Contractual penalty clauses in recent Serbian arbitration practice

Abstract

The focus of the paper is on the analysis of different approaches to situation when the parties are allowed to agree on sums payable in the event of breach of obligations, issues pertaining to contractual penalties in general as well as practical and doctrinal differences in their compensatory and penal goal. The authors reflect on some of the acute issues raised in recent arbitral practice with respect to the topic of contractual penalties, particularly in the sphere of privatization agreements. One of the problems analyzed relates to characterization of the secured obligations in privatizations, reductions of penalties as well as the issue of combining contractual penalties with bank guarantees and with the prohibition of restitution contained in the Law on Privatization of the Republic of Serbia.