Source: All England Reporter
Publisher Citation: [2013] All ER (D) 132 (Mar)
Neutral Citation: [2013] EWCA Civ 188
Court: Court of Appeal, Civil Division

Sir James Munby P, Arden and Aikens LJJ

Representation Iain Millgan QC and Julian Kenny (instructed by Linklaters LLP) for the claimants.
  David Railton QC and Jonathan Russen QC (instructed by Field Fisher Waterhouse LLP) for the defendant.
Judgment Dates: 14 March 2013


Contract - Construction - International Swaps and Derivatives Association (ISDA) Master Agreement - Companies within Lehman Brothers group trading through master agreement - Master agreement reflecting terms Master Agreement - Side letter providing additional instructions for offsetting risk and rewards of derivatives purchasing - Master agreement providing for valuation of close-out amount in event of early termination - Lehman Brothers International (Europe) going into administration leading to automatic early termination of outstanding transactions - Administrators issuing proceedings seeking to determine whether side letter to be considered as affecting outstanding transactions - Judge holding side letter not forming terms of replacement contracts for purposes of valuing close-out amount - Administrators appealing - Whether judge erring.

The Case

Contract Construction. The Court of Appeal, Civil Division, in allowing the appeal of administrators, held that, in the interpretation of a master agreement between two companies in the Lehman Brothers group, which had incorporated the terms of the ISDA 2002 Master Agreement, a side letter would form part of the process of valuation of close-out amounts.

Practice Areas

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