Template:M summ 2002 ISDA 5(b)(i)

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.

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