• Applicable period

• Rate of interest

The dispute concerns the failure to complete a complex share transfer transaction. Claimants lay the responsibility for this failure upon Defendant and seek payment of break-up fees and indemnities, together with 'interest on all such amounts awarded at such rate and for such period as the Arbitral Tribunal shall determine in its discretion'. In its prior interim award, the arbitral tribunal ruled that English law applies to the parties' contractual provisions concerning break-up fees and indemnities.

'As to interests, inflation and loss of use of money

62. Claimants contend that despite demand by letters between 13 November 1989 and the date of its Request for Arbitration . . . and the agreement of Defendant's Chairman . . . to pay the amounts owed to Claimants in mid-January 1990, Defendant has failed to make any payment in respect of break-up fees or under the indemnity. Accordingly, Claimants claim that interest on the principal amounts should be awarded and that account should be taken of inflation and the loss of use of money.

63. According to Claimants, under English law, applicable to break-up fees and indemnities provision of the Letter Agreement and therefore also to interest on claims relating thereto, arbitrators may award interest at such rate as they think fit on any sums which they award until the date of the award (Arbitration Act 1950, section 19 A) and after such date at the same rate as a judgment debt (Arbitration Act 1950, section 20).

The rate of interest is under English conflict of laws rules determined by the lex fori, i.e. in the instant case by French law.

Accordingly, based on the provisions of Article 1153 of the French Civil Code Claimants claim interest on the amount of the break-up fees and indemnities at the French legal rate, from the dates of the respective first unequivocal demands for payment until the date of payment in full.

The amounts of interest claimed by Claimants are as follows:

(1) On the break-up fee of FF . . ., which was demanded by the Claimants' letter of 13 November 1989, FF . . .; interest continuing to accrue after 28 June 1994 at a daily rate of FF . . .;

(2) On the additional break-up fee of FF . . ., payable as part of the increased break-up fee of FF . . ., which was demanded by the Claimants' letter of 31 May 1990, FF . . .; interest continuing to accrue after 28 June 1994 at a daily rate of FF . . .;

(3) On the indemnities of £ . . ., US$ . . ., DFL . . . and FF . . ., which were demanded by the Request for Arbitration dated 30 November 1990, £ . . ., US$ . . ., DFL . . . and FF . . .; interest continuing to accrue after 28 June 1994 at a daily rate of respectively £ . . ., US$ . . ., DFL . . . and FF . . .

(Notes of Oral Argument at the hearing of 28 June 1994, paragraphs 164-166).

Defendant has not challenged Claimants' submissions on interest, stating in particular that it "has no particular comment to give upon this application of French law as the governing law to interest rates" and that, accordingly, it "does not see . . . any argument to discuss or challenge the calculation of interests made by the Claimants in their one-sheet paper handed over to the Defendant and the Arbitral Tribunal" (Response to Procedural Order No. 7 of 8 July 1994, p.1).

The Arbitral Tribunal finds Claimants' claim relating to interests as founded and decides accordingly to accept it, except to the extent such claim refers to the additional break-up fee of . . . Interest shall therefore accrue to the benefit of Claimants at the French legal rate from 13 November 1989 as to the break-up fee amount of . . . and from 30 November 1990 as to the amount of the indemnities, until paid in full. The amounts of interest due through 28 June 1994 as calculated by Claimants are accepted (Notes of Oral Argument of 28 June 1994, Annex 2).

64. Claimants' claim that inflation and loss of use of money relating to the amounts due as break-up fees and indemnities should be taken into account is unsubstantiated.

The Arbitral Tribunal notes in particular that as regards the loss of use of money, the awarding of interest is intended precisely to compensate such loss.

The claim under this heading is therefore rejected.

. . . . . . . . .

Final Award

1. Defendant shall pay to [Claimant 3] for the account of all Claimants by way of break-up fees the sum of FF . . . plus:

a) interest thereon at the French legal rate from 13 November 1989 through 28 June 1994 in the amount of

FF . . ., and

b) further interest on the sum of FF . . . at the French legal rate from 29 June 1994 through the date of the Award and thereafter until the date of payment in full.

2. Defendant shall pay to [Claimant 3] for the account of all Claimants by way of indemnities the sum of £ . . ., US$ . . ., DFL . . . and FF . . . plus:

a) interest thereon at the French legal rate from 30 November 1990 through 28 June 1994 in the amounts of £ . . ., USD . . ., DFL . . . and FF . . ., and

b) further interest on the indemnity amounts of £ . . ., USD . . ., DFL . . . and FF . . . at the French legal rate from 29 June 1994 through the date of the Award and thereafter until the date of payment in full.

. . . . . . . . .'