English Commercial Court Allows Counterparty Contractual Right to Withhold Payments Under Section 2(a)(iii) of the ISDA Master Agreement
February 2010
David Barwise, Ian Cuillerier, Ingrid York, Richard Blackburn
DOWNLOAD PDF: English Commercial Court Allows Counterparty Contractual Right to Withhold Payments Under Section 2(a)(iii) of the ISDA Master Agreement
On 29 October 2009 the High Court (Mr Justice Flaux) handed down its judgment in Marine Trade SA v Pioneer Freight Futures Co Ltd BVI and another [2009] EWHC 2656 (Comm) (the "Marine Trade Case"). This case provides the first English authority for the proposition that a non-defaulting party may withhold payments under Section 2(a)(iii) of the 1992 ISDA Master Agreement and that payment netting under Section 2(c) of the 1992 ISDA Master Agreement is consequently not available to the defaulting party in such case. The court additionally addressed the circumstances in which amounts paid under protest by a non-defaulting party may be recovered. The Marine Trade Case contrasts with the judgment on 15 September 2009 of the United States Bankruptcy Court in the Southern District of New York in Re: Lehman Bros. Holdings Inc., case number 08-13555.
This Client Alert is provided for your convenience and does not constitute legal advice. It is prepared for the general information of our clients and other interested persons. This Alert should not be acted upon in any specific situation without appropriate legal advice, and it may include links to websites other than the White & Case website. White & Case LLP has no responsibility for any websites other than its own, and does not endorse the information, content, presentation or accuracy, or make any warranty, express or implied, regarding any other website.
This Client Alert is protected by copyright. Material appearing herein may be reproduced or translated with appropriate credit.
© 2010 White & Case LLP
|