2 September 2015, 12:51 GMT
The panel comprises 15 major banks and financial companies, including Bank of America, Citibank, Goldman Sachs, and JP Morgan.
The decision was made unanimously at a committee meeting on September 23.
"EMEA Credit Derivatives Determinations Committee resolved that a Potential Repudiation/Moratorium had occurred with respect to the Republic of Ukraine," according to the press-release.
The decision is the first step toward a so-called credit event that would allow the settlement of nearly $396 million of derivatives contracts, ISDA reported.
The ruling means holders of credit default swaps (CDS) now have a wait-and-see period to see if Ukraine will pay out its debts. On Wednesday, Ukraine froze redemption of a $500 million bond maturing September 23. The expected credit event will occur after the 10-day grace period and trigger the payout of the CDS.
The payout of CDS is an event of repudiation/moratorium having two parts, according to ISDA’s rules. The first is an evaluation of the potential for default, and the second includes a failure to pay.
