ARITA's submission on exclusions from new stay on the enforcement of ipso facto clauses

In April 2018 The Treasury announced consultation on exposure draft regulations (and declaration) which exclude certain contracts and contractual rights from the new stay on the enforcement of ipso facto clauses now provided for in the Corporations Act (set to commence on 1 July 2018).

The Corporations Amendment (Stay on Enforcing Certain Rights) Regulations 2018 (‘the Regulations’) and the Corporations (Stay on Enforcing Certain Rights) Declaration 2018 (‘the Declaration’) purport to ‘recognise that in some circumstances it is necessary or desirable for ipso facto clauses to continue to operate, for example, where there is an established market mechanism already in place or where it would be a commercial nonsense for an ipso facto clause to be stayed.'

ARITA made a submission (available below) which focused on concerns identified in the terms and scope of some of the exclusions in the Regulations and the Declaration which, in ARITA's view, have the potential to run counter to the intention and objectives of the new stay on the enforcement of ipso facto clauses.