Contract term held not to be a penalty clause

In De Havilland Aircraft of Canada Ltd v Spicejet Ltd [2021] EWHC 362 (Comm) Sir Michael Burton GBE, sitting as a High Court Judge, held that a clause in a purchase agreement for the acquisition of aircraft did not amount to a penalty clause. The case is of interest in so far as it demonstrates the unwillingness of a court to conclude that a term in a contract between parties who are of equal bargaining power and who have access to sophisticated and experienced lawyers is an irrecoverable penalty. The onus of proof is on the party alleging that the clause is a penalty to lead evidence in support of that submission and, in the absence of such evidence, a court may, as in the present case, conclude in summary proceedings that the clause is not a penalty clause.