What Is the Legal Enforceability of Netting Agreements (E.g. Close-out Netting)?

Close-out netting is legally enforceable in most major jurisdictions due to specific legislation, such as the Bankruptcy Code in the US. This legal certainty is crucial because it ensures that in the event of a counterparty's bankruptcy, the non-defaulting party is only obligated to pay or receive the single net amount.

Without it, the risk of "cherry-picking" would exist.