By default, netting_restriction is not populated when netting is recognized and the agreement is risk-reducing as per CRR Articles 295 to 298. When netting recognition does not aplly to the agreement, netting_restriction specifies the nature of the non-recognition:
The national supervisor is not satisfied that the netting is enforceable under the laws of each of the relevant jurisdictions (after consultation with other relevant supervisors, when necessary). Thus,if any of these supervisors is dissatisfied about enforceability under its laws, the netting contract or agreement will not meet this condition and neither counterparty could obtain supervisory benefit.
The netting contract contains clauses which, in the event of default of a counterparty, permits a non-defaulting counterparty to make limited payments only, or no payments at all, to the estate of the defaulting party, even if the defaulting party is a net creditor.