Awarding Interest in International Arbitration: Identifying the Issues to be Considered for Coherence and Enforceability

Abstract

The purpose of this paper is to analyze the legal position regarding awarding interest in international arbitration and identify the issues to be considered by arbitral tribunals. Despite the frequency of interest claims in arbitration, the area is shrouded in uncertainty. The uncertainty emanates from lack of uniformity and randomness in quantification of interest leading to undercompensation, incoherence, and inconsistency in the awards on interest. In identifying the pertinent issues to be considered in awarding interest, the paper relies on the doctrinal legal research approach to trace the legal basis for awarding interest and the interest rate to be applied. The approach justifies the use of primary legal text as sources of law, arbitral awards, and secondary sources to unveil the problem surrounding this area, analyze it, and identify the issues to be considered. The paper identifies the pertinent issues to be considered by arbitrators in awarding interest, and further unearths the legal basis of the issues from the generality of sources of law including sources of arbitral legitimacy. Indeed, the originality and value of this paper lie in the complexity and difficulty in navigating the issues of the award of interest and the little attention the current scholarship in arbitration pays to the issue, compared with other related areas such as quantification of damages. Thus, the issues identified and the need to systemically consider interest from the initial phase of arbitration will bring a new insight into the analysis of interest in international arbitration.