08 Avr 2021

Calculation Agent Agreement

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Jackson Walker strives to help our clients understand ISDA and determine how the agreement can best be tailored to their specific business and credit needs. To this end, we intend to publish regular design advice to address common issues that may arise during the ISDA negotiations and other energy trade agreements. The part of the computational officer and whether this role is questionable are questions that can be answered in different ways in different forms of ISDA documentation. Litigation rights can be included in a confirmation of a single transaction. They can also be included in master confirmations that govern certain types of trades, such as. B stock swets, for example. Sometimes litigation rights are included in the ISDA master contract schedule, where these rights may apply to all transactions or certain transactions in this agreement and may apply differently to different asset classes. The ISDA Master Contract Credit Annex has a separate dispute resolution mechanism that a party can avail itself of if it does not agree with the determination of the value of the guarantee and/or the quantity of the meaning or return of security by the assesser. Not only does the location of the litigation provisions vary, but also the content and mechanics of the language and process. In a dispute settlement provision, it cannot be said that « the findings of the calculating officer are subject to the agreement of the parties » or something to that effect. This leaves open the question of how long a party must challenge a decision if the calculation officer did not want that party`s consent to determine the calculation officer. Could the other side fight in a week, a month, two months? A trade can have a single payment that is determined only years after the trading date. A provision may say that if the parties do not agree on the determination of the computational officer, they choose a third-party dealer to resolve the issue.

The question of how long the parties must agree on this third-party supplier and what happens if the parties do not agree is not always addressed. However, when using the 2002 ISDA calendar, it is customary for some parties to replace the term « calculation agent » in Part 4 (e) with the term « determinative party » – a term used only in the 2002 ISDA. At first glance, such a change may not seem significant, as the role of the determining party implies a function similar to that of the computational manager (i.e. the determination of the amounts against the parties with respect to invoices). However, a « determining party » under the 2002 ISDA is the party that calculates the amount of the close-out (i.e. the liquidated value of all transactions after the end of the ISDA).

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