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Amwelladmin (talk | contribs) (Created page with "=== Section {{{{{1}}}|8(a)}} === One could have stopped after the first sentence, but it is a rare ISDA ninja that can help himself babbling. ISDA ninjas would make te...") |
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=== Section {{{{{1}}}|8(b)}} === | === Section {{{{{1}}}|8(b)}} === | ||
====Enforcing judgments in far-flung places==== | |||
It is a fact of life that when enforcing a cross-border contract, you may find yourself journeying to foreign climes in a bid to prise assets and payments out of a foreign counterparty. Places like Italy. With the best will in the world, and the firmest written intentions that the agreement be governed by [[English law]] and justiciable exclusively by [[Queen’s Bench Division|her majesty’s courts]]<ref>Yes, yes: ''or'' American law, before [[Judge Wapner]] in the [[People’s Court]]. I ''know''.</ref>, that may still mean engaging with, and obtaining judgments from foreign court systems, if that is where your counterparty and its financial resources are located. Those courts may be obliged to award ''their'' judgments, about ''your'' judgment, in their local currency. That exposes you to FX risk. This clause requires the parties to true up — ''immediately'', should the windfall accrue to the Defaulting Party, only ''promptly'' if it accrues to the innocent one — by reference to a fairly determined “{{{{{1}}}|rate of exchange}}”. | |||
Nerd’s point: This obligation is, strictly speaking, an [[indemnity]] obligation, in the true sense of that concept, in that is a payment that becomes due by reference to an [[externality]] that was not caused by [[breach of contract]] (even though originally it might have arisen out of one). So that’s nice. | |||
===={{{{{1}}}|Rate of exchange}}==== | |||
Abvout that “{{{{{1}}}|rate of exchange}}” — in the {{1992ma}} defined on the spot; in the {{2002ma}} promoted to the big league and featuring in the main {{isdaprov|Definitions}} section. Allow the [[JC]] a pet moan. Goddamn “[[definitions]]”. | |||
{{isda rate of exchange summ|isda92prov}} | |||
=== Section {{{{{1}}}|8(c)}} === | === Section {{{{{1}}}|8(c)}} === | ||
So who even knew the things in Section {{{{{1}}}|8(a)}} and {{{{{1}}}|8(b)}} ''were'' [[indemnities]]? | So who even knew the things in Section {{{{{1}}}|8(a)}} and {{{{{1}}}|8(b)}} ''were'' [[indemnities]]? | ||
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They are, in the strict literal sense of an indemnity: a contractual promise to pay a sum of money (the difference between the amount paid in the {{{{{1}}}|Non-Contractual Currency}} and the actual amount owed in the {{{{{1}}}|Contractual Currency}}) in circumstances not (strictly) amounting to a breach; they are not in the popular (but misconceived) conception of an {{tag|indemnity}} as some kind of all-conquering [[smart bomb]]. | They are, in the strict literal sense of an indemnity: a contractual promise to pay a sum of money (the difference between the amount paid in the {{{{{1}}}|Non-Contractual Currency}} and the actual amount owed in the {{{{{1}}}|Contractual Currency}}) in circumstances not (strictly) amounting to a breach; they are not in the popular (but misconceived) conception of an {{tag|indemnity}} as some kind of all-conquering [[smart bomb]]. | ||
[[Indemnity]] is one of the [[JC]]’s pet subjects. Get him started and that’s the evening gone. | Now, we must hush, if we want to get home at a reasonable hour, because the [[Indemnity]] is one of the [[JC]]’s pet subjects. Get him started and that’s the evening gone. | ||
=== Section {{{{{1}}}|8(d)}} === | === Section {{{{{1}}}|8(d)}} === | ||
So if your clottish counterparty can’t follow simple instructions and sends you ''Lire'' rather than ''Pesetas'', and thereby fails to cover your loss, as long as you can prove what the exchange rate was at the time you would have exchanged it into the {{{{{1}}}|Contractual Currency}}, you can recover a loss, ''even if you didn’t''. | So if your clottish counterparty can’t follow simple instructions and sends you ''Lire'' rather than ''Pesetas'', and thereby fails to cover your loss, as long as you can prove what the exchange rate was at the time you would have exchanged it into the {{{{{1}}}|Contractual Currency}}, you can recover a loss, ''even if you didn’t''. | ||
Now this, to me, seems a little controversial. What if the exchange rate dropped through the floor, then recovered, and the {{{{{1}}}|Non-Affected Party}} held his nerve. Can he then [[cherry-pick]]? | Now this, to me, seems a little controversial. What if the exchange rate dropped through the floor, then recovered, and the {{{{{1}}}|Non-Affected Party}} held his nerve. Can he then [[cherry-pick]]? | ||