The “Defaulting Party” in relation to a GMRA is the party in relation to which an Event of Default has arisen. More specifically, in terms of the GMRA:
- “Default Notices” are served on a Defaulting Party.
- The “Spot Rate” used for performing any currency conversions is selected by the non-Defaulting Party rather than the Defaulting Party.
- “Default Market Value”, “Appropriate Market” and “Net Value” (all used as part of the close-out process) are calculated by the non-Defaulting Party rather than the Defaulting Party.
- The Defaulting Party is liable to the non-Defaulting Party for all legal and professional expenses (as well as any hedging costs) incurred by the non-Defaulting Party with respect to an Event of Default.
- The non-Defaulting Party can exercise set-off rights (but the Defaulting party cannot).