Template:M comp disc 2002 ISDA 5(b)(i): Difference between revisions

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(Replaced content with "{{isda 5(b)(i) comp|isdaprov}}")
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[[5(b)(i) - ISDA Provision|As]] its clause numbering indicates, {{isdaprov|Illegality}} is a Section {{isdaprov|5(b)}} {{isdaprov|Termination Event}} — being one of those irritating vicissitudes of life that are no-one’s fault but which mean things cannot go on, and not a Section {{isdaprov|5(a)}} {{isdaprov|Event of Default}}, being those perfidious actions of one or other Party which bring matters to an end which, but for that behaviour, ought really to have been avoided.
{{isda 5(b)(i) comp|isdaprov}}
 
Note also the impact of {{isdaprov|Illegality}} and {{isdaprov|Force Majeure}} on a party’s obligations to perform through another branch under Section {{isdaprov|5(e)}}, which in turn folds into the spectacular optional representation a party may make under {{isdaprov|10(a)}} to state the blindingly obvious, namely that the law as to corporate legal personality is as is commonly understood by first year law students. Who knows — maybe it is different in emerging markets and former Communist states?
 
For the silent great majority of swap entities for whom it is not, the curious proposition arises: what is the legal, and contractual, consequence of electing not to state the blindingly obvious? Does that mean it is deemed not to be true?

Latest revision as of 16:19, 24 December 2023

Illegality: Quite a lot of formal change to the definition of Illegality; not clear how much of it makes all that much practical difference. The 2002 ISDA requires you to give effect to remedies or fallbacks in the Confirmation that might take you out of Illegality before evoking this provision — which ought to go without saying. It also carves out Illegalities caused by the action of either party, which also seems a bit fussy, and throws in some including-without-limitation stuff which, definitely is a bit fussy. Lastly, the 2002 ISDA clarifies that the party suffering the Illegality is the Affected Party, and that an Illegality applies to the non-receipt of payments just as much as to their non-payment. Again, all this ought to have been true the 1992 ISDA — no doubt there is some whacky litigation that said otherwise — so this is mainly in the service of avoiding doubt.

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