Liquidated Damages – Where To For The Genuine Pre-Estimate Of Loss?

Liquidated damages – no more “guesstimate” of loss

Construction practitioners regularly deal with claims for liquidated damages and opposing claims that they constitute a penalty. For many years, the question of whether liquidated damages constituted a penalty was generally determined by the application of the “genuine pre-estimate of loss” test. While the test remains applicable in Hong Kong, the UK Supreme Court’s decision in Cavendish Square Holding BV v Talal El Makdessi and ParkingEye Limited v Beavis [2015] UKSC 67 clarifies (possibly liberalises) the legal position on penalty clauses.

King & Wood Mallesons review the decisions and note some practical steps to take when seeking to avoid an unenforceable penalty. … READ MORE

See also “Penalty Clauses Revisited by the UK Supreme Court”, a case note authored by Phillip Rompotis in December 2015.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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