Interpretation of ‘Notwithstanding’ under the Law

What ‘Notwithstanding’ Means under the Law

As mentioned, the main purpose of the term "notwithstanding" when it comes to legal language is to indicate whether there are limitations on the general rule or specific provisions being addressed and applicable to that rule. As a concise way to introduce exceptions to a general rule, "notwithstanding" is commonly referred to as a "non obstante" modifier.
In other words , to say something is "subject to" a "non obstante" modifier means that the rule is limited by whatever has been stated after the term "notwithstanding." How it functions as a modifier can best be seen in some of the general uses of the term "notwithstanding" in legal documents.
For example:
— State day care licensing statutes and regulations governed notwithstanding the non-discrimination clauses in equal employment statutes.
— The judge can revoke visitation rights notwithstanding the terms in the divorce decree.
— Federal law concerning taxes is effective over conflicting state law notwithstanding the absence of an explicit statement of preemption.
At its simplest, the term "notwithstanding" may just represent the purpose of having an exception.
It’s common for legal language to contain a few modifiers within the span of even a few sentences. When strung together, those modifiers can really add up, but their function is always to reinforce a specific point.

Use of "Notwithstanding" in Documents / Statutes

In legal writing, "notwithstanding" is a powerful and often seen word. It’s a term of art that indicates a provision supersedes another. "Notwithstanding" can be found in contracts, statutory law, and within legal agreements. As far as legal terminology goes, "notwithstanding" is both fairly common and versatile.
Contracts
When used in contracts, "notwithstanding" is meant to be a limitation of another provision. For example, parties may agree on liability caps, indemnity, non-compete clauses, confidentiality, or the like. Here is an example from a non-recurring transaction purchase agreement:
Notwithstanding anything in this Section 9(a) to the contrary, the indemnification obligations of Holdings, the Company, and the Seller Indemnifying Parties shall be subject to the provisions of this Section 9(a) and shall not exceed in the aggregate for all claims (including, without limitation, for indemnifiable Losses arising out of Third Party Claims and for indemnifiable Losses arising out of other claims hereunder) the Maximum Amount.
Statutory Law
At times, the use of "notwithstanding" and "notwithstanding the foregoing" is used to mean that one statute will trump another. Using the same example above, let’s say we have a dispute where one statute may supersede another depending on the language used. A statute may state "notwithstanding the foregoing…" or "notwithstanding any provision in this statute…". These terms would indicate that that the provision set out thereafter must be adhered to regardless of any other provision within the statute; including those provisions set out at the start stating "notwithstanding the foregoing". It’s sort of a loop or Gordian knot of provisions, but when "notwithstanding" is used, it generally means that one provision will reign supreme when there is a conflict.
Legal Agreements
Finally, "notwithstanding" is frequently found in legal agreements. You may see it in investor agreements, shareholder agreements, or any agreement where one provision must be "notwithstanding" another.

Common Misunderstandings Of ‘Notwithstanding’

Many misunderstandings persist about "notwithstanding" in legal, business and vernacular contexts. For example:
The above issues are readily understandable. The use of "notwithstanding" is widespread in the construction and interpretation of complex statutes, regulations, directives, contracts, and precedents. Nevertheless, the parallel meaning of "notwithstanding" in legalese remains problematic. Such parlance makes the interpretation of complex statutes and contracts a challenging prospect, even for the established juristic elite.
What’s more, the widespread use of "notwithstanding" in statutes, regulations and directives has led to an erroneous perception that it is used to emphasize the effect of the provisions "notwithstanding" which precede them. This misconstruing of "notwithstanding" has the consequential effect of broadening the scope of the "notwithstanding" clause to include provisions it is meant to override.
When legislation contains multiple "notwithstanding" clauses, resorting to the "notwithstanding" clause at the top of a complex statute or regulation can result in overbroad applications that lead to absurd results. The misconstruction of "notwithstanding" leads to the amalgamation of the meaning of the clauses that are to be read otherwise as independent and distinct from each other.
Due to the importance of the correct understanding of "notwithstanding" in the construction of statutes, regulations, contracts and other documents of a complex nature, we take a two-fold approach when analyzing the use of "notwithstanding" in a particular context. First, we have to ascertain the intention of the drafters of the particular provisions in the larger legislative or contractual framework. Second, we determine the legal breadth of the ensuing impact of that intention.
These principles take on added meaning when interpreting "notwithstanding" in legal contexts, since legal meanings can be exceedingly nuanced.

Effect of The Phrase ‘Not withstanding’ in Provisions

The use of "notwithstanding" in a contract is significant. It can alter the meaning of other provisions in a contract as well as the meaning of the provision in which it appears. The result is that it must be interpreted and applied in the context of the entire contract, and the overall effect of how it and the other terms are drafted.
Generally, the effect of "notwithstanding" can be to give priority to that particular provision, regardless of any other potentially conflicting provisions in the contract. The problem with interpreting "notwithstanding" in this way is that contract terms are not constructed in a vacuum; they exist in the context of the rest of the contract. A single term cannot change the meaning of other parts without respect to those other parts.
For example, if a provision in a contract plainly limits the liability of the other party, except for breaches of a specific type, and there is another conflicting provision that in some way requires that the terms of the liability-limiting provision apply on their face, without exception, there is now a conflict. If the former applies, then the whole contract makes sense . But if the latter must apply instead, then the contract is almost certainly nonsensical.
As with most ambiguous words or phrases, the interpretation of "notwithstanding" turns on its use in a particular context. Context is the key term in contract interpretation, and can be complicated if there are multiple provisions that must also be construed in the context of one another. The context is further complicated by the relationship of the parties with respect to the industry in which they operate. Industry standards and practices also impact the interpretation of a contract term, but it is unclear if industry expectations alter the meaning of a defined contract term at law.
To summarize, the effect of "notwithstanding" is to presumably overrule the other terms of a contract, depending on how those terms are themselves phrased. The issue is that those terms in context with one another can change the result of that presumption. Therefore, in litigation over contractual interpretations, the courts will have to decide between the intended effect of the "notwithstanding" and a competing "potentially aberrant interpretation," depending on the circumstances of the particular contract.

Cases of ‘Notwithstanding”

One case that demonstrated the power of notwithstanding came before the Supreme Court of the State of New York in 1994, In Re Magliato v Bear Sterns & Co. The appellate court decision synthesized the issues arising from the case as follows: "[W]e are called upon to determine whether, within a contract approving a proposed public offering of securities, a specific reference by the Security Underwriting Syndicate (the ‘Syndicate’) to ‘in water…’ is a reference to a ‘Material Adverse Change/Events Clause’ (the ‘Mac Clause’) or, alternatively, a ‘World Trade Center Clause’ (the ‘WTC Clause’) regarding the consequences of the World Trade Center tragedy of September 11, 2001, and, further, to determine the construction of that contract’s clause stating, ‘Notwithstanding anything herein to the contrary’, in the event that we determine that a reference to the Mac Clause is intended as opposed to a reference to the WTC Clause." (Quoted from the appellate court decision.) The court sought to impanel an expert to provide testimony regarding the applicable connotations of the word notwithstanding, however the trial court denied the request as an unnecessary indulgence. Another litigation in which notwithstanding played a central role was a 2013 case in the United States District Court, Central District of California, Federal Deposit Insurance Corporation v Wa Mu Mortgage Pass-Through Certificates WMALT Series 2006-AR8. In this case, the appellate court summarized the more than six court decisions that the parties recovered through the years, all stemming from the same underlying action: "In these proceedings, the defendants in a class action alleging that the plaintiffs [FDIC] violated securities laws by overstates the quality and risk of mortgage backed securities issued by Wa Mu-obtain the benefit of their bargain through a series of settlements and transfers that were calculated to absolve them of liability while converting the FDIC’s assets to cash." In the ultimate resolution of the action, the Supreme Court affirmed the lower courts’ adjudication of the matter, and the parties remitted to the matter of fees evaluation. In these cases, we can see the way notwithstanding has been employed to suit the purposes of the litigants and courts involved, effectively affirming its status as a flexible tool in the literal arsenal.

Tips for Using ‘Notwithstanding’

There are a handful of practices that you should adopt to ensure your use of "notwithstanding" is effectual. First, always remember the principle behind the exception clause. The purpose of "notwithstanding" is not confusion, so never use it to remove an apparent conflict between provisions when you do not intend to do so. If you are using "notwithstanding" to affect the interplay of two clauses, then the clarity of both clauses is essential. Use other effective drafting tools such as an explanatory subheader, bracketed note or parenthetical phrase to help achieve this. In the context of a statutory provision, an explicit recognition of the other clauses in question is vital.
Second, make sure you do not merely restate what the other clause is saying. Effective drafting will usually disclose the context or proximity between the two clauses so that they become sufficiently connected to allow the exception clause to operate.
Third, allow for the application of both clauses. As Matt Whitaker of the ACCC points out, courts have allowed a provision to give effect to conflicting clauses if the exception clause allowed both provisions to operate. In re R , the conflicting clauses in question were the following: The petitioner was a child of unknown parentage and sought a declaration that he was such and could be adopted. The respondent was a local authority that had made an order for his adoption. The birth registration act declared that where a child was the illegitimate child of the parents of a void marriage, they were treated as if they were the parents of a legitimate child. However, an adoption act, that was repealed later, prevented an adoption from a void or invalid marriage.
The divorce court nevertheless made the following order: The petitioner sought a declaration that he was a child of unknown parentage and that an adoption was invalid because the two conflicting provisions meant that all orders for adoption were invalid. However, the court held that the two conflicting clauses were not incompatible. It also held that the effect of each clause could be given without implicitly denying the operation of the other. Therefore the court held that because the order for adoption should have been null and void, it had no effect and an adoption could still be pronounced.
A simple tip is to use two or more "notwithstanding" paragraphs to separate the exception clauses from the provisions to which they apply. This way, the exception clauses are clearly set apart.