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3 Australia

Ian Paterson

From: Set-Off Law and Practice: An International Handbook (3rd Edition)

Edited By: William Johnston, Thomas Werlen, Frederick Link

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 13 April 2024

Banks and cross-border issues — Bank resolution and insolvency — Credit risk — Monetary obligations — Insolvency set-off

This chapter discusses the law of set-off and netting in Australia as well as the key restrictions on the availability of set-off under Australian law. In Australia, set-off and netting arrangements are often used as a means of reducing operational and credit risk. In the context of reducing credit risk involving financial rights and obligations (for example, deposits and loans), set-off and netting arrangements depend on one or more of: contract, section 553C of the Corporations Act 2001, and the Payment Systems and Netting Act 1998 (Netting Act). The chapter first considers set-off between solvent parties and set-off against insolvent parties before explaining set-off under section 553C of the Corporations Act. It also examines issues that may arise in cross-border transactions under Australian law with respect to the availability of set-off in section D of the Corporations Act, with emphasis on the choice of law and set-off in insolvency.

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