High-fives all around at DPW1 for convincing a NY state court2 to interpret a NY law ISDA3 by following dicta4 in English case law that was referred to (but not followed) in a non-precedential federal bankruptcy court decision5 regarding another NY law ISDA.6
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1 “Because Loss is utilized as a fallback to Market Quotation – which by definition seeks to determine the replacement cost of the terminated transaction in the market – courts have held, under what is termed the “cross-check principle,” that a determination of Loss should achieve broadly the same result as Market Quotation.” Plaintiff’s Memorandum in Opposition to Defendant’s Motion for Summary Judgment, Lehman Bros. Int'l v. AG Fin. Prods., Inc. (Sep. 28, 2018), NYSCEF Doc. No. 340, 16, avail. at https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=8gXdP8_PLUS_CJCK86jJnS1rA8w==&system=prod, shared folder copy at https://app.box.com/s/skfv7lv7oi251cqqx2uo5jkuqsoy71zh
2 “At the very least, however, the significant discrepancy between the indicative bids and Assured's Loss calculation supports a finding that triable issues of fact exist as to whether the cross-check principle is capable of application to this case and, if so, whether Assured's calculation of Loss satisfies the test imposed by that principle.” Lehman Bros. Int'l v. AG Fin. Prods., Inc., 60 Misc. 3d 1214(A) (Sup. Ct. 2018), shared folder copy at https://app.box.com/s/ms26h2d4rj27l3sh9vfi91uyvnqpifyv, Google Scholar version at https://scholar.google.com/scholar_case?case=14259224773283682134&hl=en&as_sdt=6,33
3 “Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York (without reference to choice of law doctrine).” Schedule to ISDA in Exhibit 8 to Affirmation of Kimberly J. Brunelle in Support of Defendant's Motion for Summary Judgment, Lehman Bros. Int'l v. AG Fin. Prods., Inc. (Sep. 28, 2018), NYSCEF Doc. No. 183, AG00018295, avail. at https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=Q7xZjSSXJcOUIlvh_PLUS_njHQQ==&system=prod
4 Argued by ISDA:
Some might try to blur the distinctions between Market Quotation and Loss by invoking dicta of an English court to the effect that the two damages calculational mechanisms are “intended to lead to broadly the same result.” Peregrine Fixed Income Ltd v. Robinson Dep’t Store Plc, [2000] Lloyds Rep. Bank. 304 (Q.B.). This dicta is true generally only in the sense that both mechanisms are intended to lead to satisfactory resolutions in appropriate circumstances. Although this dicta may have been convenient in the case in which it was expressed, Peregrine, that case is totally inapposite[] and has not even been mentioned by a U.S. court.
Amicus Curiae Memorandum of Law in Support of Defendant Intel Corporation’s Motion for Summary Judgment, Lehman Brothers Holdings Inc. et al v. Intel Corporation, Bk. No. 08-13555, Adv.No. 13-01340 (Bankr. S.D.N.Y. Jan. 20, 2015), Doc 57-1, 14-15 avail. at https://www.isda.org/a/56iDE/de-057-1-1-20-15-isda-memo-of-law.pdf
5 Possibly the first time a US court refers to this principle:
No party has cited a case in which the Anthracite “cross-check” principle has been applied, where, as here, there were no deliveries or payments to be made after the Early Termination Date. Accordingly, while the principle may have hardened into hornbook law in the context of contracts for which deliveries or payments were to be made after the Early Termination Date, that context is not present here. Lehman has not provided a convincing argument as to why the principle should be extended.
Lehman Brothers Holdings Inc. et al v. Intel Corporation, Bk. No. 08-13555, Adv.No. 13-01340, 31 (Bankr. S.D.N.Y. Sep. 16, 2015), avail. at http://ia800300.us.archive.org/26/items/gov.uscourts.nysb.238947/gov.uscourts.nysb.238947.110.0.pdf
6 “Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York (withoutreference to choice of law doctrine).” Schedule to ISDA in Exhibit 2 to Declaration of Mahesh Venkatakrishnan in Support of Motion for Summary Judgment, Lehman Brothers Holdings Inc. et al v. Intel Corporation, Bk. No. 08-13555, Adv.No. 13-01340 (Bankr. S.D.N.Y. Jan. 1, 2015), Doc 63-2, 7, avail. at https://www.courtlistener.com/recap/gov.uscourts.nysb.238947/gov.uscourts.nysb.238947.63.2.pdf