The State of the Netherlands v Deutsche Bank AG [2018] EWHC 1935 (Comm) (25 July 2018)

The State of the Netherlands v Deutsche Bank AG [2018] EWHC 1935 (Comm) (25 July 2018)

The ISDA Credit Support Annex (1995 edition, unamended) does not impose a legal obligation on the Transferor to pay negative interest on cash collateral. The agreement only contemplates payment of positive interest by the Transferee, and any obligation to pay negative interest would need to be expressly stated. The relevant provisions do not support the State's argument for negative interest, and external ISDA materials post-dating the agreement cannot alter its interpretation.

Citation
[2018] EWHC 1935 (Comm)
Parties
Claimant: The State of the Netherlands; Defendant: Deutsche Bank AG
Jurisdiction
England and Wales
Judgment Date
25 July 2018
Procedural Posture
Commercial Contract Dispute / High Court Judgment
Outcome
Claim dismissed
Legal Topics
ISDA Master Agreement, Credit Support Annex, Negative Interest, Contract Interpretation
Commercial Law Banking and Finance ISDA Master Agreement Credit Support Annex Negative Interest Contract Interpretation

Case Brief

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Parties

The State of the Netherlands

Claimant

Deutsche Bank AG

Defendant

Procedural Posture

Commercial Contract Dispute / High Court Judgment

Legal Issues

  1. 1 Whether the ISDA Credit Support Annex requires the Transferor to pay negative interest on cash collateral
  2. 2 Interpretation of contractual provisions regarding interest on collateral

Ratio Decidendi

The ISDA Credit Support Annex (1995 edition, unamended) does not impose a legal obligation on the Transferor to pay negative interest on cash collateral. The agreement only contemplates payment of positive interest by the Transferee, and any obligation to pay negative interest would need to be expressly stated. The relevant provisions do not support the State's argument for negative interest, and external ISDA materials post-dating the agreement cannot alter its interpretation.

Court Disposition

Claim dismissed