repaid, except by way of court action, and doubtless your [[legal opinion]]s will tell you that won’t work (and will operate to [[Waiver of immunities - ISDA Provision|waive]] sovereign immunity anyway)<ref>To be sure, a bossy sovereign can park its tanks on your lawn, waterboard you, and throw your children to its pet crocodiles of course, but this is a practical act, not a legal one and the [[JC]] cares not one whit for practical, extra-legal acts. What can one say about them, other than, “that was horrid”?</ref>.

In the context of an {{isdama}}, therefore, all payments, [[collateral]] and [[initial margin]] that a sovereign has ponied up<ref>Assuming you can persuade a sovereign to pony up initial margin of course.</ref> before it decides to cut your legs off, you keep. Your risk is the market movements between the point where the [[sovereign]] breaches your contract until you can [[close out]] your positions. [[Netting]] also works, because it is a self-help mechanism that doesn’t oblige you to take legal action to enforce it.

If the [[sovereign]] wants to dispute payments it has already made it can either (i) dangle your children over its crocodile pit and ask you what you plan to do — again this is extra-legal behaviour and the [[JC]] can’t really comment on it (other that to agree it is horrid); or (ii) proceed against you in a court of law ''in which case it has waived its [[sovereign immunity]] [[QED]]''.