Credit derivatives market participants following the Aon Corp. versus Societe Generale case - which was on appeal before the United States Court of Appeals for the Second Circuit - were finally able to exhale last week. The court overturned a 2006 district court ruling that had favored Aon. The decision effectively sealed a Pandora's box full of disgruntled counterparties seeking to argue contract terms, according to industry experts.

The ruling solidified what most in the market would like to assume: The terms of each credit default swap contract independently define the risk being transferred - as long as those terms are clear, or "unambiguous," in the legal world, that is.

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