• Rate of interest

Claimant requests the arbitral tribunal to order Defendant to pay for uncollected receivables that Claimant had chosen to assign in accordance with their agreement, to which Swiss law was applicable. The tribunal accepts the claim, finding that Defendant has been in default since 30 September 1994 following a letter from Claimant requesting payment dated 27 September 1994.

'Interest is due under Art. 104 CO. Both parties being commercial companies, it is due under the third paragraph of that provision. There is a typical international situation, where money is due in Spanish pesetas by an Italian company to a French company. The discount rate mentioned at Art. 104(3) is not the discount rate of the central bank, but the local rate for the currency concerned at the place of performance, i.e. Paris by the effect of Art. 74 para. 2 No. 1 CO. As recently explained by Prof. H. Schönle in his contribution to Mélanges Pierre Lalive ("Intérêts moratoires, intérêts compensatoires et dommages-intérêts de retard en arbitrage international", Etudes de droit international en l'honneur de P. Lalive, Bâle, 1993, p. 649-670) the most adequate solution is to apply the LIBOR (London Interbank Offered Rate) or the corresponding rate, depending on the currency, which is in general use and published daily. This is now general practice in international arbitration and may be considered as a relevant trade usage within the meaning of Art. 13(5) of ICC Rules.1

The Tribunal accepts therefore that the basis for the calculation of interest on pesetas is the MIBOR (Madrid Interbank Offered Rate), at three months.

As to the rate of interest, it should be noted that the MIBOR (as the LIBOR) is valid between banks. Now, banks do charge their clients at a slightly higher rate, which varies depending on the quality of the borrower. Such spread may vary from 1/8 to 3/8 or 4/8%.

This rate covers the interest due for late payment under Art. 104(1) and (3) CO. Under Art. 106 CO the party who does not obtain timely payment is further entitled to be compensated for his actual loss, if it is higher than the interest rate under Art. 104. In this arbitration, Claimant has established that it obtained credit from its banker at 2% above MIBOR. The Tribunal accepts that, due to the fact that Defendant had not complied with its contractual obligations, Claimant had to resort to its line of credit with its banker. This is evidence of an additional loss within the meaning of Art. 106. Under that provision, such loss is to be compensated by the debtor, unless it proves that non payment was not faulty. There was no proof thereof on the Defendant's side. Claimant is therefore entitled to full damages under Art. 106.

Since the beginning of this arbitration and still in its "Notes de plaidoirie" of 19th November 1996, Claimant has requested interest at MIBOR plus 1%. When submitting its (updated) reduced claim, on 2nd December 1996, Claimant required 2% above MIBOR.

Although there was no reaction against this late increase of the claim, the Tribunal considers that it cannot go higher than the figures on which Defendant could express its views at the final hearing. It adopts therefore a margin of 1% above MIBOR.

The relevant rates have been supplied by Claimant in the form of an attestation from [Spanish bank]. They are accepted by the Tribunal. The Tribunal shall therefore order that interest is payable on the amount allocated to Claimant at the following rates:

Three months from: MIBOR: + 1%

30.09.1994 7.84 8.84

31.12.1994 8.63 9.63

31.03.1995 9.60 10.60

30.06.1995 9.70 10.70

29.09.1995 9.47 10.47

29.12.1995 9.25 10.25

29.03.1996 8.40 9.40

28.06.1996 7.33 8.33

30.09.1996 6.96 7.96

31.10.1996 6.97 7.97'

1
Editor's Note: 1988 Rules