Interest on delayed payments / Austrian law and, subsidiarily, the General Delivery Regulations of a professional organisation / Delay in submitting certain interest payment demands during the procedure leading to their disregard by the arbitral tribunal/ Interest rate calculations for other demands submitted in time / Starting point in the absence of a formal demand: date of the request for arbitration

According to the relevant contract, Austrian law is to be applied and, subsidiarily, the General Delivery Regulations of the Austrian Association of Engineering and Construction Industries of 1 March 1963/1 February 1982.

'In his Request for Arbitration of . . . October 1987, Claimant demands 18% interest on an amount of FF . . . plus 5% compound interest on an amount of FF . . . as from . . . April 1987. In his Reply of . . . to the Discovery Order, compound interest is no longer mentioned while, on the other hand, the interests claimed are specified as follows:

(a) 18%on the totality of the claims as from . . . May 1987, plus

(b) 18% on FF . . . from . . . 1987 to . . . May 1987 . . .

(c) 18% on . . .

(d) 18% on . . .

. . . . . . . . .

The specific claims for interest under (b) - (d) above cannot be taken into account since they have been communicated too late in the Reply to the Discovery Order. In its Order no. 1, of . . ., the Arbitral Tribunal requested that the parties submit all their claims and factual allegations in the next exchange of submissions; furthermore, it warned that exceptions would only be accepted in exceptional circumstances.

There remains to be considered the request for 18% interest on the total amount claimed, as under (a) above.

The Claimant demands 18% on the ground of article 8.3(d) of the General Delivery Regulations of the Austrian Association of Engineering and Construction Industries . . .; according to this article, the interest rate amounts to 7 1/ 2% plus the discount rate of the Austrian National Bank.

In his submission of ... the Defendant belatedly criticized the 18% rate as excessive, without specifically disputing it. However that may be, the Arbitral Tribunal tried to clarify this point by addressing the Austrian National Bank which replied as follows:

In reply to your letter of . . . we inform you that the discount rate of the Austrian National Bank (Diskontsatz) amounted to 4% p.a. in 1986, while for each section of the re-financing exceeding 70% of the refinancing ceiling at the time available to the banks an additional one percent is collected with the rate of interest mentioned. At the present time (since 6.10.1989) the discount rate amounts to 6 1/2% p.a.

The computation of the discount rate applicable in 1986 appears to be very complex and would seem to call for an additional examination by specialists in the field of banking. The Claimant merely refers to the General Delivery Regulations of the Association of Engineering Industries without submitting further justifications.

Taking into account all these various circumstances, the Arbitral Tribunal deems it well advised to apply the discount rate in force since 6 October 1989, which is 6 1/2%. The rate of interest demanded by the Claimant is therefore to be reduced from 18% to 14% (6 1/2%+ 7 1/2%).

With regards to the period of time during which the Claimant is entitled to interest, the Request for Arbitration claims 18% as from . . . April 1987, noting that the claims came to maturity on that date at the latest. In the absence of any formal demand and failing concrete explanations by the Claimant, the Arbitral Tribunal deems it appropriate to compute the interest from the date on which the Request for Arbitration was filed with the International Court of Arbitration in Paris.'