All letters of membership must be emailed to ISDAIFMprotocol@isda.org. In the email, you must submit your true and executed copies of the compliance letter. You must use the isda illegality letter form available on the ISDA website. Click here for a detention letter form. The letter(s) of membership must appear on your institution`s letterhead. Nothing in the form of a letter of membership available on the ISDA website can be changed except to fill in the details of your institutional name, date and signature block. Please do not send your original membership letter(s) to ISDA by mail. The ISDA Protocol on Illegality/Force Majeure (the “Protocol”) provides market participants with an effective means of amending their 1992 ISDA Framework Agreements to the more sophisticated provisions of the 2002 ISDA Framework Agreement, which will help them better address problems that may arise if a euro area Member State leaves the euro area and introduces capital controls. which may make it illegal for parts of that country to make payments denominated in euros.
What if I am an investment or asset manager and all my discretionary contracts do not allow me to change my clients` contracts? If you are an investment or asset manager and you are acting on behalf of more than one fund, you have the following options: Upon expiry of the applicable waiting period (and assuming that no execution has taken place), either party may terminate all or part of the transactions affected by the force majeure event in accordance with Article 6(b)(iv)(2) of the 2002 Framework Agreement. Termination must be made at least two days and no later than 20 days prior to the proposed termination date. If a party has proposed to terminate unless all affected transactions, the other party may terminate the remainder of the affected transactions without notice on the same day. However, a party shall not have the right to initiate the termination of transactions if the force majeure event is related to the performance of that party or any credit support provider of that party to make a payment or delivery under a credit support document, or compliance with any other material provision of a credit support document, but that party may terminate the remaining affected transactions, if the other party has terminated only some of them. Under the 2002 ISDA, Article 5(c) (Hierarchy of Events) intervenes to ensure that (i) illegality outweighs force majeure and (ii) illegality and force majeure both outweigh non-payment and violation of infringement events. The Protocol allows adherent counterparties to amend the terms of each ISDA `92 to include events of illegality and force majeure of termination of ISDA 2002. Unlike default events, in the context of a termination event, a party may choose (i) to terminate one or more specific transactions affected by the triggering event, which could be, for example, the counterparty`s inability to make a payment or delivery due to a euro area country leaving the euro, or (ii) the ISDA Framework Agreement and all transactions; which are covered by the agreement with its counterpart. As a case of force majeure, illegality can only be triggered after the fallback solutions and remedies provided for in the 2002 ISDA have been exhausted. Article 5(d) of the 2002 Framework Agreement generally provides that any payment, delivery or compliance affected by force majeure may be carried forward by a waiting period of up to eight local working days if the event continues.
However, no deferral shall be allowed for payment, delivery or compliance obligations due under a credit support document if payment, delivery or corresponding conformity is actually required on the respective day. Once the relevant waiting period has expired, the obligation to pay, deliver or comply is no longer excused and all contract requirements apply. A particular point to consider is that, unlike the force majeure provisions used in many contracts, the 2002 force majeure provision does not contain a long detailed list of events that can be considered a case of force majeure. Instead, the 2002 force majeure provision, after referring to a “case of force majeure or an act of the State”, goes directly to the consequences of the event or condition in question […].