Clifford Chance

Case: Tael One – construction of LMA terms and conditions for secondary debt trading – take three

25 March 2015

That a dispute over construction of the terms of a secondary debt trade on standard Loan Market Association (LMA) terms ended up in the Supreme Court is itself noteworthy. Even more so is that during the case's evolution three different courts (the trial judge, the Court of Appeal and the Supreme Court themselves) came to three different conclusions as to the meaning of an interest allocation clause in the standard LMA terms. The case highlights the limitations of using standard form documents in non-standard contexts and will be instructive reading not only for those operating in the secondary loan market but also for anyone involved with the drafting, and construction, of financial contracts generally.

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