- Arbitral Award
- ICC International Court of Arbitration 20103
LONG-TERM CONTRACTS - JOINT-VENTURE AGREEMENT - BETWEEN THREE COMPANIES OF THREE DIFFERENT STATES- ENGLISH LAW APPLICABLE
INTEREST - RIGHT TO INTEREST - APPLIED AS REQUESTED BY THE PARTY REFERRING TO ART. 7.4.9(2) UNIDROIT PRINCIPLES
In this case, the claimant sought an award of compounded interest on the unpaid balance due to it from the Respondent from the date upon which the debt was acknowledged to exist until the date of the award and subsequently from the date of the award until payment. The claimant argued that, in the absence of any specific agreement on the matter between the parties or any provision in the ICC Rules, the sole arbitrator has a wide discretion to award simple or compound interest on the principal claim under section 49 of the English Arbitration Act 1996. In this case, English law was both the lex arbitri and the lex causae.
According to the claimant, the Sole Arbitrator should exercise his discretion in a manner that, having regard to all the circumstances of the case, meets the justice of the case, is reasonable and fair and would compensate the Claimant adequately. In this regard, the claimant argued that, in the circumstances of the case, the statutory rate of the law of the country where its head office is located should apply as lex valutae, regardless of the choice of English law as the law applicable to the agreement in dispute and England as the seat of the arbitration.
In the alternative, the claimant requested to be awarded interest which corresponds to the average bank prime lending rates prevailing in this State of its seat, by invoking Article 7.4.9(2) of the Unidroit Principles, in a persuasive way.
As a further alternative, the Claimant argued that the rates of interest of 8 percent or 8 percent over the Bank of England base rate should apply, respectively, in line with English Court practice and with the Late Payment of Commercial Debts (Interest) Act 1998.
In his award, the sole arbitrator used some of the claimant's arguments. Noting that the Arbitration Rules are silent on the question of the power to award interest and that the parties did not make any provision in this respect in the joint venture agreement, the sole arbitrator considers that section 49 of the Arbitration Act 1996 governs the issue, granting him a wide discretionary power in the fixing of interest.
While the sole arbitrator rejected the claimant's first claim to apply the statutory rate of interest of the law of the country where the claimant's seat is located, he considered that this solution ignores the fact that the parties chose to resolve their disputes in London, England, and that English law governs both the procedure and the merits of the dispute. On the other hand, the sole arbitrator accepts the Claimant's alternative argument to retain a rate corresponding “to the rates of interest that the Claimant would have had to pay a bank in Utopia lending it capital in the relevant period ».
Without referring to the Unidroit Principles, the arbitrator seems to focus on the fact that Claimant is based in this country and that one of the projects for which the joint venture agreement was signed for a project in this same country. It was therefore reasonable, in his view, to assume that the claimant would seek debt finance both in connection with the joint venture agreement and generally from banks operating in that State.
(Abstract kindly provided by François Mansourati)
Stephan W. Schill (ed), Yearbook Commercial Arbitration 2019 - Volume XLIV, pp. 334-362}}