• Source of authority for granting interest

• Applicable period

• Rate of interest

• Simple/compound interest

The parties, both Thai companies, are in dispute over the performance of an agreement relating to the construction of an industrial plant, governed by and construed according to the laws of Thailand. Claimant alleges that Respondent's behaviour has prevented it from fulfilling its contractual obligations. Respondent argues that it was entitled to reduce the contract price and that Claimant failed to perform the work as required of it. The arbitral tribunal finds that Respondent was responsible for the improper performance of the agreement and accepts Claimant's claims.

'a) Interest on outstanding amounts

548. Pursuant to Article 7.3 of the Contract, it was agreed that interest on delayed payments would be paid at plus 1% above the prescribed rate of the Thailand Minimum Lending Rate. The Arbitral Tribunal has to respect this agreement between the Parties, and finds that this rate must be applied to sums owed from the due date until the date of full payment.

549. Claimant has incurred its costs in relation to this Project over the time until spring of 1999. However, up to September 1999 the Tribunal is not aware of invoices in which Claimant had demanded payment for monetary claims as submitted to this Arbitration. Hence, the Tribunal looks at the date of 5 September 1999 as the starting date for calculating interest. This is the date when Claimant filed its Request for Arbitration. By so doing, Claimant evidenced that it considered the monetary claims to be due and payable from Respondent.

550. As per Section 224 of the Thai Civil and Commercial Code, which provides inter alia that "interest for default shall not be paid upon interest", the Arbitral Tribunal finds that a compounding of interest - although quite customary in the commercial field and certainly well recognized in international arbitration practice - should not be done in the instant case. Therefore, the Tribunal does not deem it necessary to calculate interest on the principal amounts up to the date of this Award. Rather, the Tribunal only needs to determine the applicable interest rates, and the principal amounts expressed in Thai baht and US dollars will carry interest as from the date stated above, i.e. as from 5 September 1999, until the day on which payment in full is made.

551. As far as the Thai baht interest rate is concerned, the Arbitral Tribunal obtained a chart from the [bank], outlining the various applicable interest rates for the period starting in September 1999, up until the time of rendering of this Award. The Arbitral Tribunal has seen the scope of the fluctuations over the period and finds that the approximate interest rate was in the region of 7.25%, to which 1%, as per the terms of the Contract has to be added. Hence, the Arbitral Tribunal determines that a rate of 8.25% per annum simple interest must be applied.

552. As far as the US dollar interest rate is concerned, the Tribunal determines that a rate of 8.5% is appropriate. Such rate is, in any event, likewise on the very conservative side, and would seem to be the minimum lending rate for which Claimant could possibly refinance its shortfall.

b) Post award interest

553. The Tribunal determines that the interest, as hereinabove determined, shall be due and payable until the day of payment in full in respect of the amounts payable by Respondent in Thai baht and US dollars. The calculation for simple interest due as from 5 September 1999 onwards up to the day of payment will be a matter for the Parties to work out.'