77Direction not grounds for denial of obligations

77 Direction not grounds for denial of obligations

When this section applies (1) This section applies if an accountable entity, or a significant related entity of an accountable entity, is party to a contract, whether the proper law of the contract is: (a) Australian law (including the law of a State or Territory); or (b) law of a foreign country (including the law of part of a foreign country). Direction does not allow denial of obligations (2) The fact that the accountable entity is given a direction under section 64 does not allow the contract, or a party to the contract (other than the accountable entity or a significant related entity of the accountable entity), to do any of the following: (a) deny any obligations under the contract; (b) accelerate any debt under the contract; (c) close out any transaction relating to the contract; (d) enforce any security under the contract. This subsection has effect subject to this section. (3) If the accountable entity or the significant related entity is prevented from fulfilling its obligations under the contract because of a direction under section 64, the other party or parties to the contract are, subject to any orders made under subsection (4) of this section, relieved from obligations owed to the accountable entity or significant related entity under the contract. Application to the Federal Court (4) A party to a contract to which subsection (3) applies may apply to the Federal Court of Australia for an order relating to the effect on the contract of a direction under section 64. The order may deal with matters including (but not limited to): (a) requiring a party to the contract to fulfil an obligation under the contract despite subsection (3) of this section; or (b) obliging a party to the contract to take some other action (for example, paying money or transferring property) in view of obligations that were fulfilled under the contract before the direction was made. The order must not require a person to take action that would contravene the direction. Covered bonds (5) Subsection (2) does not prevent the exercise of a contractual right in relation to an asset that secures liabilities to holders of covered bonds (within the meaning of the Banking Act 1959), or their representatives, if payments under the covered bonds to the holders or representatives are not made.