10Effectiveness of approved multilateral netting arrangements

10 Effectiveness of approved multilateral netting arrangements

(1) If an approved netting arrangement is entered into in circumstances that are within Commonwealth constitutional reach: (a) obligations may be terminated, termination values may be calculated and a net amount become payable in accordance with the arrangement; and (b) paragraph (a) applies despite: (i) any disposal of rights that may be netted under the arrangement; or (ii) the creation of any encumbrance, or any other interest, in relation to those rights; or (iii) the operation of any encumbrance, or any other interest, in relation to those rights that is created after the commencement of this section; in contravention of a prohibition in the arrangement; and (c) for the purposes of any law, the assets and liabilities of a party to the arrangement are taken: (i) to include any net obligation owed to a party under the arrangement; and (ii) not to include obligations terminated under the arrangement. (2) If a party to an approved netting arrangement goes into external administration: (a) if the external administration is not a non‑terminal administration—the party may do anything permitted or required by the arrangement in order to net: (i) obligations incurred before or on the day on which the party goes into external administration; and (ii) net obligations if the obligations that are directly or indirectly netted are incurred before or on the day on which the party goes into external administration; and (aa) if the external administration is a non‑terminal administration—the party may do anything permitted or required by the arrangement in order to net: (i) obligations incurred before the participant goes into, or while the participant is in, non‑terminal administration; and (ii) net obligations if the obligations that are directly or indirectly netted are incurred before the participant goes into, or while the participant is in, non‑terminal administration; and (b) the obligations that are, or have been, netted under the arrangement are to be disregarded in the external administration (but see subsection (4)); and (c) any net obligation owed by the party under the arrangement that has not been discharged is provable in the external administration; and (d) any net obligation owed to the party under the arrangement that has not been discharged may be recovered by the external administrator for the benefit of creditors; and (e) the netting and any payment made by the party under the arrangement to discharge a net obligation is not to be voidable in the external administration; and (f) for an arrangement that is governed by the rules of a licensed CS facility (within the meaning of the Corporations Act 2001)—a payment, or a transfer of property, by a party under the arrangement to discharge a net obligation is not to be void or voidable in the external administration; and (g) paragraphs (a) to (f) apply despite: (i) any disposal of rights that may be netted under the arrangement; or (ii) the creation of any encumbrance, or any other interest, in relation to those rights; or (iii) the operation of any encumbrance, or any other interest, in relation to those rights; in contravention of a prohibition in the arrangement.