The decision of the Singapore Court of Appeal on 15 December 2020 in Denka Advantech Pte Ltd & another v Seraya Energy Pte Ltd & another [2020] SGCA 119, has affirmed that, under Singapore law, the rule against penalties remains as stated by Lord Dunedin in Dunlop Pneumatic Tyre Company, Ltd v New Garage and Motor Company, Limited [1915] AC 79.

In reaching its decision, the Court declined to adopt the wider legitimate interest test introduced by the UK Supreme Court in Cavendish Square Holding BV v Makdessi [2016] AC 1172 and also declined to extend the rule against penalties to situations outside of a breach of contract, as outlined in the Australian case Andrews and others v Australia and New Zealand Banking Group Limited (2012) 247 CLR 205.

This decision will be of particular interest in the context of construction, infrastructure and energy contracts, which often contain provisions for liquidated damages in the event of delay, but it is also relevant to other sectors in Singapore.

To read the full bulletin on this, please click here.

 

Sophie Lenox

Sophie Lenox
Senior Associate, Corporate, Singapore
+65 6868 8036

Jamie McLaren

Jamie McLaren
Partner, Corporate, Singapore
+65 6868 8038

Sandra Tsao

Sandra Tsao
Director (Prolegis LLC), Singapore
+852 2101 4629

Daniel Waldek

Daniel Waldek
Of Counsel, Disputes, Singapore
+65 6868 8068


Disclaimer

Herbert Smith Freehills LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.