This article analyses the enforcement of liquidated damages (LDs) under both the English and Egyptian jurisdictions. It identifies the tests applicable to the assessment of LDs and the extent of judicial and arbitral involvement in their amendment. The article reflects on the tests applied in light of the principles of freedom of contract and protection of social order. After analysing the tests applied, and judicial and arbitral attitudes towards LDs, the article moves onto arbitral decision making, and questions whether arbitral tribunals possess the same powers as national courts to amend LDs. The article suggests that challenges to LDs under English law have become more difficult.
However, there remains a lack of clarity as to the threshold of proportionality applied. It further determines that arbitral tribunals applying English law have no room to apply a different test than that applied by English national courts. Conversely, under Egyptian law, the Egyptian Civil Code leaves room for the competent judge to determine the applicable tests for the amendment of LDs. The Court of Cassation has set out clear tests which it has followed. The article questions whether arbitral tribunals are bound by the Egyptian Court of Cassation’s case law. It concludes that arbitral tribunals can deviate from the tests set out by the Egyptian Court of Cassation, as there is no strict doctrine of precedent under Egyptian law, but should still pay significant deference to the national courts’ applications.
Arbitration: The International Journal of Arbitration, Mediation and Dispute Management