On 4 November 2015 the UK Supreme Court handed down its decision
in the case of Cavendish Square Holdings BV v Makdessi [2015] UKSC
67.1 As had been widely anticipated, the Supreme Court
took the opportunity to fundamentally review, and largely restate,
the common law rules relating to the enforceability of contractual
penalties.
The court noted that existing case law on the subject was
tortuous, and in many respects had been superseded in England by
subsequent statutory provisions. However, the court declined the
temptation to abrogate the rule entirely. They also declined to try
and create one single rule to supersede the common law rules in
relation to penalties and the equitable doctrine of relief from
forfeiture. Instead their Lordships settled for simply
reformulating the rules on penalty clauses.
