[2] The decision dealt with many of the same issues as the controversial Metavante ruling in the New York courts,[3] although coming to the opposite conclusion under English law.

This problem was then compounded by the drafting of the ISDA Master Agreement which stated that non-occurrence of an Event of Default was a "condition precedent" to any payment obligation.

In the cases before the court, because the Event of Default was continuing up until the time when the financial contracts would naturally have come due for payment, the non-Defaulting Parties argued that they never had to pay the sums due because the condition precedent was not satisfied; in essence they were entitled to a windfall and could avoid their liabilities under the relevant derivative contracts because of the other party's default.

They rejected any argument that there was an implied term on the part of the non-Defaulting Party to terminate within a reasonable period of time or at all after the occurrence of an Event of Default.

It is important to note that these issues only arose in the first two appeals because the parties elected not to utilise the automatic early termination (AET) provisions in the Master Agreement.

[8] At first instance it was held that the payment obligation of the non-Defaulting Party was suspended during the currency of the transaction, the suspension ended on maturity whereupon the liability was then extinguished.

After considerably analysis of the various issues the Court of Appeal held however that this in fact the result: We decide therefore that Mr Zacaroli's submissions are correct and that there is no terminus, either by way of extinction or revival, to the condition precedent.

There is no suggestion that it was formulated in order to avoid the effect of any insolvency law or to give the non-defaulting party a greater or disproportionate return as a creditor of the bankrupt estate.

They had to therefore consider a separate point raised whereby whether the AET provisions necessarily assumed that all conditions precedent were satisfied (i.e. amongst other things, there was no Event of Default) for the purposes of carrying out the calculation of the amounts payable (defined as "Loss" under the agreement).

The Court held not,[12] and upheld the existing line of authority on this point, most notably in the decision of Gloster J in Pioneer Freight Co Ltd v TMT Asia Ltd [2011] 2 Lloyds Rep 96.

[14] The International Swaps and Derivatives Association (ISDA) appeared as an intervener to argue in favour of a more benign interpretation of the provisions of the Master Agreement, but were largely unsuccessful.