The English High Court has held that a bank had not validly exercised its contractual right to extend the term of a 5 year interest rate collar transaction, because its email notice was not due notice to the company.
The collar was documented on the terms of a 1992 ISDA Master Agreement (Multi Currency – Cross Border). The court held that the phrase “may be given in any manner set forth” in section 12 of the ISDA means that notice can be given in any manner that was listed (i.e. in person, telex, fax, registered mail or by electronic messaging system), but in no other way. The court further concluded that notice by “electronic messaging system” did not include notice by email. In addition, as the Schedule to the ISDA did not provide an email address, the contract had to be construed as limiting the prescribed methods to those expressly provided for in the Schedule.
Email was not specially provided for under the notice provisions of the ISDA.
In this case, Greenclose Ltd v National Westminster Bank PLC, the bank attempted to serve notice on the company at 9.45am on 30 December 2011, by email, followed up by a voicemail. Email was not specially provided for under the notice provisions of the ISDA and, regardless of whether “electronic messaging system” included email, as no email address was listed in the contact details set out in the Schedule to the ISDA, notice could not be served this way. The voicemail added nothing. The court held that notice was therefore not validly served on the company.
The court went on to comment that, even if email had been expressly permitted, notice would still not have been validly served since the email was not opened until after the agreed deadline.