Model Legislation of the International Swaps and Derivatives Association: Harmonization instead of Unification

Abstract

Since 1996 the International Swaps and Derivatives Association (ISDA) has been extremely successful in preparing and promoting model acts that have been implemented in more than 80 jurisdictions, including the Russian Federation. This circumstance is unique because ISDA, unlike intergovernmental organizations in the field of harmonization and unification of private law, does not have the status of an international organization, being a non-profit corporation. Nevertheless, its model laws, being in demand by legislators from different countries, put ISDA’s activities in the field of harmonization of private law on a par with such international organizations as Unidroit and UNCITRAL. The paper provides a brief description of the basics of the activities of this association. Special attention is given to the preparation of standard framework agreements and terms of contracts. The evolution of its model legislation is traced in detail, including the model laws of 1996, 2002, 2006 and 2018. It is noted that up to 2018, there was a tendency to expand privileges for derivative transactions, including in terms of their types and degree of protection. However, after the collapse of the leading investment bank Lehman Brothers and the subsequent global financial crisis, regulatory approaches to derivatives privileges changed, which was reflected in the latest ISDA model Act.