Effectively delivering notices under commercial contracts is not as straight-forward as it maybe ought to be, with different contracts requiring different methods of delivery, different content and different timelines. Often these boiler-plate provisions are not treated with the same vigour as the commercial provisions of a contract in negotiations, meaning they can be left containing ambiguity. And this ambiguity will also often come to light at very worrisome times, like where a default notice is being delivered to close out transactions.
There are various notices that may be delivered under the ISDA Master Agreement, but one of the most important is notice designating an Early Termination Date after the occurrence of an Event of Default. We have previously on the blog discussed recent case law which examined the required content of these notices. In terms of the actual method of delivery of these and other notices, Clause 12 of the 2002 ISDA Master Agreement stipulates that notices must be delivered by certain prescribed methods and to the address details listed in the schedule. Until recently, e-mail was not a default method for delivering default and termination notices under Section 5 or 6 of the 2002 ISDA Master Agreement. However on 30 May 2023, ISDA published standard form bilateral provisions to facilitate the amendment of ISDA Master Agreements to permit the use of e-mail as the delivery method for default and termination notices.
In practice, uncertainty has arisen where a counterparty has moved office but not updated its address details, or where delivery under the specified methods is practically impossible – such as in the COVID pandemic or in Russia following the imposition of sanctions following its invasion of Ukraine.
To mitigate some of these difficulties, ISDA is exploring a central notices hub. This would act as a platform for firms to load notices, with automatic alerts sent to the receiving entity. Parties would agree by means of a protocol that this would constitute effective delivery under their ISDA Master Agreements. There are legal and technological issues to be addressed but this seems like a sensible and efficient approach to dealing with delivering notices, which should be a simple and unambiguous process.