Interest on costs and damages in arbitration
Produced in partnership with Stephenson Harwood
Interest on costs and damages in arbitration

The following Arbitration practice note produced in partnership with Stephenson Harwood provides comprehensive and up to date legal information covering:

  • Interest on costs and damages in arbitration
  • Which law determines the award of interest in arbitration proceedings?
  • What interest can be claimed?
  • What rate of interest can be claimed/awarded?
  • Section 12 of the Late Payment of Commercial Debts (Interest) Act 1998
  • What will the tribunal consider?
  • Interest under the Arbitration Act 1996
  • Interest under the institutional arbitration rules

This Practice Note considers the law and practice of awarding interest on damages and costs in international commercial arbitration proceedings, including under the law of England and Wales and the Arbitration Act 1996 (AA 1996). Reference is also made to comparative guidance from investment treaty arbitration proceedings.

To compare the position on this issue in jurisdictions around the world, see our International Comparator Tool.

Which law determines the award of interest in arbitration proceedings?

The question of whether to award interest and, if so, at what rate is a matter for the arbitral tribunal which first has to determine the basis on which interest is to be awarded. The tribunal will consider:

  1. any agreement between the parties (either in the original arbitration agreement, the underlying contract or subsequently)

  2. the provisions of any relevant arbitral rules or legislation (such as a provision for statutory interest)

  3. the relevant applicable law

In practice, the tribunal will apply any express agreement by the parties. If there is no agreement regarding interest, the tribunal's powers to award interest will be subject to the provisions of the law of the seat of arbitration, and not that of the underlying contract. Following the House of Lords decision in Lesotho Highlands Development Agency v Impregilo, the question of interest is considered to be a procedural, not a substantive question.

What interest can be claimed?

It is generally

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