International Air Transport Association v. Ansett Australia Holdings Limited(2008) was decided correctly by the High Court of Australia. However, the reasoningof the judges was unsound due to their apparent unfamiliarity with the operationof Central Counterparty (“CCP”) systems. The judges failed to recognize that“open offer” was the mechanism of counterparty substitution used in the InternationalAir Transport Association (“IATA”) clearing rules to create mutuality andguarantee multilateral insolvency set-off. This article analyzes the Ansett decisionand describes the legal principles that should have been used to decide the case.Only “financial market” CCPs receive special statutory protections from burdensomecorporate insolvency laws. Therefore, it is argued that the new transnationallex mercatoria confers analogous protection on the arrangements of “non-financialmarket” CCPs such as IATA. The High Court would have reached the same outcomethat they did by applying this legal framework to the facts in Ansett.
Field of Research
Socio Economic Objective
970118 Expanding Knowledge in Law and Legal Studies
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