Goldman Sachs International v Videocon Global Ltd & Anor

Under the 1992 ISDA Master Agreement, successive margin calls do not supersede an earlier unpaid call unless the parties’ conduct withdraws it. An instruction to a bank to make payment is not tender or performance where the money has not been paid and the creditor has not refused payment. An early termination notice may designate the contractual date of delivery and, alternatively, the next date on which the notice becomes effective under the notice provisions. Where the parties select Loss and Second Method, a Section 6 statement must show the calculations in reasonable detail and disclose relevant quotations and sufficient information to demonstrate compliance with the contractual requirements of reasonableness and good faith.

Goldman Sachs International sought summary judgment against Videocon Global Ltd for sums said to be due following the termination of two currency option transactions governed by a 1992 ISDA Master Agreement and Credit Support Annex. It also sought judgment against Videocon Industries Ltd under a guarantee.

The defendants disputed the continuing effectiveness of the original margin call, alleged tender of performance, challenged the effectiveness of the early termination notice, and disputed the sufficiency of Goldman Sachs’s Section 6 statement calculating Loss. The court determined liability summarily but held that quantum required a trial.

1. Liability. The margin call of 23 November 2011 remained effective despite later margin calls. The ISDA Credit Support Annex contemplated successive calls, and Goldman Sachs had done nothing capable of causing Videocon Global reasonably to understand that the earlier call had been withdrawn (paras 7–12, 34).
2. Videocon Global had not tendered performance. An instruction to its own bank did not amount to payment, particularly where the instruction could be altered, delayed or refused. There had been no refusal by Goldman Sachs to receive payment. The principle stated in Dixon v Clark (1848) 3 CB 365 did not assist the defendants on these facts (paras 13–17).
3. The evidence did not give Videocon a real prospect of establishing that the Early Termination Notice was delivered after close of business. The court was entitled, on the summary judgment evidence, to assess whether the defendants’ evidence had a real prospect of withstanding scrutiny at trial where the timing was crucial and the evidence lacked a proper basis (paras 18–27).
4. The notice complied with Section 6(a) of the ISDA Master Agreement. It designated 2 December 2011 and sensibly provided for the next Local Business Day on which the notice was effective under Section 12(a), namely 5 December 2011 if necessary (paras 28–33).
5. Quantum. Where Loss and Second Method applied, Section 6(d)(i), read with Section 14, required a statement showing the calculations in reasonable detail. If quotations were used, the statement also had to show the relevant quotations and identify sufficient information to establish that they came from leading dealers in the relevant markets. The statement did not disclose the calculations, quotations, sources, selected quotations or pricing model. Those failures were material because the recipient was entitled to understand how the figures were derived and assess reasonableness and good faith (paras 36–47).
6. Goldman Sachs therefore obtained summary judgment on liability but not quantum. Quantum against both defendants, including the guarantee claim, was left for trial. Credit was to be given for the Credit Support Balance of US$532,728.10 (paras 48–51).