In response to Eurozone concerns, ISDA recently published its Illegality/Force Majeure Protocol, which is now open for adherence.
- What It Does: This Protocol enables parties to 1992 ISDA Master Agreements to incorporate the illegality and force majeure provisions of the 2002 ISDA Master Agreement.
- Why: This Protocol is intended to provide parties transacting under 1992 ISDA Master Agreements with improved remedies should the Eurozone crisis result in either the imposition of exchange controls in a member state (e.g., following its withdrawal from the Eurozone/replacement of the euro with a new national currency) or other legal developments that might render it illegal or impracticable for a party in a member state to fulfill its scheduled payment or delivery obligations in respect of OTC derivatives transactions.
See the T-H Client Alert attached for more details about ISDA’s Illegality/Force Majeure Protocol.