The IECA Master Netting Agreement is a succinct, state-of-the-art agreement designed to allow the termination, close-out, and netting of physical and financial commodities transactions under certain circumstances including insolvency. Compared to the few other master netting forms available in the market, the IECA Master Netting Agreement has the following advantages:
• It is shorter and easier to use
• It is supported by legal opinions in two key jurisdictions (England & Wales and US)
• Designed for use with long form or bespoke transactions in addition to those covered by master trading agreements
• Drafting team intentionally considered use with a variety of commodities, including power, gas, crude, refined products, NGLs, metals, freight, emissions, and other environmental products.
The IECA has procured legal opinions as to the enforceability of the IECA Master Netting Agreement under English law as well as under US law. When used in accordance with the legal opinions, parties to the IECA Master Netting Agreement can be confident that their exposure on covered transactions can be viewed on a net, rather than a gross, basis, thereby reducing credit risk and potentially conserving working capital. The legal opinions have been prepared by a top tier international law firm, Reed Smith LLP. They will soon be available for purchase. Please check this page for updates.
Every situation is different and requires independent legal analysis. For those reasons, neither the IECA nor Reed Smith can guarantee the enforceability or fitness of the IECA Master Netting Agreement for you, your counterparty, or your situation. You are encouraged to consult with your own legal counsel with respect to the preparation, negotiation, and use of the IECA Master Netting Agreement.