In December 2019, ISDA published a white paper (available here) examining the unique aspects of derivatives transactions that can present issues in interpreting how sanctions programs should apply in the context of derivatives and analyzed these issues in the context of recent sanctions program experiences. The white paper proposed principles to ensure the continued safe operation of derivatives markets and minimize market disruption and economic consequences for non-sanctioned entities, while neither compromising foreign policy or national security goals, nor conferring any benefit on sanctioned entities or otherwise harming the objectives of any sanctions program.

While ISDA’s standard form agreements, definitional booklets and confirmation templates include provisions that might be activated by sanctions, these documents have not specifically addressed the potential unique consequences of novel economic sanctions programs on derivatives counterparties or transactions (as further outlined in the white paper).  This guidance note therefore considers when parties may wish to include specific provisions addressing sanctions issues in ISDA documentation, explains the purpose of these provisions and provides example provisions that can be adapted by parties for use in their negotiated agreements.

Click on the attached PDF to read the guidance note.