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17 July 20232 minute read

ISDA amends notice provision, aligns treatment of CSAs’ illegality and force majeure provisions in Master Agreement

The International Swaps and Derivatives Association, Inc. (ISDA) has published an article highlighting specific amendments made to the notice, illegality, and force majeure provisions in ISDA documentation.

Notably, the notice provision (Section 12) of the ISDA Master Agreement was revised to explicitly state that e-mail is an acceptable method of communication for any notice or other communication in respect of the Agreement.

Section 12 now specifies that any notice or other communication will be deemed effective “if sent by e-mail, on the date it is relayed to the recipient’s email infrastructure (it being agreed that data captured by the sender’s email infrastructure, whether or not including data from the recipient’s email infrastructure, may be used as evidence that the email has been successfully relayed to the recipient’s email infrastructure).”

Additionally, the amendment introduced greater clarity and specificity regarding the timing of notice delivery. Previously, notices were required to be given at the “close of business” in the recipient’s location. The concepts of a “Notice Delivery Cut-off” and “Notice Delivery Cut-off Time” were newly incorporated in Section 12 of the Master Agreement. The “Notice Delivery Cut-off” refers to the designated “Notice Delivery Cut-off Time” in the designated “Notice Delivery Location.” 

To accommodate these changes, a new section titled “Notice Delivery Cut-off Time and Notice Delivery Location” was added to the end of the Schedule to the ISDA Master Agreement. This section allows parties to specify the cutoff time for notice delivery, as well as the city, region, or country to which the cutoff time applies. The default Notice Delivery Cut-off Time is 17:00 (local time), but parties may agree to insert an alternative time if desired.

Lastly, the amendments include modifications to the Illegality and Force Majeure Event provisions of the English law Credit Support Annex (CSA) to align them with the treatment outlined in the New York law CSA. Consequently, under the English law CSA, the current “Waiting Period” of three business days for an Illegality or eight business days for a Force Majeure before a party could close out is no longer applicable. Further, the party that is unable to deliver collateral due to the Illegality/Force Majeure would not be able to trigger close out. 

Find out more about the implications of these changes by contacting any of the authors.