Compensatory interests on damages due / Applicable law / Law of the contract: law of the Netherlands / Matter of substantive law / Application of Ulis Convention, Article 82, principle of full compensation /Starting date: when damages arise / No prior declaration on default necessary / Interest on interest excluded from the Ulis Convention

The Claimant has applied for 8.5% interest on the damages claimed since . . . May 1988.

The interests of payments due are under the Law of the Netherlands (Art. 1282 Civil Code) and generally, on a comparative law basis, qualified as a matter belonging to the substantive law where the principles of civil law apply. This Tribunal also qualifies the question as of substantive law.

The applicable law on contractual liability and the determination of the law of contract is in the present litigation the Dutch law, through which however the ULIS-Convention of 1 July 1964 is to be applied.

Under the ULIS, Article 83, defining interests as the market interests plus one percent, is specific and applies only to default on the obligation for the payment of the sales-price and not to damages in case of default on delivery (F.J.A. van der Velden, op. cit. p. 82). So the ULIS Convention gives no special rule for compensatory interests on damages due. The principle of an ample compensation under Art. 83 ULIS is however noteworthy.

The matter of interests does not in the opinion of the Tribunal fall outside the scope of ULIS (Art. 8 is limited in its exclusions). One clear argument in that sense is the mere existence of a rule such as Art. 83 ULIS.

Thus the interpretation and the fillingup of gaps is, according to Article 17 ULIS, done following the general principles on which the convention is based, and without falling back on a subsidiary set of national law rules (H. Dölle, op. cit., p. 121 et seq., esp. 125). The principles underlying Art. 17 are: good faith, party autonomy, and acting as reasonable persons or according to accepted customs.

Lost interest as a consequence of the breach of contract is also loss of profit. So the principle of full compensation of Art. 82 ULIS applies, with a view of putting the injured party in an economic position as if the original contract were performed. Thereto the Tribunal may inter alia look at the interest in the country of residence of the creditor (H. Dölle, op. cit., p. 553).

The Tribunal looks at the 8.5% claimed; it will not allow more, but finds 8.5% reasonable. There is even a consensual element in the fact that the defendant/counterclaimant also applies for 8.5% interest, stressing that it is "an extremely reasonable rate" . . .

Under ULIS, contrary to Dutch Law (Art. 1279 and 1286 Civil Code) the interests, just as any damages, start running without prior declaration on default on the day of avoidance or when damages arise. The Tribunal will not go beyond what is claimed and finds the claim for interests from . . . May, 1988 reasonable and wellfounded.

Under the ULIS Convention interest on interest is considered to be excluded, as mentioned in the negotiating process (ELA. van der Velden, op. cit. p. 190).

The Tribunal decides that on the total amount of damages allotted, 8.5% interest per annum will accrue and is due from . . . May 1988 until the day of complete payment.

Per annum the 8.5% on . . . FF amounts to . . . FF.

On . . . May 1990 the interests amounted to . . . FF.

For every day after . . . May 1990 the interests will be . . . FF, to be added to the . . . FF due on . . . May 1990.

. . .

In conclusions of the points elaborated above, the claimant is awarded the sum of . . . FF in damages and interests on that sum of 8.5% per annum from . . . May 1988 until the date of full payment.

The defendant is ordered to pay the same, without appeal or delay, in France (where the original obligation was to be performed) and either in French Francs or the equivalent on the date of payment in Dutch guilders.'