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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
INTRODUCTION
This topic is extremely wide, so I shall devote my paper to interests which represent the main compensation for damages resulting from failure to fulfill an obligation of payment. In this respect, there would appear to be nothing more simple for an international arbitrator than deciding any question about damages due for failure to fulfill an obligation of payment. However, the practice shows that the lack of uniformity in the rules related to interest applied by arbitral tribunals does in fact lead to uncertainty in arbitration jurisprudence.1 On one side, the requests for arbitration sometimes omit any demand for the judgment to include payment of interest, or at least formulate it in an incomplete way that leaves it to the discretion of the arbitrator to fix the rate of interest that he deems appropriate.2 On the other side, it happens that at the end of a difficult ruling, the arbitrator does not attach sufficient importance to the problem of interest.
The interest meant to indemnify a creditor for the temporary absence of the funds due to him3 is the result of failure to fulfill an obligation of payment of a sum of money, one which arises from a contractual obligation or, alternatively, from an extra-contractual obligation that will be converted into a monetary obligation.
But whatever the nature of this pecuniary obligation (whether obligation of giving or of doing),4 there can be no doubt that by engaging himself to pay the debt due, the debtor also takes on the obligation of a precise and determined result and cannot be exonerated even because of force majeure, in application of the principle genera non pereunt.
Compensation due from another party's failure to fulfill a monetary obligation is made good at a fixed rate in international commercial arbitration by the allocation of moratory interest, by the allocation of compensatory interest provided for by national legislation5 and/or is also recognized in jurisprudence and doctrine.6 In this respect, compensatory interest presupposes that the person responsible should make partial or total reparation for the prejudice caused, with the further addition of the moratory interest. We shall limit our study to the question of moratory and compensatory interest granted by international arbitrators.
The difficulty arises with the inconsistent positions adopted by arbitral tribunals concerning the interest to be granted, and also with the challenges confronting such tribunals concerning the choice of the appropriate legal system. What are the solutions to be adopted by arbitral jurisprudence in the absence of such a stated choice and what is the solution to be recommended for possible unification in this matter?
1. DIFFICULTIES AND CHALLENGES
Arbitral jurisprudence confirmed the principle accepted in international law that the parties winning a suit on the merits have the right to receive interest on the granted principal.7
However, the position of arbitrators concerning the means at the disposal of the creditor of a sum of money to obtain reparation for loss imposed by absence or delay of payment is far from uniform.
Arbitrators have to settle delicate questions about the law applicable (1) concerning interest, in particular as to the qualification of the interest tobe granted (moratory, compensatory, punitive, damages and interest for delay, etc.), its rate, its starting-point and its computation. In the absence of an expressly stated choice of the law to be applied (2), they will also have to decide what rules should be applied in allocating interest, entirely using their own discretion. This is a particularly sensitive issue for arbitration in view of the importance of the sums involved. The amount of interest due sometimes exceeds the principal itself.8
1. Concerning application of the law chosen by the parties
The choice of the law to be applied in fixing the interest takes on great importance in view of there being consideration for the legal system chosen by the parties. The arbitrator will have to pronounce the award according to the contractual agreement between the parties if there is a choice expressed,(a) and in the absence of such stated agreement between the parties, (b) hewill have to settle various questions concerning the function of the law to be applied for the interest (i) whether the latter should be moratory or compensatory and what its rate should be, (ii) as well as its starting point and date for computation (iii).
a) If the intention of the parties is clear, it appears from an examination of the arbitral awards that the parties, having made their choice9 concerning the law to be applied to the merits, have also agreed on an appropriate interest. In such a case, the arbitrators should respect the agreement of the parties and apply the agreed rate of interest.10
The autonomy of the parties is a fundamental principle in private international law, and sacred to international arbitration. In arbitration, the arbitral tribunal must take the provisions of the contract into account.11
In this respect, an international ad hoc arbitral tribunal has adopted in its award the agreed conventional rate, which is higher than the rate provided for in the law applicable to the contract. A challenge has been made, based inter alia on the fact that the amount of the interest, being 75% of the principal, constitutes a Ribawi interest, which would be contrary to the international public policy and, as such, considered as a cause of annulment of the award. Beirut Court of Appeal12 rejected such allegation in its decision of 14 February 2002, based on the parties' autonomy to decide on their contractual commercial relationship, especially noting that the Lebanese Commercial law in this matter did not provide for an interest rate ceiling.13
However, in a final award rendered under ICC Rules of Arbitration in Case 8874, the arbitral tribunal, acting as amiable compositeur, considered "according to the principles of equity" that, despite the parties' initial contractual agreement on a monthly rate of 1.4% and despite the principle that the allowance of interest is a cornerstone of economic and commercial relations, the initial interest rate, if applied to the considered amount and period of time, would be disproportionate with the economic and commercial conditions of this case. Therefore, the arbitral tribunal substituted the US prime rate recommended by the Principles of Unidroit for the initial contractual rate of 1.4% per month, for the delayed payment owed to the claimant by the respondent.14
The first challenge which arises in the above-mentioned case is whether an amiable compositeur arbitrator, in disregarding the parties' contractual provision and based on its own consideration of equity, could have stayed within the limits of the ultra petita.
b) In the absence of such stated agreement between the parties to be applied in fixing the interest, in case the parties have omitted to fix a conventional interest, the qualification of the interest should be resolved by the arbitral tribunal in accordance with the applicable law to the dispute. The issue to be examined is: how to apply this lex contractus under the different approaches adopted by the various juridical systems (i).
As to the rate at which interest should be awarded (ii) and to the starting point of interest (iii), decisions of arbitral tribunals have not revealed a unanimous solution in this regard.
Moratory interest is defined as being interest related to monetary debts, drawn up in local or foreign currency. It compensates on an inclusive basis, regardless of a debtor's fault, for the loss of a sum of money by the creditor due to the debtor's delay in fulfilling his payment obligation. It constitutes an inclusive compensation indemnifying the capital with-holding.15 Compensatory interest refers to a pre-contractual, contractual or extra-contractual liability of the defaulting party. It aims to restore the injured party to the proprietary situation that would have been his if the damage relief had occurred immediately.16
Many juridical systems have adopted this distinction.17 Unlike moratory interest, the allowance of compensatory interest requires the proof of the debtor's fault18 and of the damage suffered by the claimant; moreover, some legislations require the proof of the debtor's bad faith19 or an unjustified resistance.20
The difference between compensatory damages and moratory damages has been underlined by many civil law specialists.21 Interest qualification, whether moratory or compensatory, depends on the legal system chosen by the parties. In a civil law system, this distinction remains applicable, which is not the case in a common law system, where interest is regarded as a procedural matter and not a matter of substantive law.
In fact, in Japanese law, the matter of interest is a substantive issue. If there is no provision on interest, courts award no interest. Article 420 of the Japanese Civil Code (CC) provides that parties can agree on an estimate of damages in the case of breach of contract, and in such circumstances the court cannot change the amount of the estimate of damages. This provision is based on the principle of freedom of contract.
In Russia also, the matter of interest is regarded as a substantive issue. If there is an agreement on interest by the parties, arbitrators must determine interest based on the agreement. In the absence of such an agreement, the rules of the law applicable to substantive issues are applied.
In regard to Scotland and England, the matter of the award of interest is procedural. Since there is no particular provision allowing an arbitral tribunal to award interest in the Law on Arbitration, arbitrators may have discretionary power in this regard.
Under the Scots Late Payment of Commercial Debts (Interest) Act 1998, statutory interest and a contractual remedy following late payment of a debt are terminologically distinguished (Part II, Section 8). Therefore, interest is a special kind of damages, but must be distinguished from "damages", which must be proven by the party.
If there is an agreement on liquidated damages, which is regarded as a pre-estimate of damages, interest can therefore be claimed on such damages. Under the Arbitration Act of 1996, the parties can freely agree on the power of the arbitral tribunal as regards interest (Article 491).
In the absence of such an agreement, the arbitral tribunal may award simple or compound interest from such dates and at such rates as it considers meets the justice of the case.
In order to impose interest, arbitrators must fix the principal sum on which interest is imposed. As a pre-condition for this, arbitrators must decide whether the damages that had been agreed by the parties are to be classified as liquidated damages or penalty.22
Furthermore, there is a wide range on the ground of applicable law with respect to the provision of interest, starting from a total prohibition, passing by a partial prohibition based on a distinction between civil and commercial contracts, up to a total recognition of the principle of interest, as will be detailed below.
Saudi Arabia is the only country that has not adopted regulations governing interest rates in commercial matters. On the one hand, this is because interest, in whatever form, is considered as Riba and, on the other hand, because in the absence of a civil code, the Sharia takes the place of a constitutional civil code and is therefore the basis of all rules of law.23
As a consequence, and unlike the other Middle Eastern countries, which have adopted the distinction between civil and commercial law in order to render interest rules more flexible, Saudi Arabia has maintained the prohibition on usury in commercial matters, in accordance with the general principles of the Sharia. Courts in Saudi Arabia do not mention interest in their judgments, as it is forbidden by Sharia. The same applies in respect of arbitral tribunals, which disregard in domestic cases the allowance of interest as being contrary to the Sharia, the provisions of which are of public policy.24 Therefore, an international award dealing with interest could be annulled on this ground by the Board of Grievances in charge of the enforcement of arbitral awards.
Moreover, in an arbitral award rendered in Saudi Arabia, the official position of the Kingdom can be summarized as follows: "The Sharia's Islamic law forbids usury in any form or manner whatsoever, whether or not it is gained or in secret. The defendant asserted that a portion of the amount claimed by the claimant [...] is illegal. If the defendant's contention properly invokes Sharia provision, then the Arbitral Tribunal must apply it since it relates to the public order of the Kingdom."25
This partial prohibition is based on the one hand on the nature of the legal relation, and operates a distinction between civil and commercial disputes and, on the other hand, on the function of interest, some systems allowing moratory interest without stipulating any provisions as to compensatory interest, yet providing for an integral compensation of the damage.
• The Kuwaiti legislature for instance, has taken the view that the rules which govern civil matters are not appropriate for commercial matters. As a result, the rules of the Sharia in general, and the prohibition against Riba in particular,26 which are observed in civil matters, are not observed in commercial matters, because they are deemed not to be appropriate to the world of business.
Thus Article 102, subsection 1 of the Kuwaiti Commercial Code fixes at 7% the legal rate of interest, and enables contracting parties to stipulate interest rates for commercial loans; in the absence of an agreement as to the interest rate, the legal rate shall apply.27 In banking transactions, term deposits earn interest as in all traditional banks. Furthermore, under Article 364 of the Commercial Code, a customer who is granted a credit facility will be required, not only to repay the capital, but also to pay the interest agreed upon in the contract or, failing this, the legal rate. In addition, the Central Bank has the power to regulate and set ceilings for interest rates concerning bank credits and loans.
• The same distinction applies in Bahrain between civil and commercial debts, where the law allows moratory interest in commercial matters on the following conditions: " … in no case shall the total interest payments charged by the creditor be in excess of the principal debt amount on the basis of which interest has been charged in the cases of debts the repayment period of which does not exceed 7 years."28 Such ceiling is only applicable to commercial transactions in local currency and does not apply to commercial transactions in foreign currency. However, moratary interest is not permissible under civil obligations.29
As to the compensatory interests, they are allowed by the Bahraini law without any distinction between civil and commercial obligations.30
• Another example of legislation providing for partial prohibition is the Code of Commercial Transactions of the United Arab Emirates, promulgated by the Federal law of 7 September 1993, relating to the parties' obligations in commercial contracts. Article 76 of the aforementioned Code stipulates that the creditor is entitled to charge interest on commercial loans according to the interest agreed in the contracts. If the rate of interest is not specified in the contract, the rate prevailing on the market at the time of the agreement will apply, on condition that it does not exceed the ceiling of 12% at the time of repayment.
Article 399, paragraph 1, relating to current accounts, stipulates that interest on current accounts is not paid to customers unless otherwise agreed by the parties. The interest is then calculated on the official rate basis. However, if the interest rate is not set, it should be calculated on the basis of the prevailing price on the market, but may not exceed the rate of 12%.
• The Sultanate of Oman also does not have a civil code and, therefore, applies the Sharia in civil matters.31 The Commercial Code stipulates in Article 1 that its provisions apply to merchants and to commercial activities that may be undertaken by any individual, including those who do not have the status of merchant. Article 5 stipulates that, in the absence of statutory provisions, precedence is granted to custom, special or local custom being preferred to general custom, but in the absence thereof, the Sharia shall apply. Where none of those exist, the rules of equity shall apply. This Commercial Code follows the example of western codes and regulates all commercial and banking activities (documentary credits, cheques, bills of exchange, bankruptcy and so on) as well as commercial loans. Article 80 of the Omani Commercial Code grants the lender the right to receive a return as consideration for the debtor having obtained a loan or a commercial facility. The rate of this return is set by mutual agreement between the two parties within the limits laid down each year by the Minister for Trade and Industry, after agreeing thereon with Oman's Chamber of Commerce and Industry, and having regard to the loan's maturity date, its purpose and risks. In a case where the debtor delays settling his debt after maturity date, the creditor will be entitled to the return agreed for the delay. The creditor may claim complementary damages, to be added to the return agreed in the loan or commercial facility, if the delay has caused the creditor damage in excess of the return. The court will assess those damages.
• As to Iranian law, the Iranian Constitution prohibits Riba and such prohibition has been confirmed by the decision of the Council of Guardians and by the arbitral tribunal's decision in the ICC Case 7263.32
However, it should be noted that the Iranian law allows an important exception to the strict prohibition of interest in the case of transactions between Iranian nationals and foreigners whose laws permit the payment of interest.
In addition, in a decision rendered in the ICC Case 7373,33 the arbitral tribunal gave liberal interpretation to the Iranian law, by considering that such law allows compensatory interest in the event of late payment. The arbitral tribunal based its decision on equity, considering that it would be unfair in international commercial relations not to award interest to the claimant.
And in a recent decision, the arbitral tribunal referred to the Iranian Civil Code, which allows courts to order debtors to pay an indemnity to creditors for losses incurred due to late payment, if such indemnity is provided for in the contract.34
• It should be also noted that some Islamic countries, such as Egypt and Iraq, have moved away from Sharia and expressly allowed the payment of interest at a certain rate.35
However and despite the admission of interest in Egyptian Law, the arbitral tribunal, having applied on the matter of interest the Libor rate + 3% instead of the interest rate as fixed in Article 226 and sequence of the Egyptian Civil Code, has seen its award annulled by the Appeal Court of Cairo,36 which considered as contrary to public policy the award rendered in the ICC Case 9982, on 21 December 1999, where the arbitral tribunal did not compute the interest in conformity with the provisions of Article 227 of the Egyptian Civil Code, whereas the parties had agreed to solve the dispute according to the Egyptian law.
The challenge that arises in cases where a ceiling is imposed by certain legal systems somehow binds the arbitrator in the matter of interest because of a potential challenge which could be made on the ground of his award infringing public policy.37
Furthermore, there is no relevant provision concerning compensatory interest in several Middle Eastern legislations. However, compensation for delay in settling a civil debt is permitted only if the delay has caused damage to the creditor. On the other hand, compensation for delay in settlement of a commercial debt is not linked to the damage caused to the creditor; it is expressly stipulated that the creditor may receive damages over and above the interest on overdue payment that is awarded, without being required to prove the existence of fraud or gross negligence on the part of the debtor. The same provision related to the full compensation of prejudice is stipulated in several other Middle Eastern countries.38
It should be noted that some arbitrators, in the presence of a total or partial prohibition in the above-mentioned countries, are confronted with the challenge represented by the parties' agreement on a conventional rate higher than the one stipulated by the law of the contract. This would lead to the risk of annulment of the award, or to the refusal by the competent judicial authorities to give the exequatur for non-conformity with the mandatory laws. If the case arises, whenever the arbitrator admits the rate fixed in the law applicable to the substance and not the agreed conventional rate, he takes the risk of having his award censured on the ground that he has ruled without conforming to the mission entrusted to him and will have then ruled, in our opinion, ultra petita.
In Europe, the practice of awarding interest is well established among European countries.39
In a final award rendered in the ICC Case 8711,40 the arbitral tribunal considered it fair under German law to allow the claimant a compensation for the valuable services made to the respondent. However, the arbitral tribunal referred to the exclusion set by German law related to a presupposed fault of the commercial agent.
The English Arbitration Act of 1996 best illustrates the awarding of interest under a common law system. Interest has been customarily awarded under the Act of 1950 whenever a claimant has been deprived of the use of money, unless the parties have expressly agreed otherwise.41
Asian countries such as China, Taiwan, India, Japan and the Republic of Korea generally allow interest to be paid when a debtor is in default on a money payment.42
Therefore, having reviewed the different legal systems and noted the different approaches adopted thereto in the matter of interest,43 with respect to their qualification and function, these being a matter of substantive or procedural law, difficulties confront an arbitrator when dealing with this issue, even if the parties have chosen an applicable law on the substance of the case. Furthermore, another challenge arises when dealing with the interest rate, where a wide diversity of solutions has been adopted by international tribunals.
The classic solution consists in fixing the rate of interest on the basis of the applicable law to the contract. However, a review of the most recent awards shows that there are different methods currently used by international arbitration tribunals to determine the rate of interest, and not a uniform one. This plurality of methods results from the general trend that comes out in doctrine and international arbitral practice, which consists in leaving the arbitrator, when fixing this rate, free not to refer to the legal rate of a national legal system.44
The arbitral jurisprudence referred in many awards to the applicable law to the contract in order to determine the applicable rate of interest. In an arbitral award of the ICC rendered by a unique arbitrator,45 the latter mentioned that "this was the more correct and appropriate solution." In fact, until 1980, tribunals fixed the interest rate following the law of the contract.46
Arbitral tribunals seem inclined to apply the legal rate of the place of arbitration, as such rate is related to the procedure and not to the substance.
The application of lex fori provides the arbitrators with a large power of appreciation concerning the appropriate rate to be assessed.47
In some awards, arbitral tribunals have applied the interest rate of the place of payment.48 However, "in many cases, the currency of the debt is preferred to that of the place of payment".49
Arbitral tribunals have in some awards disregarded the law chosen by the parties for determining the interest rate, using their discretion to determine the reasonable rate on a case by case basis.50 In a final award in Case 8769,51 the sole arbitrator considered that it was appropriate to apply a commercially reasonable interest rate.
Another method of determining the interest is based on the market rate of the currency in which the award is rendered.52
An ICC Case 9771 (2001)53 considered that, as Russian law54 does not set up a fixed legal rate of interest, but provides as main rule that the creditor is entitled to a rate corresponding to the discount bank interest rate prevailing at its domicile at the date of performance of the obligation, "the default interest starts to run from the time when the Request for Arbitration was submitted until the payment date on the official Italian discount rate as applicable from time to time."
As to this matter also, arbitral jurisprudence has not revealed a uniform position, as different starting points have been adopted:
This date can be chosen because it reflects the date on which the defaulting party should have made the payment. Thus, the non-defaulting party should have had the use of the money from that date.
In an ICC Final Award rendered in Case 6281,55 the arbitral tribunal considered that defendant's default began on any date at which he should have delivered but did not perform the delivery, and applied Article 277, paragraph 1, of the Yugoslav Law on Obligations according to which interest is due to the creditor on the amount of damages as of the date at which the debtor begins to default.56
Most often, arbitral tribunals decide that interest will be payable as from the first request of payment.
In the award rendered under ICC Case 6531,57 the arbitral tribunal decided that interest must be calculated at the French legal rate, and that it started running as from the moment when the creditor gave the debtor formal notice to pay (mise en demeure) (Article 1153 CC). In a partial award rendered in 1996 in Case 7983, the arbitral tribunal considered that monetary interest at the legal rate requested by the claimant ran only as from the date of the notice service.58
In several awards, arbitral tribunals referred to the date of the request for payment.59
The date of submission of a request for arbitration has been adopted by several arbitral awards and constitutes the most frequently adopted solution.
In an ICC Case 6162 (1990),60 the arbitral tribunal decided that the claimant was entitled to an interest of 5% as from the filing date of the request for arbitration. In the final award in ICC Case 10329 (2000),61 the arbitral tribunal considered that the awarded amount should bear an interest of 5% per annum from the filing date of the request for arbitration until full payment.62
An ICC award rendered in Case 5864 (1989),63 based on Article 229 of the Libyan Law on Damage for Delay,64 decided that, pursuant to the applicable law (Iranian Law) and in the case circumstances, interest should run only from the date of commencement of the arbitration.
The latest of the four starting points is the date of the award itself. In ICC Case 8264 of 1997, the arbitral tribunal rejected the claimant's claim for pre-award interest, stating that the respondent's delay in payment could have been explained by the claimant's reluctance to provide certain information to the respondent. The arbitral tribunal decided that interest should run as from the 30th day after notification of the award.65
Some awards fix, as the starting date for damages, the date of occurrence of the event that caused the damage. Such is the case in the Starret affair, in which the Irano-American Arbitral Tribunal fixed the starting date for damages as from the expropriation date.66
2. In the absence of the choice of law applicable to the substance
When the parties have not expressly chosen the applicable law to the substance of the case, it is up to the arbitrator to determine the applicable law, in conformity with the chosen mode of arbitration, by adopting either the conflictual method or the direct one. The arbitrator certainly enjoys a large freedom at this stage: "the extent of the arbitrator's freedom depends on the lex arbitri which may allow an arbitrator to implement not only the national law but rules of law".67 However, he will have to make sure that the chosen law does not infringe international public policy of the country in which the execution of the award will take place. This freedom is implicitly confirmed by Article 5 of the New York Convention, Article 7-1 of the European Convention, Article 28 of the UNCITRAL Model Law, Article 17 of the ICC Rules, Article 31-1 of the UNCITRAL Rules of Arbitration, Article 46 of the English Law and the Arbitration Act of 1996.68
In numerous arbitral awards, the tribunal resorted to the conflictual method to determine the applicable law in the field of interest.
For example, in ICC Case 8175 of May 1996,69 the Arbitral Tribunal was of the view that if the conflict of laws rules were to be applied at all, the appropriate law in relation to these questions as to interest was French law. Application of that law resulted in this case in the application of Indian law, since questions relating to interest are treated as substantive under the French conflict of laws rules.
Furthermore, in ICC Case 8501, the arbitral tribunal, applying Article 13 (3) of the ICC Rules, decided that "the Arbitral Tribunal will apply the law designated by the conflict of laws rules that it deems appropriate for the case."70
Recently, a final award of the Hague Permanent Court of Arbitration,71 dated 19 September 2003, ruled that international law does not prescribe a specific rate of interest, but that several other juridical systems could be relevant. In circumstances in which laws of several different juridical systems could be applied to a particular transaction or event, it is a frequent practice to select the law of the legal system with which the question to be decided in the specified case has the closest connection. In this case, the tribunal noted that the Swiss legal system is the one having the closest connection with this question. (Switzerland was the place where the registered office of the bank was situated, as well as the seat and operational center of the activities of the bank. In addition, the bank made dividend payments in Swiss francs, and the currency in which interest had to be paid was the Swiss franc. Moreover, the private shareholders dealt with the bank in Switzerland and their dividends were paid in Swiss francs.) Therefore, the tribunal referred to Article 73 of the Code of Obligations, which states: "Where the object of an obligation is the payment of interest, and no rate is fixed either by contract, by law, or by custom, then the interest shall be paid at the rate of five percent per annum. This shall not affect provisions of public law regarding usury." Furthermore, Article 104 (relating to moratory interest) provides: "If an obligor is in default as to the payment of a financial debt, he shall pay default interest at five percent per annum, even if the contract provides for a lower rate. If a higher interest rate than five percent has been agreed upon in the contract, whether directly or by stipulation of a periodic bank charge, such higher interest may also be claimed during the period of the default. Among merchants, when the usual bank discount at the place of payment is higher than five percent, default interest may be calculated at such higher rate."
Accordingly, the tribunal decided that the rate of interest to be paid by the bank was 5% simple interest.
The application by the arbitral tribunal of the conflictual method is confirmed by Article 33-1 of the UNCITRAL Arbitration Rules, prescribing that "the Arbitral Tribunal shall apply the law designated by the parties as applicable to the substance of the dispute. Failing such designation, the Arbitral Tribunal shall apply the law determined by the conflict of laws rules which it considers applicable."
It should be noted that the arbitral practice reveals that arbitrators prefer not to adopt the conflictual process. Pierre Lalive stated in this context in the ICC case No. 151272 that, "the international arbitrator does not have a lex fori from which to derive conflict of laws rules".
Several arbitrators have considered that no national law could meet the rightful expectations of the parties in international transactions to the same extent as transnational rules or the lex mercatoria.73 Indeed, a new trend in the field of international arbitration consists in the application of the direct method, this being by reference either to the law deemed by the arbitrator to be the most appropriate, or by reference to the "general74 principles and normal usages of international trade".
In the final award rendered in ICC Case 6219,75 the arbitral tribunal considered that the general trend arising out of the legal literature and international arbitral practice is to grant the arbitrator a large measure of freedom in fixing such rates, the arbitrator not being obliged to refer to the legal rate of any national legal system, whether that of the law of the contract or the lex fori of the place of arbitration.76
In addition, the inappropriateness of the legal rate application, as fixed in the various national laws, has been indicated by arbitrators.77
This need to meet the parties' rightful expectations has been emphasized by Yves Derains,78 who referred to the award of ICC Case 8385, in which the arbitral tribunal decided that the law that should be implemented was the law that best meets the needs of the community of international commerce. The one that does not conflict with the parties' rightful expectations, brings about uniform results and offers a reasonable solution to the dispute […] Furthermore, he held that application of international principles offers a lot of advantages. They are applied uniformly and independently of the distinctive characteristics of each national law. They take into consideration the needs of international relations and allow a fruitful exchange between the systems that are sometimes exaggeratedly bound to conceptual distinctions and those looking for a fair and pragmatic solution to particular cases. Thus, it was an ideal opportunity to apply what is more and more frequently designated as lex mercatoria. The same author has often reiterated his position, considering that whatever the process used, the international arbitrator applies the law that best meets the rightful expectations of the parties. Indeed, UNIDROIT principles illustrate that trend, as will be shown below.
In light of the above, it appears that, except in cases where the parties have expressly designated the applicable law to interest, international arbitrators do not adopt a standard solution whenever the parties file a claim in relief of the damage deriving from the debtor's failure to execute his obligation of payment.
On one side, in case of the choice of a lex contractus, arbitrators were not unanimous in applying it to the interest issue. And in cases where the parties did not choose the law to be applied on the substance, different solutions were decided.
No matter the method used, conflictual or direct, the outcome is similar: in both cases, the general trend that comes out in doctrine and international arbitral practice is to leave to the arbitrator a great freedom in the field of interest, particularly when the parties show a lack of concern at this level upon their filing of the request for arbitration.79 Yet, disregarding this issue is unjustified, given the substantial interests which are at stake.
If this observation derives from the characteristic flexibility of arbitration, it remains that the free faculty of appreciation left to the arbitrator in this field, which reflects in many awards the lack of motivation,80 constitutes an additional challenge imposed by the issue of interest in the field of international arbitration.
How to remedy such a de facto situation?
PROPOSED SOLUTIONS
Examination of the above-mentioned international arbitral awards allows one to distinguish the criteria adopted by the arbitral tribunals for the allocation of moratory and compensatory interests.
As for the moratory interest, this is a question of a fixed-rate indemnity sanctioning delay in fulfilling the obligation to pay. Delay in the fulfillment of the obligation to pay is the only condition required for such interest to be due for payment. As for compensatory interest, a study of the relevant jurisprudence allows a list to be drawn up of the various criteria considered by the arbitration tribunals to make it due for payment, to fix its amount and to fix the date from which it should be calculated (1).
The diversity to be seen in the many criteria adopted in jurisprudence makes it necessary to consecrate a material rule for fixing interest in conformity with the expectations of the parties concerning the best law (2).81
1. The various criteria in jurisprudence for compensation due on account of non-fulfillment of the obligation to pay
Many criteria have been adopted by arbitral jurisprudence. On the one hand, some arbitral decisions simply look for the existence of a loss borne by the creditor as a result of non-fulfillment (a); others require bad faith on the part of the debtor (b); while yet others make reparation conditional on the absence of fault on the part of the creditor (c).
The awarding of compensatory interest is conditional on the proven existence of a damage caused to the creditor. This condition is however not required for the allocation of moratory interest, which comes as a matter of course.82
Several arbitral awards have laid down the features of the damage which open the way to reparation.
The classic solution has been the attribution of reparation covering not only actual loss but also profit that might have been gained. Arbitral jurisprudence has, however, required the presentation of proof of the loss suffered for compensation to be admitted. At this level, therefore, proof is required concerning the harm done and the amount of profit lost. So it was that in the award pronounced by the ICSID Tribunal on 25 February 1988 in the case Soabi v. Senegal,83 the arbitral tribunal considered that only "real, certain and special" prejudice is reparable. The arbitral tribunal had recourse to the concept of loss of an opportunity implying identification of prejudice that is reparable according to the degree of probability of the event occurring and considered that the loss of possible profit was in fact the loss of an opportunity to gain the profit expected. The arbitral tribunal then proceeded to calculate the prejudice thus understood by comparing the agreed price with the cost of execution initially foreseen, reduced by the hazards of an economic and financial nature likely to affect the carrying out and profitability of the projects in the long term.84
More explicitly, in a decision of 17 July 2003 rendered in the ICSID case of CMS Gas Transmission Company v. Argentina,85 the arbitral tribunal declared that the granting of any particular compensation supposes that the investor proves that he has truly suffered loss.86 This has been justified by the tribunal's concern that the investor should not be in a position to be indemnified twice over, particularly when the investor took advantage of the provisions of an instrument of protection of investments in order to sue, in his own name, a host state.87
In the case Asian Agriculture Products Ltd (AAPL) v. Sri Lanka, in its award of 27 June 1990,88 the arbitral tribunal based its decision on the principle that any future loss is reparable, but only on condition that such loss is certain. Therefore, the arbitral tribunal fixed compensation according to the then value of the shares held by the investor, but refused to take into account the profit that the investor claimed he would be making in the coming years. The award considered that future profit for a business company of only recent foundation, under-capitalized, relying on just one product and with only one market outlet, was too uncertain for it to be open to compensation.
In a more recent ICSID decision of 30 August 2000 in the case Metalclad Corporation (Metaclad) v. Mexico,89 the arbitral tribunal considered that the correct market value of an active business that had always been profitable could be judged on the basis of an estimation of the future profits, subject to an analysis in terms of discounted cash flow. However, it also considered that when a business firm had not been exploited enough, over a period long enough to allow analysis of the evolution of its results, or when it had not been profitable, the future profits could not be taken into consideration in order to determine the value of its business or its market value. According to the arbitral tribunal, any award based on supposed future profits would be purely speculative; therefore it was an indemnity equal in value to what had been invested that should have been awarded to the plaintiff. The reason was that reparation on behalf of the plaintiff should as far as possible simply make good all the consequences of the illicit act and re-establish the state of things that would presumably have existed if the said act had not been committed (statu quo ante).
A final award in Case 10346 (December 2000)90 stated that it was necessary to consider the consequent compensation for loss and damage that respondent must pay to claimant. The question of compensation would appear to be resolved merely by applying the concepts of damnum emergens and lucrum cessans, the first of which means a reduction in net worth, and the second a frustrated gain (income not received). Thus, the tribunal should proceed to evaluate the figures proved in the proceedings as making the damnum emergens and lucrum cessans using the parameter of fullness of the compensation, referable to the need to place the aggrieved party in the position it would have been in, absent the loss. However, for a loss to be compensated, it must be "certain" rather than "contingent loss", which only gives the right to compensation.
In the above case, the classification of damages as certain or contingent constituted for the arbitral tribunal a necessary filter for the determination of the reasonable losses and was based on the degree of seriousness and the scientific or technical solidity possessed by the prediction of what would have occurred had the harmful event not intervened, and from there to go on to quantify the loss which will amount to 100% if there is legal certainty that the situation would have occurred.
In a final award in ICC Case 9771 of 2001,91 the arbitral tribunal examined first the claimant's entitlement to damages, as the goods delivered were not in conformity with the contractual specifications and, therefore, since respondent breached its obligation under the contract to deliver goods of a specific quality, the claimant was entitled to compensation for the damages suffered. However, the arbitral tribunal rejected the claimant's claim related to the loss of reputation, as it had not presented any evidence in this respect.
Likewise, in the case Aucoven v. Venezuela, the arbitral tribunal recalled in its decision of 23 September 200392 that loss of profit can be made good only if the expected profit presents a sufficient degree of certainty. The applicable law was Venezuelan law, but the arbitral tribunal stressed that the solution would have been the same even under international law.
So also in the ICSID case Amco Asia Corporation (Amco) v. Indonesia of 20 November 1984,93 the arbitral tribunal pointed out that according to the principles and rules common to the main juridical systems, damages should be limited to reparation for direct and foreseeable harm. The requirement that it should be direct is the consequence of the need for a causal link between the fault and the prejudice.
As per Anglo-Saxon juridical systems, the reparation for the loss cannot impose exaggerated burdens on the liable party. Article 1616 of the Spanish Civil Code also states that the debtor is only liable for direct losses, i.e. losses that are the necessary and strict consequence of his unlawful act. In contrast, the debtor has no liability if the loss is not the certain and necessary result of his conduct, or if there is no causal relationship.94 Therefore, the loss should have a direct character, that is to say resulting from the cause-effect relationship.
However, as per jurisprudence95 and ICC Case 10346 (December 2000),96 it is not enough to denote a loss as direct, as regard must also be had to the distinction between "foreseeable" and "unforeseeable" losses, with compensation being payable in relation to the former but not in relation to the latter, save where the debtor had acted fraudulently. The distinction between "foreseeable" and "unforeseeable" losses presents difficulties, and the judge who follows the "foreseeability" standard will have to conduct investigations into the type of losses which, ordinarily and reasonably, should have been within the contemplation of the party as associated with its breach, in order to decide from there whether or not compensation should be ordered and, if so, the amount of such compensation. Foreseeability, referring to the harmful consequences of their actions being within the reasonable contemplation of the parties, is therefore an additional condition to allow compensatory interest: both elements of damages must be foreseeably caused by the fundamental breach.
In an award rendered in ICC Case 6162, 97 the arbitral tribunal dismissed the claimant's claim for damages as the claimant had not alleged that the defendant would have acted in bad faith.
In a final award in Case 9032 (January 1998),98 the arbitral tribunal granted the agent a right to indemnity on the grounds of loss of profit in addition to indemnity for cessation or non-renewal of contract, further to a right to interest as from the date of summons of the debtor. This was because of unjustified failure to execute the contract on the part of the mandatory, so causing a loss of possibilities of sales and therefore a loss of earnings for the agent.
This requirement of bad faith is set out by certain national legislations, including French legislation (Art 1153 of the French Civil Code stipulates that the creditor to whom its defaulting debtor has caused a prejudice due to bad faith unrelated to this delay, may receive damages distinct from the moratory interest). These texts reflect this moralizing function sought through the allocation of compensatory damages.
In a final award in Case 8711 (March 1998),99 the arbitral tribunal considered that to allow a compensation was fair because the claimant had provided the defendant valuable services.
In a final award in ICC Case 10329 (2000),100 the arbitral tribunal based its decision on Article 75 of UN Convention on Contracts for the International Sale of Goods (CISG), which states that, if the seller has resold the goods within a reasonable time from contract avoidance, the party claiming damages may recover the difference between the contract price and the price in the substitution transaction.
In this case, after having requested the respondent to perform its obligations under the contract, the claimant advised him that it was taking measures to mitigate its loss. Article 77 of the above-mentioned Convention provides that a party who relies on a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss. The arbitral tribunal noted, therefore, that the claimant's claim for damages should be admitted because it had taken the necessary and appropriate measures in time and place to mitigate its damages.
In a final award in Case 10274 of 1999,101 the arbitral tribunal considered that according to Article 75 of UN Sales Convention, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction, as well as any further damages recoverable under Article 74 of UN Sales Convention, if the contract was avoided and if, in a reasonable manner and within a reasonable time after avoidance, the seller has resold the goods. However, the goods should be resold in a reasonable manner, if the seller acted as a prudent and reasonable seller would have acted. In this case, the claimant tried to resell the goods for more than 20% less than the price agreed with the respondent. Thus, the arbitral tribunal considered that the claimant acted as a prudent and reasonable seller.
2. For a material regulation concerning interest: consecrating the principle of integral reparation for prejudice
Behind the diversity of solutions retained, one rule is, in our view, evident, concerning the integral reparation of prejudice suffered by the creditor because of failure on the part of the debtor to fulfill his obligation to pay a certain sum of money.
According to Article 78 of the Vienna Convention, failure to pay the price gives a right to interest on the sum due, without affecting the damages which might be demanded in the event of basic breach as in non-basic breach of contract. In his commentary on an ICC award given in 1994 in Case 7585, Heuze considered that it resulted from Article 78 of the said Convention that any sum is productive of interest.102
In Case 64 of 1985,103 the Iran-US Tribunal considered that "in the absence of a contractually stipulated rate of interest, the Tribunal will derive a rate of interest based approximately on the amount that the successful claimant would have been in a position to have earned if it had been paid in time and, thus, if it had the funds available to invest in a form of commercial investment in common use in its own country."
In the ICC Case 7197 of 1992,104 the arbitrator, by invoking Article 14 of the Vienna Convention (Article 78), granted the entire indemnity claimed.
In ICC Case 7710 of 1995,105 the arbitral tribunal considered UNIDROIT principles to be the main component of the general rules and principles concerning international contractual obligations, enjoying as they did wide international consensus.
In the ICC Award No. 8501,106 the arbitral tribunal considered that application of the appropriate commercial usages was compatible with Article 12(5) of the ICC regulations and with arbitral practice; in a growing number of international suits, the arbitrators are deciding that the obligations of the parties should be determined according to the usages and customs of international commerce or to the general principles of law without reference to any one particular national law. In many cases, these principles are a more exact expression of the true intention of the parties than would be the application of a conflictualist approach tending to impose the way of any one national law.107
For these reasons, the arbitral tribunal concluded in the above case that it would decide the case by applying to the contracts concluded between the parties the generally accepted usages of commerce and the principles of international commerce. In particular, the arbitral tribunal would refer, as circumstances required, to the dispositions of the Vienna Convention of 1980 concerning contracts for international sale of merchandise (Vienna Convention) or to the principles relating to contracts of international commerce laid down by UNIDROIT concerning practices admitted in international commercial law.
As for the law applicable in the question of reparation, the arbitral tribunal considered that, as stated above, the parties had expressed their common intention to have their relations regulated by the general principles of international commerce.
In the ICC Case 5835 of 1996,108 the arbitral tribunal decided that Kuwaiti law was applicable on the basis of the method of combined application of different systems of conflict of laws. It also stated that Kuwaiti law limited the rates of interest only if there was a contractual rate or a rate of interest applicable when the payment of sums of money whose amount was known to the debtor was overdue,109 and further if the interest intended to compensate the injured party because the damages his adversary was condemned to pay him were handed over a certain time after the deadline and the creditor had had to accept financial obligations in order to survive while awaiting compensation (...). Kuwaiti law provides that compensation should include "the prejudice suffered by the creditor (...) on condition that it is the natural result of the non-execution of the obligation or of delay."110 The arbitral tribunal considered that the financial costs could be qualified, given the circumstances of this case, as the "natural result" of the debtor's delay in paying the damages due to his contractual partner. In particular, if the basis of the debtor's responsibility is "a grave fault" (...), the limits normally applicable to rates of interest no longer exist.111
As per Yves Derains, "this interpretation of Kuwaiti law is in conformity with the internationally accepted principles which otherwise would become applicable in conformity with the first interim Award handed down by the Tribunal. Reference may also be made to the UNIDROIT Principles of 1994, which lay down in their Article 7.4.9 (3) that the creditor further has a right to supplementary damages if the rate of interest normally applicable is not sufficient to cover the prejudice that the debtor's failure to pay has caused him. There was recourse to UNIDROIT Principles in this case as a means of showing that the decisions came up to the level of what was to be expected in the case of an international transaction."112
Based on the above, the survey of legal literature reveals that, in spite of the persisting controversies with regard to cases involving monetary interest, the case law elaborated by international arbitral tribunals strongly suggests that, in assessing the liability due for losses incurred, the interest becomes an integral part of the compensation itself.
As is reflected in various arbitral awards, interest is awarded to compensate the damage resulting from the fact that, during the period of non-payment by the debtor, the creditor is deprived of the use and disposition of the sum that he was supposed to receive.
CONCLUSION
In conclusion, the development of arbitration and promotion of international commercial transactions compel a basic rule: arbitration flexibility; granting the arbitrator freedom of action, along with a commitment to the basic rules governing the arbitral procedure and international litigation, in such a way as to conform with, and achieve, international trade prosperity.
Arbitration is the natural jurisdiction of international commercial agreements and the competent judicial private power for the world of trade. Given the above, the question arises: is it not high time we thought of laying down independent material rules governing interest in arbitration, in a way that helps achieve this aim within the mentioned criteria?
The time has come to establish internationally recognized guiding rules, far from any conflictual method.
Arbitral practice has shown, as developed above, a great diversity in both orientations and solutions, both as much in the application of the lex contractus as in the absence of such choice of law, and revealed lack of uniformity in respect of interest, its rate, computations and starting point.
This situation leads to uncertainty in this field, which has a negative impact on international trade practice, the operators being confronted to the various challenges either in having the award annulled because of violation of public policy, or in having an ultra petita or a non-motivated ruling in the matter of interest. The solution would be the adoption of a material rule that gives the arbitrator freedom to decide integral compensation of the damage, based on a case-by-case ruling in the matter of interest, which is of crucial importance in view of the important amounts involved.
1 Sylviana Technical Systems, Inc. v. Iran, Case No. 64 of the Iran-US Tribunal, Award No.180-64-1 of 27 June 1985, Yearbook of Commercial Arbitration, Vol. XI, 1986, pp. 290-305.
2 See Sylviana Technical Systems, Inc. v. Iran, op. cit., in which the Iran-US Tribunal stated that "in the absence of a contractually stipulated rate […] the Tribunal has exercised its discretion, applying rates varying from 8.5% to 12%, which it determined to be 'fair rates'."
3 Herbert Schönle, Intérêts moratoires, intérêts compensatoires et dommages-intérêts de retard en arbitrage international, Etude de droit international en l'honneur de Pierre Lalive, p. 250.
4 Yves Picot, in Encyclopédie Dalloz, Répertoire de droit civil, Obligations, No. 39.
5 Jérôme Ortscheidt, Laréparation du dommage dans l'arbitrage commercial international, Dalloz, No. 482, p. 220.
6 Herbert Schönle, op. cit., p.650.
7 ICC Case No. 7331 in 1994, JDI 1995 p. 100, obs. D. Hasher. Likewise, see also Mc. Collough & Company, In. v. Ministry of Post, Telegraph and Telephone, National Iranian Oil Company, Bank Markazi 22 April, 1986, Yearbook of Commercial Arbitration XVII, 1987, p. 316, especially p. 321.
8 Yves Derains, Intérêts moratoires, dommages-intérêts compensatoires et dommages punitifs devant l'arbitre international, Etudes offertes à Pierre Bellet, Paris, Litec, 1991, p. 120.
9 Lara Hammoud and Matthew Secomb, Interest in ICC Arbitral Awards: Introduction and Commentary, ICC Bulletin, Vol. 15 No. 1, Spring 2004, p. 2.
10 In ICC Case 10696 (ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 96), the Arbitral Tribunal bases its decision to award interest to the claimant on the intention of the parties as expressed in their contract, stating that it is a duty to abide by the Parties' agreement.
11 ICC Rules of Arbitration, Article 17 (2). See ICC Cases 10696 (op. cit.), 7373 (ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 74), 5597 (ICC International Court of Arbitration Bulletin, Vol. 3, 1992, p. 16). See also Sylviana Technical Systems, Inc. v./ Iran, op. cit.: "The rates stipulated in the contract and thus agreed by the parties are usually accepted by the Tribunal."
12 Beirut Court of Appeal, Case No. 1725/2001, dated 29/11/2001, The Lebanese Review of Arab and International Arbitration, No. 33, p.52.
13 Article 257 of the Lebanese Code of Commerce, providing for an interest rate of 9%.
14 Final Award rendered in Case 8874, ICC International Court of Arbitration Bulletin, Vol. 10 No. 2, Fall 1999, p. 85.
15 Final Award rendered in ICC Case 7153, JDI, 1992, p. 1005, Obs. Dr. Hascher.
16 Herbert Schönle, op.cit., p. 650.
17 Articles 104 and 106 of the Swiss Civil Code; and Article 1153 of the French Civil Code.
18 Article 106 of the Swiss Civil Code.
19 Article 1153 al. 4 of French Civil Code.
20 Lebanese Civil Code: Article 265, par. 2: However, if the debtor is of bad faith, the creditor who has been harmed by an unjustified resistance may be allocated complementary damages.
21 Yvaine Buffelan-Lanore, Droit Civil, 9th ed., 2004, No. 303, p. 697, Muriel Fabre-Magnan, Les Obligations, Thémis, 1st ed. 2004, No. 213, p. 575.
22 Ikko Yoshida, Comparison of awarding interest on damages in Scotland, England, Japan and Russia, Kluwer Law International, p. 2.
23 Nayla Comair-Obeid, Charging interest in the Arabian Peninsula, Middle East Commercial Law Review, Sweet & Maxwell, Vol. 1, issue 3, May-June 1995, p. 92.
24 The Lebanese Review of Arab and International Arbitration, No.16, p. 48.
25 Nathalie Najjar, L'arbitrage dans les pays arabes face aux exigences du commerce international, LGDJ, 2004, p. 350.
26 Article 547 of the Kuwaiti Civil Code. See Nayla Comair-Obeid, The Law of Business Contracts in the Arab Middle East,Kluwer Law International, 1996, p. 194 and seq.
27 Article 102, subsection 2 of Kuwaiti Commercial Code.
28 Article 81 (2) of the Law of Commerce (Legislative Decree No. 7 of 1987).
29 Article 228 of the Bahraini Civil Code (Legislative Decree No. 19 of 2001) provides that (a) "any agreement for interest in consideration of utilizing a sum of money or against delay in settlement thereof shall be void".
30 Concerning commercial debts, the above-mentioned Article 81, § 4 stipulates that "A creditor shall have the right to claim supplementary damages to be added to the delay interest without the need for proving that the damages in excess of such interest have been caused by the debtor's deceit or gross failure". Also Article 228 of the Bahraini Civil Code allows the Court, "when the object of an obligation is the payment of a sum of money and the debtor fails to pay after he was formally summoned whilst he is able to do so", "…to order the debtor to pay a compensation as required by the law if the creditor proves that the loss is caused to him due to such failure".
31 Decree of Sultan Qabus, No. 550/90, put into effect in 1991. See Nayla Comair-Obeid, op. cit. under 26, p. 190.
32 Final Award of September 1996 rendered in ICC Case No. 7263, ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 73.
33 Final Award of February 1997 rendered in the ICC Case 7373, ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 74.
34 Final Award of June 1989 rendered in ICC Case 5082, Yearbook of Commercial Arbitration, Vol. XXII, 1997, p. 87.
35 Articles 226 of Egyptian Civil Code and 171 of Iraqi Civil Code.
36 The Lebanese Review of Arab and International Arbitration, No. 26, p. 73. In the same sense, the Egyptian Court of Cassation in its decision rendered on 31 May 1990 considered as contrary to public policy the Award which computed the interest at 8% whereas the Egyptian law provides for an interest rate ceiling of 5%.
37 Article 114 of Kuwaiti Commercial Code.
38 Article 171 of the Syrian Civil Code, 173 of the Libyan Civil Code, 207 and 208 of Iraqi Civil Code, 170, 221 and 222 of Egyptian Civil Code.
39 Article 1153 of Belgian Civil Code and Article 345 of Greek Civil Code. See in this respect ICC Case 5485 of 1987, Yearbook Commercial Arbitration, XIV 1989, p. 157.
40 ICC International Court of Arbitration Bulletin, Vol. 12 No. 1, Spring 2001, p. 124.
41 Ikko Yoshida, op. cit.
42 Article 23 of the Law of the People's Republic of China on Economic Contracts involving foreign interest; Article 419 of Japanese Civil Code, Article 548 of Korean Civil Code, Article 203-05 of Taiwanese Commercial Code, Article 224 of Thaï Commercial Code.
43 See in this respect Lesotho Highlands Development Authorityv. Impregilo SPA and others, 31 July 2003, ASA Bulletin, Vol. 22 No. 2, 2004, p. 411-431.
44 ICC Final Award - Case No. 6219, JDI, 1990, p. 1047, obs. Yves Derains. See also ICC Arbitral Awards1986-1990, p. 428.
45 ASA Bulletin, 1993, p. 373.
46 ICC Final Award of April 1995 rendered in Case 8123, ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 84.
47 ICC Final Award of 1989 rendered in Case 5731, International Court of Arbitration Bulletin, Vol. 3 No. 1, 1992 and ICC Final Award rendered in Case 7078, ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, p. 70 and ICC Final Award of 1995 rendered in Case 8123, op. cit.
48 ICC Final Award of 1989 rendered in Case 5324 of 1989, ICC International Court of Arbitration Bulletin, Vol. 3 No. 2, 1992, p. 53.
49 James Otis Rodner, The Applicable Interest Rate in International Arbitration, ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 47.
50 ICC Final Award of September 1999 rendered in Case 10079, ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 94. See also ICC Final Award rendered in Case 8123, op.cit., ICC Final Award rendered in Case 6219, ICC International Court of Arbitration Bulletin, Vol. 3 No. 1, 1992, p. 22, ICC Final Award of March 1995 rendered in Case 7622, ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 81.
51 ICC International Court of Arbitration Bulletin, Vol. 10 No. 2, Fall 1999, p. 77.
52 ICC Final Award rendered in Case 7063 (1993), ICC Arbitral Awards 1996-2000, p. 75.
53 ICCA YB Final Awards in Case 9771 (2001), Yearbook of Commercial Arbitration, Vol. XXIX, 2004, pp. 46-65.
54 Article 395 of the new Russian Civil Code.
55 ICC Arbitral Awards 1986-1990, p. 394.
56 See also the Final Award rendered in the ICC Case 7114, ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 72 and the Final Award rendered in the ICC Case 7373, op. cit.
57 Yearbook of Commercial Arbitration, Vol. XVII 1992, p. 221.
58 JDI, 4, 2004, p. 1271.
59 ICC Case 6754 of 1993, ICC Arbitral Awards 1991-1995, p. 600, ICC Case 7331 of 1994 (op. cit.), ICC case 7078 (op. cit.). See also Lara Hammoud and Matthew Secomb,op. cit., p. 58, item 33.
60 ICC Case 6162, Yearbook Commercial Arbitration of 1990, p. 84.
61 ICC Case 10329 of 2000, ICCA YB Final Awards.
62 See also ICC Final Award (1998) rendered in Case 9333, ICC International Court of Arbitration Bulletin, Vol. 10 No. 2, Fall 1999, p. 105.
63 ICC International Court of Arbitration Bulletin, Vol. 3 No. 1, 1992, p. 19.
64 Which states that when the object of an obligation is the payment of a sum of money, the amount of which is known at the time when the claim is made, the debtor shall be bound, in case of delay in payment, to pay to the creditor, as damages for the delay, interest at the rate of 4% in civil matters and 5% in commercial matters.
65 ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 86.
66 Yearbook Commercial Arbitration, 1988, p. 271. See also ICC Case 6281, Yearbook Commercial Arbitration, 1990, p. 96.
67 Yves Derains, op. cit ,p.106.
68 Yves Derains, The Role of Unidroit principles in the International Commercial Arbitration: A European view, ICC International Court of Arbitration Bulletin, 2002, p. 10.
69 ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, 2004, p. 85.
70 ICC Case 8501, JDI No.4, 2001, p. 1164.
71 Yearbook Commercial Arbitration, Vol. XXVIII, 2003, pp. 100-168.
72 Yearbook Commercial Arbitration, 1976, pp. 128-129.
73 In the ICC Case 8874 published in ICC International Court of Arbitration Bulletin, Vol.10 No. 2, Fall 1999, p. 85, the Arbitral Tribunal considered that the initial interest rate, if applied to the considered amount and period of time, would be disproportionate with the economic and commercial conditions of this case.
74 ICC Final Award of 1989 rendered in Case 5881, ICC International Court of Arbitration Bulletin, Vol. 3, 1999, p. 51.
75 ICC International Court of Arbitration Bulletin, Vol. 3 No. 1, 1992, p. 22.
76 See also ICC Final Award of April 1997 rendered in Case 8521 (ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 90) in which the arbitral Tribunal applied the rate which it considered is general practice in International Arbitration and may be considered as a relevant trade usage within the meaning of Article 13 (5) of the ICC Rules.
77 Reference is to be made to ICC Final Award of September 1999 rendered in ICC Case 10079 (ICC International Court of Arbitration Bulletin, Vol. 15 No. 1, Spring 2004, p. 94), in which the sole arbitrator decided to award on the approximate rate applicable to accounts held in US dollars, as both parties agreed that the legal rate was not appropriate for a disposition in US dollars.
78 Yves Derains, op. cit. under 67, p. 13 and also for the same author, Attente légitime des parties et droit applicable au fond en matière d'arbitrage commercial international, Travaux du Comité français de droit international privé, 1984-1985, Paris, CNRS, 81.
79 See ICSID Award AGIP S.p.A. v. Government of the Republic of Congo, 30 November 1979, Rev. Crit. DIP ,1982, p. 92, especially p. 104 ; ICSID Award Benvenutti et Bonfante v. Government of the Republic of Congo, 8 August 1980, Yearbook Commercial Arbitration, 1983, p. 144, especially p. 151.
80 In a Final Award of 1992 rendered in ICC Case 7006 (ICC Arbitral Awards 1991-1995,p. 199), the arbitral tribunal considered that a judge's award of interest in a monetary condemnation from a date prior to the judgment must be motivated and finally that the motivation, while not restricted in any particular way, cannot flow from an arbitrary discretion that the judge is empowered to exercise but must be enrooted in the circumstances that the disposition of the substantive issues reveals.
81 ICC Final Award of 1995 rendered in Case 1170, JDI, IV, 2001, p. 858.
82 In an ICC Final Award of 1990 rendered in Case No. 6162, op. cit., the arbitral tribunal dismissed the claimant's claim for damages, as the claimant had not alleged that the defendant would have suffered an exceptional prejudice. Also in the ICC Final Award of 1992 rendered in Case 6962 (ICC Arbitral Awards1991-1995, p. 306), the arbitral tribunal stated that "no evidence of a loss is required under French law for claiming interest on overdue interest on overdue amounts at the legal rate of interest…".
83 Revue de l'Arbitrage, 1994, No.1, p. 192.
84 Emmanuel Gaillard, La Jurisprudence du CIRDI, ed. Padone, 2004, p. 286.
85 JDI 2004, No. 131, pp. 236-254.
86 In the same sense, see the Case American Manufacturing & Trading Company (AMT) v. Zaïre of 21 February 1997, JDI 1998, No. 125, p. 243 and the Case Azurixv. Argentine, JDI 2004, No. 131, pp. 276- 282.
87 Emmanuel Gaillard, op. cit., p. 814.
88 Revue de l'Arbitrage, 1994, p. 196 and JDI 1992, No. 119, pp. 217-227.
89 ICSID Review 2001, No. 16, p. 168 and JDI 2002, No. 129, pp. 190-233.
90 ICC International Court of Arbitration Bulletin, Vol. 12 No. 2, Fall 2001, p. 111.
91 Yearbook Commercial Arbitration, Vol. XXIX, 2004, p. 46-65.
92 JDI 2003, No. 130, p. 162.
93 Revue de l'Arbitrage, 1994, p. 190.
94 See ICC Award 10346, op. cit.
95 Final Award of December 1996 rendered in Case 8769, ICC International Court of Arbitration Bulletin, Vol. 11 No. 2, Fall 2000, p. 70.
96 See ICC Award 10346, op. cit.
97 Op. cit.
98 ICC International Court of Arbitration Bulletin, Vol. 12 No. 1, Spring 2001, p. 127.
99 ICC International Court of Arbitration Bulletin, Vol. 12 No. 1, Spring 2001, p. 124.
100 ICC Case 10329 of 2000, Yearbook Commercial Arbitration, Vol. XXIX , 2004, pp. 108-132.
101 ICC Case 10274 of 1999, ICCA YB Awards.
102 Final Award of 1994 rendered in Case 7585, ICC Arbitral Awards 1991-1995, p. 606.
103 Sylviana Technical Systems, Inc. v. Iran, op. cit.
104 Final Award of December 1992 rendered in Case 7197, ICC Arbitral Awards 1991-1995, p. 500.
105 JDI, Vol. IV, 2001.
106 JDI, Vol. IV, No. 1, 2001, p. 165 et s.
107 W. Laurence Craig, William W. Park and Jan Paulsson, International Chamber of Commerce, Oceana Publications, 2000, p. 295.
108 ICC Award 5835 published in ICC Court of Arbitration Bulletin, Vol. 10 No. 2, 1999, p. 34, quoted by Yves Derains, Le rôle des Principes d'UNIDROIT dans l'arbitrage commercial international : une vue européenne, Bulletin de la Cour Internationale d'Arbitrage de la CCI, Supplément Spécial, 2002, p. 16 and seq. Likewise, the award given in ICC Case No. 7110 of 1995, published in the ICC International Court of Arbitration Bulletin, Vol. 10 o. 2, 1999, p. 40.
109 Articles 110 and 111 of Kuwaiti Code of Commerce.
110 Article 300, section 2 of Kuwaiti Civil Law No. 67, 1980
111 Article 300, section 3 and Article 304 of Kuwaiti Civil Law.
112 Yves Derains, op. cit. under 108, p. 15.