European Business Organization Law Review


CDS Zombies

Anna Gelperna1 * and Mitu Gulatia1 *

a1 American University Washington College of Law and Duke Law School.


This paper examines the contract interpretation strategies adopted by the International Swaps and Derivatives Association (ISDA) for its credit derivatives contracts in the Greek sovereign debt crisis. We argue that the economic function of sovereign credit default swaps (CDS) after Greece is limited and uncertain, partly thanks to ISDA's insistence on textualist interpretation. Contract theory explanations for textualist preferences emphasise either transactional efficiency or relational factors, which do not fit ISDA or the derivatives market. We pose an alternative explanation: the embrace of textualism in this case may be a means for ISDA to reconcile the competing political demands from state regulators and its market constituents. We describe categories of contracts susceptible to such political demands, and consider when and why textualism might be the preferred response.


  • CDS;
  • Greece;
  • ISDA;
  • Determinations Committee;
  • restructuring;
  • contracts;
  • textualist;
  • contextualist


*   We are grateful to the organisers of and participants in the conference and workshop on OTC derivatives regulation at the University College Dublin, and especially to John Biggins and Colin Scott for their immense patience and support. We thank Emilios Avgouleas, Lisa Bernstein, Joseph Blocher, William Bratton, Lee Buchheit, Stephen Choi, GuyLaine Charles, Kevin Davis, Robert Ellickson, Erik Gerding, Ben Heller, Robert Kahn, Gregory Klass, Kimberly Krawiec, Donald Langevoort, Adam Levitin, Barak Richman, Felix Salmon, Daniel Schwarcz, Robert Scott, David Snyder, Robert Thompson, Holland West, and participants in workshops at Georgetown Law and American University Washington College of Law for helpful comments and insights.