The most important thing to remember is that the isda framework contract is a clearing agreement and all transactions depend on each other. Therefore, a defect below a transaction is considered a defect among all transactions. Section 1(c) describes the concept of the single agreement and is essential, as it is the basis of close-out netting. The intention is that when a failure event occurs, all transactions will be completed without exception. The concept of “netting out” prevents a liquidator from “pecking raisins”, i.e. making payments for profitable transactions for his bankrupt client, and refusing to do so for unprofitable transactions. However, Section 6(e), which expressly permits “any set-off”, was in contradiction with the Loan Agreement, which contained a provision excluding the possibility for Shanpark to make a deduction or set-off for amounts due under the Loan Agreement or Framework Agreement, without prejudice to the set-off provided for in Section 2(c) and Section 6(e) of the Framework Agreement. Cooke J considered that the exclusion of set-off from the loan agreement prevailed over section 6(f) of the framework contract, the first being dated to the second. The provision of the loan agreement must be read in such a way as to record the final agreement between the parties regarding the availability of compensation for Shanpark. This means that, even if Shanpark were available elsewhere, shanpark would under no circumstances be allowed to exercise a right of set-off under Article 6(f). The framework contract is the central document around which the rest of ISDA`s documentary structure is built. The pre-printed framework contract is never modified, except to insert the names of the parties, but is adapted to the framework agreement through the use of the calendar, a document containing elections, additions and amendments to the framework agreement.
In the case of MHB-Bank AG v Shanpark Ltd  EWHC 408 (Comm) of 25 February 2015, Mr Justice Cooke confirmed before the Commercial Court that the non-payment and final noodle provisions of the 1992 ISDA Framework Agreement are limited to the amounts due under the provisions of the Framework Contract. Amounts payable under another agreement may reduce the amount of early termination only to the extent that they are accountable. The judgment also examines whether the contractual set-off clause added to the framework contract in this case was sufficiently broad to allow a right to un liquidated damages in order to reduce the anticipated amount of termination. The second regime, “close-out netting”, applies after an early termination date has been set due to the occurrence of a default event or termination event. Once a failure event or termination event has occurred, Section 6 (Early Termination) comes into play. If a party exercises its right to designate an early termination date, Article 2 (obligations) is deleted. With respect to the first scheme, non-payment, Cooke J stated that Section 2(c) would no longer apply once all transactions have been closed by a notice indicating an early termination date in accordance with Section 6. In addition, Section 2(c) only concerns amounts payable “on any date”, “in the same currency” and “in respect of the same transaction” (or more than one transaction if the parties chose it, which they did not do in this case). . .