Expenses - 1992 ISDA Provision
An indemnity is all very well ...
Bear in mind, also, that your operating theory here is that your counterparty is a Defaulting Party — i.e., for all intents and purposes, broke. So while it’s a fine thing, this indemnity might not be of much practical use.
Is it covered in the close-out calculation?
No. The “Expenses” referred to in this provision would not be captured by the definition of “Close-out Amount” or “Early Termination Amount” because, Q.E.D., they arise only once that amount has been determined and the Non-Defaulting Party is in the process of collecting it.
Stamp Tax and Section 4(e)
- The JC’s famous Nutshell™ summary of this clause
- Difference between Events of Default and Termination Events when it comes to Expenses
- Is it covered in the close-out calculation
- A limited modification to stamp tax arrangements
- Or its 1992 equivalent, “the amount determined following early termination of a Terminated Transaction”.