A recent English High Court decision suggests that some such awards may be enforceable notwithstanding the rule against penalties.

In Pencil Hill Limited v US Citta di Palermo S.p.A., the English High Court enforced an arbitral award that was based on a penalty clause in an agreement. The award was issued by the Court of Arbitration for Sport (the CAS) in Switzerland. The High Court’s decision is of interest because penalties are not normally enforceable under English law. This Client Alert considers the ramifications of the decision on penalties in the context of international arbitration.