Source: All England Reporter
Publisher Citation: [2012] All ER (D) 29 (Apr)
Neutral Citation: [2012] EWCA Civ 419
Court: Court of Appeal, Civil Division
Judge:

Longmore, Patten and Tomlinson LJJ
Representation William Trower QC and Daniel Bayfield (instructed by Linklaters LLP) for the claimant in the first appeal.
  Mark Hapgood QC and Henry Forbes Smith (instructed by MacFarlanes LLP) for the first and second defendants in the first appeal.
  Robin Dicker QC and Joanna Perkins (instructed by Clifford Chance) for the third defendants in the first appeal.
  Richard Fisher (instructed by Freshfields Bruckhaus Deringer) for the fourth defendants in the first appeal.
  Antony Zacaroli QC and Jeremy Goldring (instructed by Allen & Overy LLP) for the International Swaps and Derivatives Association Inc as intervening party in the first and second appeals.
  Jonathan Nash QC (instructed by Weil Gotshal & Manges) for the claimants in the second appeal.
  Felicity Toube QC (instructed by Hogan Lovells International LLP) for the defendant in the second appeal.
  Charles Kimmins QC and Luke Pearce (instructed by Herbert Smith LLP) for the claimant in the third appeal.
  Richard Jacobs QC and Siddharth Dhar (instructed by Thomas Cooper) for the defendant in the third appeal.
  Mark Phillips QC and Stephen Robins (instructed by Watson Farley & Williams LLP) for the claimant in the fourth appeal.
  James Willan (instructed by Berwin Leighton Paisner LLP) for the defendant in the fourth appeal.
Judgment Dates: 3 April 2012

Catchwords

Contract - Condition precedent - Expiry - Interest rate swap transactions subject to International Swaps and Derivatives Association Inc form Master Agreement - Master agreement providing that defendant's obligation to make payments under future transactions subject to condition precedent - Event of default triggered by defaulting party's insolvency - Claimant entering liquidation leading to automatic early termination of outstanding transactions - Payment obligation of non-defaulting party suspended during period of event of default - Judge holding that payment obligation of non-defaulting party extinguished at the end of the natural term of each transaction - ISDA Master Agreement (Multicurrency - Cross Border)(1992 edn).

The Case

Contract Condition precedent. The Court of Appeal, Civil Division, determined a number of questions of construction in relation to derivatives in the form of interest rate swaps and forward freight agreements on the International Swaps and Derivatives Association Inc form of Master Agreement in the event of a defaulting party due to an event of default. In particular, the payment obligation of the non-defaulting party had been suspended, rather than extinguished, during the currency of an event of default under the Master Agreement, and would be revived if the event of default had been cured at any time before the outstanding transactions had been terminated.

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