The recent case of Greenclose Limited v National Westminster Bank(“the Bank”) has emphasised the tight requirements for giving a valid notice under the 1992 ISDA Master Agreement (“1992 MA”).

The Case

The claimant, Greenclose Limited, was a family business and the majority shareholder and managing director, Mr Leach, was described by the judge as an astute and sophisticated businessman who understood the nature of the products offered. 

The Bank agreed to refinance facilities for Greenclose conditional on it entering into some form of interest rate hedging. Mr Leach was reluctant to commit to hedging but the Bank made hedging mandatory. 

Mr Leach finally settled on a 5 year collar that was extendable for 2 years by the Bank on notice.  While there was, therefore, a risk that the hedging could last for 7 years, Greenclose would in return benefit from a lower floor for the collar. Mr Leach provided Greenclose’s office fax number for the trade confirmation to be sent for him to sign and fax back. A final confirmation was to follow in the post which would also require his signature.

Email Notice

The Bank sent Greenclose the 1992 MA. The Schedule on methods of notice was completed by Greenclose to include the company address, office telephone number and main contact. A fax number was not included and there was no provision for an email address. 

In order to extend the collar by 2 years, the Bank needed to provide notice, in accordance with Clause 12 1992 MA, to Greenclose by 11.00am on 30 December 2011. Prior to this, Mr Leach had received both an email and a letter from the Bank warning that it was likely that the collar would be extended and that he would receive confirmation in writing. 

The Bank decided on 29 December 2011 to extend the collar but waited until the next day to notify Greenclose.  The Bank attempted to fax notice on the morning of 30 December but the fax failed to send. An email was then sent to Mr Leach confirming the fax failure and saying that the Bank was exercising its right to extend the collar. The Bank also attempted to call Greenclose’s office but there was no response and so a voicemail was instead left on Mr Leach’s mobile. Mr Leach argued that he did not read the email or hear the voicemail until the following day, that is after the deadline for notice had passed. 

The Court’s Decision

The court rejected the Bank’s argument that Clause 12 1992 MA deals only with effectiveness of notice and they could give notice in any way. Mrs Justice Andrews said that Clause 12 deals with 2 issues: 1) how notice can be given and 2) when such notice is deemed effective. The natural interpretation is that there are a limited number of permitted ways to give notice. This is supported by the “Amendments to the ISDA Master” document which advises that notice “may be given by any of the specified methods” suggesting that it cannot be given by unspecified methods.

Mrs Justice Andrews noted that the Clause 12 notice requirements applied to provisions of the contract such as notification of breach of contract where “certainty [for notice] is of paramount importance” and so having unlimited methods of providing notice was not sustainable. Further, the clause requires notice to be given by any party wishing to change any of the contact details by which notice can be given. No such notice had been provided by Greenclose. If the notice provisions in the Schedule were not the only possible means to communicate notice, there would be no reason to have a formal procedure to change them. 


As a fax number had not been provided by Greenclose in the Schedule even if the Bank’s fax had sent this would not be a valid notice. It was irrelevant that Greenclose had provided their fax number for the trade confirmation as they had never expressly consented to notice by fax or updated the Schedule. 


Email was not included in the Schedule and so was not a means of notice under the 1992 MA or the loan agreement and was not effective.

The Court did not believe that “electronic message”, as referred to at Clause 12(a)(v), included e-mails. The Judge said that this refers to an electronic messaging system such as SWIFT.  Further, the user’s guide for the 2002 ISDA Master Agreement  (which specifically provides for notice by email) notes that Master Agreement has been modified “to permit email delivery”, confirming that this was not previously permitted. 


The voicemail left for Mr Leach did not purport to be a notice; it was merely drawing his attention to the email.  While the office telephone number was provided in the Schedule of 1992 MA, the agreement did not provide for notice by phone. 


The Bank could have provided notice earlier than 30 December and took unnecessary risk by waiting until then.  It was irrelevant that the Bank had provided a previous warning of the potential extension of the collar. The notice to Greenclose was not valid and the Bank was ordered to repay the amounts from the period of the extension. 

The court rejected Greenclose’s alternative argument that the Bank should not have extended the collar when it was not in Greenclose’s commercial interest. Mrs Justice Andrews said that the Bank had an unqualified right to extend the term of the Collar and was under no obligation to put the economic interests of its customer before its own in reaching its decision.


Notice will only be effective if served in accordance with the methods detailed in the Schedule to the ISDA agreement and so this should always be checked. Failure to do so may render the notice invalid and could have serious economic impacts. 

Mrs Justice Andrews said that either side could have agreed to add additional means for communicating notice, such as by email. If they are not included in the Schedule, they will not be permitted.  If using the 1992 MA, email needs to be specifically inserted in order to be effective.