Expenses - ISDA Provision
Content and comparisons
Observers will note that, but for the odd comma, Section 11 in the 1992 ISDA and the 2002 ISDA are identical. And deliciously brief. Not that they couldn’t be improved, of course; they just weren’t. The dear old Jolly Contrarian has improved it for you: in the panel top left.
An indemnity is all very well ...
Not 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.
In the limited circumstance of default, this section modifies the arrangement for who pays Stamp Tax as set out in Section 4(e) (which says it is the person whose tax residence precipitates it).
Applies to Events of Default, not Termination Events
This section applies only following an Event of Default, and not on a termination following an Termination Event. There is some cognitive dissonance there: while Events of Default in the main are meant to be more worthy of outrage than Termination Events — thereby justifying stentorian measures to recover losses and costs as a result — some Termination Events, and most Additional Termination Events — are credit- and solvency-related, thus equally deserving of the kind of opprobrium that would warrant on on-slapping of an indemnity.