Cavendish Square Holding BV v Talal El Makdessi: A Judgement Eagerly Awaited

One of the most closely watched cases in the recent times from a commercial law perspective is the case of Cavendish Square Holding BV v Talal El Makdessi pending before the UK Supreme Court. The hearings were complete on 23.07.2015 and the decision of the court is awaited. The issues involved in the case are the following:

1. Whether the rule against penalties applies to commercial contracts between sophisticated parties.
2. If the rule does apply to such contracts, whether clauses 5.1 and 5.6 are within the scope of the rule.
3. If the clauses are within the scope of the rule against penalties, whether the Court of Appeal was wrong to conclude that they were penal and therefore unenforceable.

The most interesting thing about the case is the Appellant principal that the rule against penalties should cease to be applicable is not only in respect of commercial contracts between sophisticated parties which were negotiated at arm's length but the Appellant questions the whole doctrine against penalties itself. The decision would have huge ramifications in international commerce. See the UK SC page on the case. The vidoes of the hearings beginning from the hearing held on 21.07.2015 are available here. The videos depict a fascinating picture of how hearings take place in the UK SC.

Hat tip: The UK SC Blog