The Role of Judicial Discretion in Commercial Disputes: Penalty Clause Issues
Publication: Journal of Legal Affairs and Dispute Resolution in Engineering and Construction
Volume 16, Issue 2
Abstract
Nowadays, many problems caused by the imperfection of the legislation exist in applying the penalty clause category in commercial contracts. Many of them stem from belonging to different legal systems. With varying understandings of penalty clauses across jurisdictions and an uncertainty element in the inclusion of a penalty clause in contracts, the role of judicial discretion in resolving a dispute often becomes the deciding factor in dispute resolution. This research paper analyzes current trends related to judicial discretion’s role in commercial disputes and the difficulties associated with implementing a penalty clause from a theoretical and legal point of view. The problem of this study is due to the existence of a number of discrepancies in the understanding of the penalty clause in different jurisdictions and an element of uncertainty when including a penalty clause in commercial contracts, as well as convergence processes in contract law. The paper considers theoretical and doctrinal approaches to understanding the penalty clause as a legal category and the role of judicial discretion in regulating penalties within contractual legal relations. In practical terms, the study interests lawyers practicing economic and corporate law.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
Data are available from the corresponding author upon reasonable request.
References
Works Cited
Assaad, R., and M. A. Abdul-Malak. 2020. “Legal perspective on treatment of delay liquidated damages and penalty clauses by different jurisdictions: Comparative analysis.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 12 (2): 04520013. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000387.
Benjamin, P. 1960. “Penalties, liquidated damages and penal clauses in commercial contracts: A comparative study of English and Continental law.” Int. Comp. Law Q. 9 (4): 600–627. https://doi.org/10.1093/iclqaj/9.4.600.
Bremer, N. 2015. “Liquidated damages under the Law of the United Arab Emirates and its Interpretation by UAE Courts.” GAIR Mitteilungen. Accessed April 13, 2023. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3356439.
Farhat, A., and S. Yakan. 2020. “Judicial authority on penalty clause.” Al Jinan 13 (1): 223–250.
García, I. M. 2012. “Enforcement of penalty clauses in civil and common law: A puzzle to be solved by the contracting parties.” Eur. J. Leg. Stud. 5 (Mar): 95.
Hartkamp, A. S. 2015. “Contract law in the Netherlands.” Kluwer Law International BV. Accessed April 13, 2023. https://books.google.nl/books?hl=ru&lr=&id=nUefDwAAQBAJ&oi=fnd&pg=PT27&dq=netherlands+dutch+penalty+clause&ots=zuJbv7Am90&sig=GkBhljsQ6KYExWL-4jbl7rEfQ6Q&redir_esc=y#v=onepage&q=netherlands%20dutch%20penalty%20clause&f=false.
Heikkilä, S. 2019. “On the use and treatment of penalty and liquidated damages clauses under Finnish and English laws.” Master’s thesis. Faculty of Law, Helsingin yliopisto.
Holmes, O. W. 1997. “The path of the law.” Harvard Law Rev. 110 (5): 991–1009. https://doi.org/10.2307/1342108.
International Institute for the Unification of Private Law. 2016. “UNIDROIT principles 2016.” Accessed April 13, 2023. https://www.unidroit.org/instruments/commercial-contracts/unidroit-principles-2016/.
Ismail, M. 2018. “The penalty clause in Jordanian civil law.” JL Law Policy Globalization 79 (Mar): 1.
Kaminskaya, E. I. 2013. “‘Liquidated damages’ in Anglo-American contract law.” In Issues of international private, comparative and civil law, international commercial arbitration, 191–207. Herentals: Liber Amicorum. Accessed April 13, 2023. https://elibrary.ru/item.asp?id=38305085.
Karpuntsov, V., and R. Veresha. 2022. “The issues of criminological and victimological security and the COVID-19-related quarantine measures.” J. Emerg. Manage. 20 (4): 301–315. https://doi.org/10.5055/jem.0694.
Khovalyg, D. S. 2021. “Limited damages in the law of the United Arab Emirates.” BBK 72.4 (A43): 167. Accessed April 13, 2023. https://elibrary.ru/download/elibrary_44878070_78022897.pdf.
Manly, Q. C. 1962. “The Conventional Penalties Act 1962 (South Africa): Comparative observations with recent developments in the common law.” Richard Manly QC, The Conventional Penalties Act. Accessed April 13, 2023. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2971856.
Mattei, U. 1995. “The comparative law and economics of penalty clauses in contracts.” Am. J. Comp. Law 43 (3): 427–444. https://doi.org/10.2307/840646.
McEneaney, C. 2019. “Penalty clauses and liquidated damages: The divergence in English and Irish jurisprudence.” King’s Inns Student Law Rev. 8 (May): 1.
Miller, L. 2004. “Penalty clauses in England and France: A comparative study.” Int. Comp. Law Q. 53 (1): 79–106. https://doi.org/10.1093/iclq/53.1.79.
Nordin, E. 2014. “The penalty clause bias.” Maastricht J. Eur. Comp. Law 21 (1): 162–187. https://doi.org/10.1177/1023263X1402100108.
Prisekina, N. G., and E. E. Zamulina. 2019. “The principle of remutiability and the public order clause in the institute of cross-border bankruptcy under the laws of Russia and the USA.” Asia-Pac. Econ. Polit. Law 21 (4): 108–115. https://doi.org/10.24866/1813-3274/2019-4/108-115.
Sanisalova, N. A. 2012. “Penalty in Russian and foreign legislation.” Proceed. Penza State Pedagogical University VG Belinsky 28: 151–156. Accessed April 13, 2023. https://cyberleninka.ru/article/n/neustoyka-v-rossiyskom-i-zarubezhnom-zakonodatelstve.
Schelhaas, H. N. 2017. “The UK supreme court on penalty clause cases from a Dutch perspective.” Eur. Rev. Private Law 25 (Nov): 209. https://doi.org/10.54648/ERPL2017013.
Songowicz, D., X. Y. Geng, H. Fox, and P. Mousseron. 2014. “Assessing the judge’s adjustment power over liquidated damages clauses (Europe).” ACC. Accessed April 13, 2023. https://www.acc.com/resource-library/assessing-judges-adjustment-power-over-liquidated-damages-clauses-europe.
Teng, J., and K. Kalaiarasu. 2022. “Divergence and convergence in the law of contractual penalties and liquidated damages clauses in England, Singapore, and Malaysia.” Liverpool Law Rev. 43 (2): 451–475. https://doi.org/10.1007/s10991-022-09309-3.
Veresha, R. V. 2016. “Criminal and legal characteristics of criminal intent.” J. Adv. Res. Law Econ. 7 (21): 1881–1890. https://doi.org/10.1108/jfc-02-2016-0013.
Yurdakul, M. O., and Y. I. Ozkan. 2019. “Liquidated damages in construction contracts.” GSI Articletter 21: 154. Accessed April 13, 2023. https://heinonline.org/HOL/LandingPage?handle=hein.journals/gsiartc21&div=15&id=&page=.
Zimenkova, O. N. 2017. “Practice of the ICAC on the application of the provisions of English law on the penalty.” In V. A. Kabatov, S. N. Lebedev: In Memoriam, 583–611. Statut Ves. Accessed April 13, 2023. https://elibrary.ru/item.asp?id=36466945.
Information & Authors
Information
Published In
Journal of Legal Affairs and Dispute Resolution in Engineering and Construction
Volume 16 • Issue 2 • May 2024
Copyright
© 2023 American Society of Civil Engineers.
History
Received: May 12, 2023
Accepted: Oct 6, 2023
Published online: Dec 23, 2023
Published in print: May 1, 2024
Discussion open until: May 23, 2024
ASCE Technical Topics:
- Business management
- Continuum mechanics
- Contracts and subcontracts
- Convergence (mathematics)
- Dispute resolution
- Dynamics (solid mechanics)
- Engineering fundamentals
- Engineering mechanics
- Government
- Jurisdiction
- Laws and regulations
- Legal affairs
- Legislation
- Mathematics
- Motion (dynamics)
- Organizations
- Practice and Profession
- Solid mechanics
- Uncertainty principles
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.