In a ruling on June 28, 2017 (File No. 33 Cdo 3428/2016), the Supreme Court considered the proportionality of contractual penalties. The Court found that the total amount of a sanction could not be seen as proof of its disproportionality if it resulted from an extended delay and the application of an otherwise proportionate daily penalty.

The Court argued that the opposite view was unacceptable since it would favour debtors and challenge the very purpose of contractual penalties. The longer that a debtor neglected its obligations, the more it might benefit from this scrutinising of the alleged disproportionality of the contractual penalty.

The Court found that the contractual penalty was meant to work as an incentive and that once a lease ended, there was a duty to vacate the leased premises. In the present case, the defendant had continued to occupy the land for several years (though its lease ended on January 1, 2013, the premises had still not been vacated on April 28, 2016). Clearly, then, the contractual penalty had not been a sufficient incentive for the defendant.

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