Whether court should award interest on arbitral awards

http://www.bailii.org/ew/cases/EWHC/Comm/2014/2188.html

Clyde & Co for claimant

An arbitral award was made in favour of the claimant. It did not contain a provision for the payment of interest. The arbitration had a Russian seat and the Moscow Arbitrazh Court annulled the award. Nevertheless, the claimant was subsequently given leave by the Dutch Courts to enforce the award in the Netherlands. When the award was not paid, the claimant commenced an action in the English High Court to enforce it. As a preliminary issue, the claimant sought post-award interest under either Russian or English law.

Simon J held as follows:

  1. It is open for the claimant to argue that no effect should be given to the decision of the Russian court, on the basis that the judgment was obtained by fraud or in breach of the rules of natural justice.
  2. As a matter of Russian law (taking into account what a Russian Supreme Court would decide if the matter came before it as the law presently stands (and not anticipating what future development might take place, given that Russian law is allegedly going through a period of change on this issue)), interest was not recoverable.
  3. However, there was no absolute bar under English law to an award of interest in respect of the late payment of a foreign award under section 35A of the Senior Courts Act 1981. The defendant had sought to argue that the parties had excluded the English court’s power to award interest because they had agreed that the Russian courts would decide this issue and the Russian courts have no power to award interest. Simon J held that this point might affect the exercise of the court’s discretion but not its jurisdiction to award interest.