Template:Isda Illegality summ

Illegality vs. Force Majeure smackdown

Like a Force Majeure Event, an Illegality may only be triggered after exhausting the fallbacks and remedies specified in the 2002 ISDA.

There is a Waiting Period before you can terminate in the 2002 ISDA

Note the effect of section 6(b)(iv)(2) in the 2002 ISDA is to impose a Waiting Period of three Local Business Days before one acquires the right to terminate on account of an Illegality. There is no such waiting period in the 1992 ISDA.

Hierarchy of Events

Under the 2002 ISDA, Section 5(c) (Hierarchy of Events) intervenes to provide that (i) Illegality trumps Force Majeure and (ii) Illegality and Force Majeure both trump the Failure to Pay and Breach of Agreement Events of Default.

Given that {{{{{1}}}|Illegality}} is no longer subject to the “two {{{{{1}}}|Affected Parties}}” delay on termination (as it was in the 1992 ISDA), this is significant.