Lehman Brothers Special Financing Inc v Carlton Communications Ltd

Lehman Brothers Special Financing Inc v Carlton Communications Ltd

Section 2(a)(iii) of the ISDA Master Agreement operates as a suspensory condition precedent and does not offend the anti-deprivation principle or constitute a penalty; therefore, LBSF's claim for payment fails.

Parties
Claimant: Lehman Brothers Special Financing Inc; Defendant: Carlton Communications Limited
Jurisdiction
England and Wales
Judgment Date
28 March 2011
Procedural Posture
Civil / Judgment
Outcome
claim dismissed
Legal Topics
ISDA Master Agreement, Anti Deprivation Principle, Penalty Doctrine, Interest Rate Swaps
Contract Law Insolvency Law Financial Derivatives ISDA Master Agreement Anti Deprivation Principle Penalty Doctrine Interest Rate Swaps

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Parties

Lehman Brothers Special Financing Inc

Claimant

Carlton Communications Limited

Defendant

Procedural Posture

Civil / Judgment

Legal Issues

  1. 1 Whether Section 2(a)(iii) of the ISDA Master Agreement is unenforceable as offending the anti-deprivation principle
  2. 2 Whether Section 2(a)(iii) constitutes a penalty
  3. 3 Whether payment obligations under the swaps are suspended or discharged upon default events

Ratio Decidendi

Section 2(a)(iii) of the ISDA Master Agreement operates as a suspensory condition precedent and does not offend the anti-deprivation principle or constitute a penalty; therefore, LBSF's claim for payment fails.

Court Disposition

claim dismissed