2 Background

Subject(s):

Conflict of laws — Recognition and enforcement — Arbitrators — Interest

This chapter provides a background of interest in international arbitration, tracing the early history of interest through medieval times, the Reformation, modern times, and today. Interest has a long and rich history, intertwined with the world's development. It involves religion, politics, and economics. Religion's effect on interest continues to this day, seen most prominently in various shari'a-based laws' restrictions on interest. Meanwhile, the law's view of interest has evolved over time. Throughout history, various systems — both religious and legal — contained laws to protect consumers from abusive interest. These factors, among others, help to explain the current state of interest in international arbitration. They explain why arbitrators view interest cautiously, rather than just focusing on the real economic value of money over time. The chapter then discusses the economics of interest, considers the treatment of interest in arbitral practice and the law applicable to interest, and looks at interest under shari'a law.