Top Story - Down Under Decision
Date:
November 1 2004
A decision of the New South Wales Supreme Court is causing some consternation among derivatives lawyers, not only in Australia but internationally as well. The commercial effect of Enron Australia v. TXU could be significant.
In Enron, the parties had entered into numerous electricity “swap” contracts under an ISDA Master Agreement by which one party agreed to pay a fixed rate, and the other a floating rate (based on the spot price of electricity), for the notional purchase of electricity to be delivered in the future. Prior to Enron’s liquidation, Enron and TXU netted their obligations and settled the amounts due under the various swap contracts on a weekly basis in accordance with the ISDA Master provisions.
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