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Interest in International Arbitration by Secomb, Matthew

4 Calculation Method

From: Interest in International Arbitration

Matthew Secomb

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved.date: 19 August 2019

Subject(s):
Conflict of laws — Recognition and enforcement — Interest

This chapter focuses on the method used to calculate interest. This is effectively a choice between simple and compound interest. Simple interest can be defined as ‘interest paid on the principal only and not on accumulated interest’. By contrast, compound interest can be defined as ‘interest paid on both the principal and the previously accumulated interest’. When compound interest is granted, the compounding ‘rests’ need to be determined. The rests are the time intervals after which accrued interest is calculated and then interest is calculated on the accrued interest. The chapter suggest that the choice between simple and compound interest is probably the thorniest issue when it comes to interest in international arbitration. No uniform approach has been established on this question. This lack of uniformity could be for any number of reasons. The chapter describes the traditional approaches to determining the calculation method for interest in international arbitration. It then critiques some of those approaches and sets out a possible uniform approach to determine the calculation method. Finally, it considers a possible limitation to this uniform approach, namely, mandatory laws.

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