• Applicable period

• Rate of interest

The parties, individuals from the USA and the Middle East, are in dispute over the performance of a shareholders' agreement. In an earlier partial award, the arbitral tribunal decided that New York law, together with United States law where applicable, was to be applied to substantive issues. In its final award, while rejecting the claims made by Claimant, the arbitral tribunal accepts part of the counterclaims made by Respondent. The issues to be determined included the following:

'9. Whether in the event of an award of monies and/or damages being made to the Claimant or to the Respondent or to both, interest on such monies and/or damages should also be awarded and, if so, at what rate and for what period of time. Alternatively, whether the Claimant or the Respondent is entitled, in the event of an award of monies and/or damages being made in his favour, to late payment damages.

9.1.1 As found above the total amount of damages recoverable by the Respondent from the Claimant is . . . In view of the fact that the Claimant has had the use of this money, whilst the Respondent has been deprived of the benefit of same, the Tribunal considers that interest should be awarded on the said damages figure. In view of the fact that the various losses giving rise to the damages figure occurred at different times during the period of the contractual relationship between the parties, the Tribunal takes the view that interest should be awarded for the items of loss, from appropriate dates and that this interest should be payable to the date of the Award.

9.1.2 As New York law is to be applied to the substantive issues, the Tribunal considers it appropriate to look to that law to fix the rate of interest to be awarded prior to the date of the Award. In view of the fact that under New York law the norm would be to award simple interest, the Tribunal takes the view that simple interest should be awarded until the date of the award. As the rate of interest under New York law is 9%, the Tribunal takes the view that this rate should be applied.

9.1.3 The question arises as to what would be the appropriate dates from which interest should run. In this respect the Tribunal has regard to paragraph 3(d)(iii) of the Shareholders Agreement. It provided that profit distributions should take place within thirty days of the end of each financial year unless otherwise agreed. Such evidence as there was on the topic indicated that profits were distributed pursuant to this provision on a date later than the thirty day limit stipulated. For this reason the Tribunal proposes to adopt the date of 1 January after the end of each relevant financial year as the date from which interest should be calculated on damages awarded to the Respondent in respect of losses incurred in the preceding year. However, in respect of the damages awarded arising from the December 1992 Assignment, the Tribunal has already held that the appropriate date from which to measure that loss is 1 January 1994. Accordingly interest in respect of these damages will run from that date. Further, in respect of . . . the Tribunal considers it appropriate to take the date of 1 January 1994 as the date from which to award interest as the final payment to it appears to have been made in July 1993.

9.1.4 The losses giving rise to the . . . damages awards occurred in different years. Having regard to the approach that the Tribunal has decided to adopt, it is necessary to calculate the losses incurred on a year by year basis, though with the first two years from 5 December 1985 to 31 October 1987 being taken together. This, (with the . . . damages figure of . . . included for convenience in that Y/E 31/10/93 as well as a 4 cents adjustment in that year to provide equivalence with the damages awarded) produces figures as follows . . .

9.1.5 Accordingly, on the above basis the Tribunal finds that the Respondent should be awarded simple interest at 9% on the damages figure of . . . until the date of the award, as follows . . .

9.1.6 The Tribunal also takes the view that interest should be awarded from the date of the Award until the date of payment, on the total of the compensatory damages and pre-award interest awarded by this Award. Having regard to the fact that (a) the venue for this arbitration is London, (b) the UK Arbitration Act 1996 does not appear to apply to it, (c) the apparent absence of an order bringing into force section 3 of the UK Private International Law (Miscellaneous Provisions) Act 1995 giving arbitrators a discretion in relation to interest where an award made in England is in a foreign currency, the Tribunal considers it appropriate to award simple interest from the date of the Award until the date of payment at the statutory rate applicable to judgment debts in England at the date of the Award and so finds. Further, as the Respondent has already paid his lawyers the sum of . . . towards his legal costs and is, therefore, at a loss to this extent, the Tribunal considers it appropriate that simple interest at the same rate should be awarded from the date of the award until date of payment on this amount also.

9.1.7 Having regard to its findings in relation to interest as made above, the Tribunal does not consider it appropriate to make an award of late payment damages.

. . . . . . . . .

Order

1. The claims of the Claimant are dismissed.

2. The Claimant is ordered to pay to the Respondent the sum of $ . . . as compensatory damages for breach of fiduciary duty and as damages for breach of the Shareholders Agreement. All claims in respect of which damages are not awarded are dismissed.

3. The Claimant is ordered to pay to the Respondent until the date of this Award simple interest at 9% per annum on the said compensatory damages as follows: . . .

4. The Claimant is ordered to pay to the Respondent the sum of $ . . . in respect of the Respondent's normal legal costs, which amount includes the Respondent's normal legal costs incurred in connection with the trial of the issue determined by the partial Award.

5. The parties are ordered to each pay 50% of the costs represented by the arbitrators fees and expenses and the administrative costs fixed by the International Court of Arbitration at $ . . . in accordance with the applicable rules.

6. The Claimant is ordered to pay to the Respondent simple interest at the statutory rate of interest payable on judgment debts in England at the date of this Award on the total of the compensatory damages and pre-award interest awarded by this Award, from the date of this Award until date of payment.

7. The Claimant is ordered to pay to the Respondent simple interest at the statutory rate of interest payable on judgment debts in England at the date of this Award on the sum of $ . . ., being part of the normal legal costs incurred by the Respondent and already paid by him, from the date of this Award until payment.'