In Section 2, point c), the term «multiple transaction payment netting» is not defined by an integrated definition or a stand-alone definition. It is not orthodox. Below are some comments based on my volatile audit of the first four pages of the 28-page master`s contract (without appendices). These comments only scratch the surface. (You will find in this article my analysis of another use used in the ISDA master agreement.) The framework contract allows the parties to calculate their net financial commitment in over-the-counter transactions, i.e. a party calculates the difference between what it owes to a counterparty under a master contract and what the consideration owes under the same agreement. Here is the following sentence in the introductory clause: «This 2002 master contract and the calendar are together called the Master Agreement. It is redundant, as is the term «master convention» defined, since the previous sentence indicates that the master`s agreement contains the calendar. The Tribunal noted that the existing authority of the 1992 ISDA Master Contract, which had established that advance payments should be assessed on a «clean» and not «dirty» basis (i.e., assuming that, for termination, the transaction in question would have expired and all conditions of full execution by both parties would have been met. As unlikely as this hypothesis is). The Tribunal described this as a «continuity hypothesis.» It also found that: that there are no authorities on the importance of the similar provisions of the 2002 ISDA Masteragrement (as included in the CMA amendment in the Lehman ISDA), but that the provisions of the 1992 ISDA and the 2002 ISDA should be interpreted consistently, there is no reason to believe that the development of the 2002 ISDA-Masters contract , was decided to «essentially abandon» the continuity hypothesis. The main advantages of an ISDA management contract are improved transparency and liquidity.
As the agreement is standardized, all parties can study the ISDA master agreement to find out how it works. This improves transparency by reducing the possibility of opacity of leakage provisions and clauses. Standardization by an ISDA executive contract also increases liquidity, as the agreement makes it easier for parties to make repeat transactions. Clarifying the terms of such an agreement saves all parties time and legal fees. The recent High Court decision in Lehman Brothers International (Europe) vs. Lehman Brothers Finance S.A. provides useful guidance on the correct interpretation of the «Close-Out Amount» in the 2002 ISDA Masteragrement. The master`s agreement was updated in 2002 (known as ISDA Masteragrement 2002). The updated phase of the 1992 agreement has its roots in the succession of crises that affected global financial markets in the late 1990s.