Distinction between financial costs incurred due to delays in payment and interest on overdue payments / Egyptian law, Articles 226 and 232 of the Egyptian Civil Code

'The Claimant states that he has been obliged to bear financial costs due to delays on the part of the Defendant in the performance of his payments. Legally this claim forms part of the damages properly so called. It must be clearly separated from the interest on overdue payment or on default dealt with hereafter. It is noted (...) that the Defendant's payments were made during a first period of time with only a few days' delay. The file also establishes that the Claimant very frequently complained about late payment of his invoices. The delays became far more extensive from midOctober 1983. The Tribunal is of the opinion that according to commercial usage a delay of two or three days does not imply immediately an obligation for the debtor to pay interest on default. Under this heading the Tribunal shall therefore slightly reduce the Claimant's claim.

The Claimant states that the interest rates he had to pay varied from 9.5% to 10.8125% for payments in US dollars and reached 15% for payments in Egyptian pounds. These rates are not based on any written evidence. Ex aequo bono and in light of the rates practiced in respect of the US dollar and the Egyptian pound, the Tribunal accepts to take into consideration a slightly reduced average rate.

All considered the Tribunal will grant Claimant an amount of $ ... for additional financial costs. Since this amount corresponds to interest, it does not bear interest, in accordance with Article 232 Eg. Civil Code.

The Claimant had to renegotiate a contract with ... The file proves this. However the amount of $ ... is not confirmed in detail in the documents produced. The Tribunal recognizes the difficulty in establishing evidence for each individual element of the damage (...). It will therefore fix a reasonable amount of $ ...

Concerning interest other than interest claimed to reimburse financial costs, the Request for Arbitration refers to "ipso facto entitlement to interest as from the maturity dates". The Tribunal has jurisdiction to determine this issue (Terms of Reference, Item X). In his Rejoinder, the Claimant repeats the total amount set out in the Request for Arbitration but claims interest only from the date of filing the request.

The Claimant does not indicate the applicable rate of interest.

This issue is ruled by Egyptian law. This law provides that interest is only due from the date of filing with the court and specifies that in commercial matters the rate shall not be higher than 5% (Art. 226 ECC). Such is therefore the rate to be applied.'