- 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.