Videocon Global Ltd & Anor v Goldman Sachs International

Under the 1992 ISDA Master Agreement, the debt arising from early termination accrues on the Early Termination Date. The effective service of notice stating the amount payable fixes the Payment Date. Detailed supporting calculations are not a condition precedent to that payment obligation.

The requirement to provide the contractual statement on or as soon as reasonably practicable does not make time of the essence. A late statement remains effective. Its lateness constitutes a breach of contract and may support a damages claim where it causes loss, but it does not extinguish the debt or permanently prevent payment from becoming due.

Following Global's default under two currency swaps, Goldman terminated the transactions under the 1992 ISDA Master Agreement and demanded US$4,066,542.90. An initial statement identified that amount but lacked the reasonable detail required by section 6(d)(i). Goldman later supplied a detailed replacement statement.

Teare J granted summary judgment in [2014] EWHC 4267 (Comm). He held that the replacement statement remained effective even if it had not been provided as soon as reasonably practicable. The appellants contended that timely service was a condition precedent, so that a late statement could never trigger the payment obligation. The central issue was whether section 6 imposed that time bar.

1. Appeal dismissed. The requirement in section 6(d)(i) to provide a statement on or as soon as reasonably practicable after the Early Termination Date was not a condition precedent of which time was of the essence. A statement served outside that period could still result in the amount becoming payable.

2. The Master Agreement distinguished the underlying debt from the obligation to make payment. The close-out debt accrued on, or as at, the Early Termination Date. At that point the obligations under the terminated transactions were replaced by the single obligation relating to the close-out amount. This conclusion was supported by the valuation date for Loss and the accrual of interest from the Early Termination Date. A subsequent failure to comply fully with section 6(d)(i) could not extinguish that accrued debt.

3. Section 6(d)(ii) made the amount payable when notice of the amount payable became effective. In context, effectiveness referred to the delivery rules in section 12. It did not require a statement containing every calculation and quotation prescribed by section 6(d)(i). Goldman's first letter identified the amount payable and was therefore sufficient to fix the Payment Date, notwithstanding the inadequate detail supporting its calculations.

4. In any event, neither the wording nor the commercial scheme made prompt service a condition of payment. Time-bar provisions require clear language, and the expression “as soon as reasonably practicable” was insufficient to make time of the essence. The appellants' construction would permanently displace the agreed close-out machinery because of delay and substitute an uncertain common-law damages claim. That result was commercially unrealistic and inconsistent with the agreement's purpose.

5. Late provision of the detailed statement was nevertheless a breach of contract. It could support damages where changes in market or financial conditions caused loss. No such loss was alleged here. Gloster LJ gave the judgment, with which Cranston J and Sir Stephen Richards agreed.

1. Court of Appeal (Civil Division): Permission to appeal was granted because of the issue's market importance, but the appeal was dismissed. The court upheld the summary judgment.

2. High Court, Commercial Court: Teare J granted Goldman summary judgment for US$4,066,542.90, interest and expenses in [2014] EWHC 4267 (Comm) . He held that late provision of a detailed section 6 statement did not prevent the payment obligation from arising.

3. Earlier High Court proceedings: Mr Robin Knowles QC had granted summary judgment on liability but held that the inadequate detail in Goldman's first statement meant that quantum should proceed to trial. Goldman then served a detailed replacement statement and made the successful second summary judgment application.