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Enron Mail |
Thanks for pointing that out. Mark
Edmund Cooper 02/21/2001 12:23 PM To: ECT London European Trading, T Paul Johnson/EU/Enron@Enron, Janet Wood/EU/Enron@Enron, Matthew Dawson/LON/ECT@ECT, Michael Slade/LON/ECT@ECT, Jonathan Marsh/EU/Enron@Enron, Mark Evans/Legal/LON/ECT@ECT cc: Subject: Change to standard ISDA Schedule Dear All, In the course of current ISDA Master Agreement negotiations with an Australian counterparty it has come to my attention that the ISDA netting opinion for Australia specifies that certain Sections of the ISDA Master should not be altered; otherwise reliance on the opinion, and close-out netting, could be jeopardised. In particular the opinion specifies that Section 2(a)(iii) should not be altered. Enron has a standard alteration to Section 2(a)(iii) in Part 5 of its standard form Schedule, viz. "(a) Conditions Precedent. The condition precedent set forth in clause (1) of Section 2(a)(iii) shall not apply to payments owed by a party if the other party shall have satisfied in full all its payment obligations under Section 2(a)(i) and shall at the relevant time have no future payment obligations whether absolute or contingent, under Section 2(a)(i)." Obviously, in the case of Australian counterparties this condition precedent should not be included in our documentation. In addition, there are a number of other countries (including Germany, Italy, South Korea and Switzerland) where the effectiveness of the ISDA netting opinion presupposes that certain Sections of the Master, including Section 2(a)(iii), are not altered in any material respect. To that end I would suggest that our standard condition precedent does make a material alteration and that it should not be included in ISDA Master Agreements with counterparties trading from these jurisdictions. Certainly from the London end, I think that when we start negotiations with a new counterparty we should check the ISDA opinions to ensure that we don't trip ourselves up. Regards, Edmund
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