Automatic early termination bars reliance on section 2(a)(iii) of ISDA Master Agreement (High Court)

In Britannia Bulk plc v Pioneer Navigation Ltd and others [2011] EWHC 692 (Comm), the High Court considered the combined effect of the Automatic Early Termination, Loss and Second Method provisions under a 1992 ISDA Master Agreement and concluded that a non-defaulting party cannot rely on section 2(a)(iii) of that agreement to formulate a "nil loss" argument against a defaulting party's claim for payment of close-out amounts.

NOTE: this case was upheld by the Court of Appeal on 3 April 2012, see Legal update, Section 2(a)(iii) ISDA Master Agreement: Court of Appeal judgment on four appeals.

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