- Conflict of laws — Recognition and enforcement — Interest
This chapter concludes that international arbitrators do not yet take a uniform approach to the granting of interest on awards. However, the law and practice of international arbitration seem to have converged, or be converging, on certain aspects of interest. An example of this is respecting any agreement by the parties on interest. By contrast, on other aspects, there remains some significant variance in the way the issues are dealt with. An illustration of this is whether interest should be simple or compound. The chapter argues that there should be convergence between the law and practice of international arbitration with regard to interest on a three-step uniform approach. First, the parties' agreement should be respected if it determines the rate, calculation method, or dates over which interest should be granted. Second, absent such agreement, the claimant should be able to claim the losses it incurred because it did not have the use of the money in question. The rate, calculation method, and period over which interest is granted should reflect those losses. Third, if the claimant cannot, or does not, prove its actual losses, then it should be granted interest at a commonly used commercial rate, augmented appropriately, for the relevant currency at the place of payment; compounded, with the rests corresponding to the rate used; and running from the date the payment should have been made, or the date of the loss, until the date of payment. It is the third step that is most important in practice. While the first two steps can sometimes be important, in the majority of cases, they do not apply.