10 Dec Award of Interest Under The Arbitration Act 2005

The payment of interest on monies paid later than it should is a normal feature of modern contractual relationships. It is highly probable that a party would suffer financial loss resulting from late payment of principal sums which could lead to a claim in arbitration either as a debt or damages. Such loss is recovered as interest.

The award of interest in arbitration has become routine. In fact, it is now rare for interest not to be awarded where an award provides for payment of monies due. The availability and rate of interest in arbitration can have substantial practical importance. Such interest can be significant where the amount in dispute is large and the time periods involved are lengthy. At times, the ultimate interest award can exceed the principal sum in dispute.

The basis upon which interest is awarded does vary. The presumption is that an arbitral tribunal has the power to award interest just like its power to make an award in respect of any other claims submitted to it. The right to interest flows from either a contractual provision for the levying of late interest payment, or by virtue of the applicable law.