Document ID: chunk:federal_register_of_legislation:C2024C00373:section:16:p1
Version: federal_register_of_legislation:C2024C00373
Segment Type: section
Provision Reference: s 16 (pt 1/3)
Character Range: 66935–69731

16  Effectiveness of market netting contracts
 (1) If:
 (a) Australian law governs a market netting contract; and
 (b) the contract is entered into in circumstances that are within Commonwealth constitutional reach;
the following provisions apply:
 (c) obligations may be terminated, termination values may be calculated and a net amount become payable in accordance with the contract;
 (ca) any security given, in accordance with the contract, in respect of obligations of a party to the contract may be enforced in accordance with the contract;
 (cb) rights and obligations of a party to the contract may be transferred in accordance with the contract;
 (cc) without limiting paragraph (cb):
 (i) property (including property over which security has been given) of a party to the contract may be transferred or otherwise dealt with in accordance with the contract; and
 (ii) property (including property over which security has been given) of another person on whose behalf a party to the contract is acting may, with that other person's prior written consent, be transferred or otherwise dealt with in accordance with the contract;
 (d) paragraphs (c), (ca), (cb) and (cc) apply despite:
 (i) any disposal of rights that may be netted under the contract; or
 (ia) any disposal of rights or property that may be transferred in accordance with the contract; or
 (ii) the creation of any encumbrance, or any other interest, in relation to those rights or that property; or
 (iii) the operation of any encumbrance, or any other interest, in relation to those rights or that property that is created after the commencement of this section;
  in contravention of a prohibition in the contract;
 (e) for the purposes of any law, the assets of a party to the contract are taken:
 (i) to include any net obligation owed to the party under the contract; and
 (ii) not to include obligations terminated under the contract.
 (2) If:
 (a) a party to a market netting contract goes into external administration; and
 (b) Australian law governs either:
 (i) the external administration; or
 (ii) the contract;
the following provisions apply:
 (c) obligations may be netted or terminated, termination values may be calculated and a net amount become payable in accordance with the contract;
 (d) obligations that are, or have been, netted or terminated under the contract are to be disregarded in the external administration;
 (e) any net obligation owed by the party under the contract that has not been discharged is provable in the external administration;
 (f) any net obligation owed to the party under the contract that has not been discharged may be recovered by the external administrator for the benefit of creditors;
 (fa) any security given by the party, in accordance with the contract, in respect