Supreme Court of Justice (Portugal) | New York Convention 1958 | Liquidated Damages Clause | International Public Policy | 14-03-2013 | Case #0031

Supreme Court of Justice
Date: 14-03-2013
Case Nr. 7328/10.0TBOER.L1.S1
LINK (external)

RELATED CASE – Lisbon Court of Appeal | 12-07-2012| Case #030

Headlines:

The recognition and enforcement of a foreign arbitral award may only be refused if it is manifestly contrary to the principles of international public policy of Portugal.

If the agreement was freely entered into between the parties and the parties found the liquidated damages clause as an adequate provision for their potential damages, one cannot deem it in violation of the ethical and legal principles underpinning the international public policy of Portugal

 

Summary:

  1. Under the legal framework applicable to the recognition of a foreign decision – Art. 1096(f) and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 – the recognition and enforcement of a foreign arbitral award may only be refused if it is manifestly contrary to the principles of international public policy of Portugal.
  2. There can be a violation of the public policy principles only if the decision entails an intolerable damage to ethical-legal principles of the Portuguese legal system, being the latter a set of mandatory rules and principles.
  3. If the particulars of the case show that the agreement was freely entered into between the parties and that the parties found the liquidated damages clause as an adequate provision for their potential damages, one cannot deem it in violation of the ethical and legal principles underpinning the international public policy of Portugal. This conclusion will stand even if the amount of the liquidated damages could be questioned in general terms.
  4. The arbitral award that ordered the respondent to pay the claimant liquidated damages was rendered under French law, which is also a contractual provision admitted by Portuguese law. Hence, that liquidated damages clause is not contrary to any principle of international public policy of the Portuguese state.

 

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