Adjudication—awarding interest
Adjudication—awarding interest

The following Construction guidance note provides comprehensive and up to date legal information covering:

  • Adjudication—awarding interest
  • General principles
  • Interest as a ‘matter in dispute’
  • Parties have agreed jurisdiction to award interest
  • Late Payment of Commercial Debts (Interest) Act 1998

Produced in association with 4 Pump Court

This Practice Note looks at the power of an adjudicator to award interest, and the various grounds upon which a party may claim interest in an adjudication.

General principles

Unlike in court proceedings, there is no statutory discretion conferred on an adjudicator to award interest on damages or debt, so a referring party must identify a basis for claiming interest.

A referring party should explicitly claim interest (and identify the basis for its interest claim) in its Notice of Adjudication and Referral Notice to ensure that interest is validly claimed and within the adjudicator’s jurisdiction to award. The claim should include a rate of interest and details of whether the interest claimed is simple or compound and, if compound, the appropriate rests.

There are a number of possible bases upon which an adjudicator can award interest:

  1. where it is a 'matter in dispute' (eg interest is claimed under the contract or as damages) which has been referred to the adjudicator

  2. the parties have agreed that the adjudicator has jurisdiction to award interest (eg in the applicable adjudication rules) and interest is considered to be necessarily connected with the dispute

  3. there is a statutory right to interest under the Late Payment of Commercial Debts (Interest) Act 1998 (LPCD(I)A 1998)

These grounds are discussed in more detail below.

If an