Common use of Penalty Clauses Clause in Contracts

Penalty Clauses. It is possible that a Luxembourg court (if having jurisdiction) would consider for instance Section 9.03 (c) of the Credit Agreement whereby the Company may be obliged to pay additional interest on the related Euro-Dollar loan at a rate per annum determined by the relevant Lender as a penalty clause (clause pénale). Penalty clauses (clauses pénales), and similar clauses on damages or liquidated damages, as governed by article 1152 and articles 1226 et seq. of the Luxembourg civil code are allowed to the extent that they provide for a reasonable level of damages. The Luxembourg judge (if competent) has however the right to reduce (or increase) the amount thereof if it is unreasonably high (or low). The provisions of article 1152 and articles 1226 et seq. of the Luxembourg civil code are generally considered to be a point of public policy under Luxembourg law. It is possible that a Luxembourg court would consider them to be a point of international public policy that would set aside the relevant foreign governing law.

Penalty Clauses. It is possible that a Luxembourg court (if having jurisdiction) would consider for instance Section 9.03 (c) 3.04 of the Credit Agreement whereby the Company may be obliged to pay additional interest on the related Euro-Dollar loan Eurodollar Rate Loan at a rate per annum determined by the relevant Lender as a penalty clause (clause pénale). Penalty clauses (clauses pénales), and similar clauses on damages or liquidated damages, as governed by article 1152 and articles 1226 et seq. of the Luxembourg civil code are allowed to the extent that they provide for a reasonable level of damages. The Luxembourg judge (if competent) has however the right to reduce (or increase) the amount thereof if it is unreasonably high (or low). The provisions of article 1152 and articles 1226 et seq. of the Luxembourg civil code are generally considered to be a point of public policy under Luxembourg law. It is possible that a Luxembourg court would consider them to be a point of international public policy that would set aside the relevant foreign governing law.