In the Australian (New South Wales) High Court decision in
Enron, Australia v TXU Electricity (2003), the court
found that, when a bankruptcy event of default occurred under
an Isda master agreement between the two parties in respect of
Enron, TXU (as the non-defaulting party) could, but was not
obliged to, designate an early termination date.
The transactions entered into by the parties under the
agreement had developed so that, had TXU terminated, it would
have been required to compensate Enron's loss because Enron was
in the money at the time of its default. TXU chose not to
On the basis of the condition precedent in Section 2(a)(iii)
of the Isda Master Agreement, which states that no payments or
deliveries need to be made by a party if the other party is in
default, TXU was not obliged to, and did not, make any further
payments or deliveries to...