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Sovereign immunity: Difference between revisions
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===What [[sovereign immunity]] is=== | ===What [[sovereign immunity]] is=== | ||
[[Sovereign immunity]] comes in two varieties, both relating to forms of [[litigation]]: | [[Sovereign immunity]] comes in two varieties, both relating to forms of [[litigation]]: | ||
*'''[[ | *'''[[Immunity from suit]]''': wherein one cannot take court action for [[breach of contract]] against a [[sovereign]] ''at all''<ref>[[Sovereign immunity]] does of course cover non-contractual disputes and infractions — the drunken ambassador who seeks to avoid prosecution for running over a local fishwife on his way back from a saucy cabaret is the paradigm case, but it is not relevant to the [[JC]] so we shall not speak of it.</ref>; and | ||
*'''[[ | *'''[[Immunity from enforcement]]''': having successfully taken court action for [[breach of contract]] against a [[sovereign]] ''somewhere else'', one cannot then [[Enforcement|enforce]] that judgment against the sovereign’s assets by way of getting your money back. | ||
===What [[sovereign immunity]] isn’t=== | ===What [[sovereign immunity]] isn’t=== | ||
====It doesn’t void your contract | ====It doesn’t void your contract altogether==== | ||
[[Sovereign immunity]] can’t immunise a sovereign against parts of a [[commercial contract]] it has already performed, since the aggrieved commoner doesn’t have to take action to recover sums it has already been paid. If the sovereign pays a sum owed, it stays paid. Immunity can’t help the sovereign here. It cannot — by legal means — recover moneys it has paid, | [[Sovereign immunity]] can’t immunise a sovereign against parts of a [[commercial contract]] it has already performed, since the aggrieved commoner doesn’t have to take action to recover sums it has already been paid. If the [[sovereign]] pays a sum owed, it stays paid. Immunity can’t help the [[sovereign]] here. It cannot — by legal means — recover moneys it has paid, unless it takes 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 crocodile, but this is an [[extra-legal]] 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]] a [[sovereign]] has already ponied up<ref>Assuming you can persuade a sovereign to pony up initial margin of course.</ref> before it decides to walk away, you get to keep. Your risk is the market movements from when 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. | In the context of an {{isdama}}, therefore, all payments, [[collateral]] and [[initial margin]] a [[sovereign]] has already ponied up<ref>Assuming you can persuade a sovereign to pony up initial margin of course.</ref> before it decides to walk away, you get to keep. Your risk is the market movements from when 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. | ||