ISDA Files Amicus Brief in Swedbank v. Lehman

NEW YORK, Thursday, July 15, 2010—The International Swaps and Derivatives Association, Inc. (ISDA) today filed an amicus brief in the US District Court for the Southern District of New York (SDNY) in respect of the May 5, 2010 Bankruptcy Court judgment in the case of Swedbank AB v. Lehman Brothers Holdings Inc.

In the submission, ISDA offers its perspective on the history and purpose of the financial contract “safe harbor” provisions of the Bankruptcy Code, and urges the District Court—regardless of how it resolves this particular dispute—to reject the unduly narrow reading of those provisions in the Bankruptcy Court.

“The narrow construction of the Bankruptcy Code endorsed by the Bankruptcy Court threatens to inject significant uncertainty and disruption into the financial markets,” said Katherine Darras, General Counsel, Americas, ISDA. “That is precisely the danger Congress sought to avoid when it enacted the safe-harbor provisions.”

According to ISDA, the safe-harbor provisions should be read to mean exactly what they say: the exercise of any contractual right to set off payment amounts arising in connection with the termination or liquidation of a swap agreement shall not be stayed, avoided, or otherwise limited by operation of any provision of the Bankruptcy Code.

While the ISDA brief does not take a position on whether the judgment of the Bankruptcy Court in the specific dispute between these parties should be affirmed or reversed, ISDA suggests that if the District Court affirms the bankruptcy court’s judgment, it should limit the Bankruptcy Court’s decision to the particular facts of this case—the restriction against setting off post-petition debts against pre-petition claims where the setoff clause is silent as to this aspect of mutuality.

The brief is available on ISDA’s website,


About ISDA

ISDA, which represents participants in the privately negotiated derivatives industry, is among the world’s largest global financial trade associations as measured by number of member firms. ISDA was chartered in 1985, and today has over 820 member institutions from 57 countries on six continents. These members include most of the world’s major institutions that deal in privately negotiated derivatives, as well as many of the businesses, governmental entities and other end users that rely on over-the-counter derivatives to manage efficiently the financial market risks inherent in their core economic activities.  Information about ISDA and its activities is available on the Association’s web site:

ISDA is a registered trademark of the International Swaps & Derivatives Association, Inc.

Documents (1) for ISDA Files Amicus Brief in Swedbank v. Lehman