3 April 2012
The ISDA Master Agreement should be interpreted strictly in accordance with its written terms, without implying additional rights or obligations that are not expressly spelt out, according to the Court of Appeal. In particular, a payment obligation is suspended if the potential recipient is subject to an Event of Default (eg insolvency), but the obligation is never extinguished. The Master Agreement does not provide for extinction, and there is no basis to imply a term to that effect since the parties have not provided for it expressly. As a result, a payment obligation could revive if the Event of Default is cured at any stage, however far in the future the cure takes place.