Recommended Amendments to the 2002 ISDA Master Agreement in respect of Application of Automatic Early Termination to a Chinese Counterparty and the Guidance Note

Recommended Amendments to the 2002 ISDA Master Agreement in respect of Application of Automatic Early Termination to a Chinese Counterparty and the Guidance Note

The recommended amendments set out in this document are intended to apply to a Chinese counterparty that is subject to the Enterprise Bankruptcy Law of the People’s Republic of China when Automatic Early Termination (AET) is applied to the Chinese counterparty. Implementation of the recommended amendments will mitigate, but not resolve entirely, the risks associated with the effectiveness of AET in a Chinese bankruptcy proceeding (as discussed in paragraph 6.3 of the 2017 China Netting Memorandum published by ISDA and dated 16 March 2017). This document should be read in connection with the 2017 ISDA China Netting Memorandum which analyses the enforceability of close-out netting under Chinese law.

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