1 Jurisdiction to award interest and general considerations
This chapter will examine some issues relating to the concept of interest in the context of international responsibility. Generally speaking, interest can be an element both in the calculation of a sum due as damages or compensation (pre-award interest) and in relation to the obligation of a judgment debtor as regards the payment of the sum awarded (postaward interest).
A tribunal that possesses jurisdiction to determine liability and the compensable damage flowing therefrom is both entitled and obliged to give consideration to interest. A tribunal may refuse to award interest if it is precluded from doing so by the instrument establishing its jurisdiction.1 Tribunals have also decided against the award of interest where settlement funds are restricted,2 or because of the claimant’s conduct.3
Page Id: 613ReferencesCase concerning the audit of accounts between the Netherlands and France in application of the Protocol of 25 September 1991 Additional to the Convention for the Protection of the Rhine from Pollution by Chlorides of 3 December 1976, Netherlands v France, Final award, (2005) XXV RIAA 267, PCA Case No 2000-02, ICGJ 374 (PCA 2004), (2011) 144 ILR 259, 12th March 2004, Permanent Court of Arbitration [PCA] ICGJChristern, Becker, Fischbach, Friedericy, Kummerow, and Daumen Cases, Award, (1903) X RIAA 363, 1903, Mixed Claims Commission (Germany-Venezuela)Illinois Central Railroad Company (USA) v United Mexican States, United States v Mexico, Award, (1951) IV RIAA 21, 31st March 1926, General Claims Commission (United States-Mexico 1923)Motion for allowance of interest on awards from the date until their payment, Great Britain v Venezuela, Award, (1903) IX RIAA 470, 1903, Mixed Claims Commission (Great Britain-Venezuela)Postal Treaty Case (of a general nature), Italy v Venezuela, (1903) X RIAA 499, 1903, Arbitration(p. 614)
The substantive international legal obligation to pay interest on monies due is well established. An authoritative statement of the position is to be found in article 38 of the ILC Articles on State Responsibility of 2001:
Jurisdiction to award interest is rarely covered expressly by the statute or procedural rules of a tribunal. There is no reference to any power to award interest in the statute or rules of, for example, the International Court of Justice, the Permanent Court of Arbitration, the International Centre for the Settlement of Investment Disputes, or the Iran-US Claims Tribunal. Nonetheless, those bodies have evidently considered themselves as possessing an inherent competence to award interest. The Permanent Court of International Justice (PCIJ), with a Statute very similar to that of the ICJ, showed no hesitation in dealing with the question of interest in its very first judgment, The SS Wimbledon
The PCIJ awarded simple interest of 6 per cent, the amount requested by the applicant, running from the date of the judgment:
The Iran-US Claims Tribunal in a case relating to the payment of post-award interest held that claims for interest on principal sums awarded are part of the compensation sought and do not constitute a separate cause of action requiring their own jurisdictional grant.6 The Law of the Sea Tribunal has stated that it is ‘generally fair and reasonable that interest is paid on monetary losses, property damage and other economic losses’,7 and the European Court of Justice also concluded in an early case concerning non-contractual liability of the European Community that claims for interest are in general admissible.8
Page Id: 614ReferencesCorus UK Limited v Commission of the European Communities, Judgment, Case T-171/99, ECLI:EU:T:2001:249,  ECR II-2967,  OJ C3/23,  5 CMLR 34, 10th October 2001, Court of Justice of the European Union [CJEU]; General Court of the European Union [EGC]; General Court (1st Chamber)Draft Articles on Responsibility of States for Internationally Wrongful Acts, adopted by the Commission at its fifty-third session in 2001 (Final Outcome) (International Law Commission [ILC]) UN Doc A/56/10, para.76, UN Doc A/RES/56/83, Annex,  II(2) UNYBILC 26, UN Doc A/CN.4/L.602/Rev.1, GAOR 56th Session Supp 10, 26Pt.2 Content of the International Responsibility of a State, Ch.II Reparation for Injury, Art.38Hans Fuchs Versandschlachterei KG v Commission of the European Communities, Judgment, Case T-134/01,  ECR II-3909, 9th October 2002, Court of Justice of the European Union [CJEU]; General Court of the European Union [EGC]; General Court (2nd Chamber)Iran v United States, Case No A-19, 16 Iran-US CTR 288, 1987, Iran-United States Claims TribunalIreks-Arkady GmbH v Council of the European Communities and Commission of the European Communities, Judgment, action for damages, Case 238/78, ECLI:EU:C:1979:226,  ECR 2955, 4th October 1979, Court of Justice of the European Union [CJEU]; European Court of Justice [ECJ]M/V 'Saiga' (No 2) Case, Saint Vincent and the Grenadines v Guinea, Admissibility and merits, ITLOS Case No 2,  ITLOS Rep 10, ICGJ 336 (ITLOS 1999), (1999) 38 ILM 1323, (2002) 120 ILR 143, 1st July 1999, International Tribunal for the Law of the Sea [ITLOS] ICGJSS 'Wimbledon', United Kingdom and ors v Germany, Judgment, PCIJ Series A No 1, ICGJ 235 (PCIJ 1923), 17th August 1923, League of Nations (historical) [LoN]; Permanent Court of International Justice (historical) [PCIJ] ICGJSempra Metals Limited (formerly Metallgesellschaft Limited) v Her Majesty's Commissioners of Inland Revenue,  UKHL 34,  1 AC 561,  3 WLR 354,  4 All ER 657,  Eu LR 1,  STC 1559,  BTC 509,  Bus LR 49, 18th July 2007, United Kingdom; House of Lords [UKHL]Siemens SA v Commission of the European Communities, Judgment, action for annulment, application to intervene, Case T-459/93, ECLI:EU:T:1995:100,  ECR II-1675, 8th June 1995, Court of Justice of the European Union [CJEU]; General Court of the European Union [EGC]; General Court (2nd Chamber)(p. 615)
An important multilateral acknowledgement of the power to award interest is to be found in the Decision of the Governing Council of the United Nations Compensation Commission of 18 December 1992:
This was affirmed in the ‘Report And Recommendations Made By The Panel of Commissioners Concerning The First Instalment Of Claims For Departure From Iraq or Kuwait (Category “A” Claims)’:
There are a number of instances in which the constituent instrument of a tribunal, or its rules of procedure, foresee the possibility of an award of interest. The North American Free Trade Agreement provides in article 1135 that a tribunal may award ‘monetary damages and any applicable interest’. The American Arbitration Association (AAA) in its Rules on International Dispute Resolution Procedures11
provides, in article 28(4):
Similarly, the World Intellectual Property Organization (WIPO) Rules provide in article 60(b):
These provisions are consistent with the views expressed in leading international law treatises.13 The jurisdiction to hear claims for interest and award it as an element of Page Id: 615ReferencesArbitration Rules 2002 (World Intellectual Property Organization [WIPO]) WIPO Publication No 446Ch.V Awards and Other Decisions, Art.60, (b)North American Free Trade Agreement (North American Free Trade Association [NAFTA]) UN Doc UNCTAD/DTCI/30(Vol.III), 73Main Text, Part 5 Investment, Services and Related Matters, Ch.11 Investment, Section B Settlement of Disputes between a Party and an Investor of Another Party, Art.1135 Final Award IC(p. 616) reparations is thus well established in international law, although it is less common for regional human rights courts than mixed commissions and arbitral tribunals to discuss or particularize any pre-judgment interest component of a reparations award.14
An award of interest may perform one of several functions. The most frequent rationale given for the award of pre-judgment interest is that it is compensation for loss of the ability to benefit from the use of the principal compensation sum from the date it fell due.15 The fact of the claimant’s loss and the respondent’s responsibility is assumed to follow from the fact of the latter being responsible for the deprivation of monies due to the former without the need to establish any liability for such harm, its directness and proof of loss. An award of interest has also been said to be necessary to protect against the diminution in value of the principal sum for the period between the time it fell due and payment, thus protecting against the effect of inflation on damages due and valued at a date before the judgment or award.16 Interest may also be awarded ‘as damages’ where interest costs are actually incurred by the claimant, the court or tribunal considers that the respondent has liability for such harm and it is not too remote a consequence from the original harm inflicted,17 and on occasion interest may form the principal damages sum rather than being ancillary to it.18 It has also been suggested that an interest award may function as an alternative to other methods of calculation as compensation for loss of profits.19 An interest award may also be used to restore the status quo ante by removing an unlawful competitive advantage gained by a respondent by the use of property or money which they ought not to have had.20
2 The distinction between pre-award and post-award interest
It is necessary to distinguish between interest as an element in the calculation of the sum awarded in the decision and interest payable for delay in the payment of that sum. For instance, the obligation to pay compensation for a taking of property will have arisen at Page Id: 616ReferencesBeyeler v Italy, Just satisfaction, App No 33202/96,  ECHR 466, (2003) 36 EHRR 5, (2002) 36 EHRR 46, 28th May 2002, Council of Europe; European Court of Human Rights [ECHR]; Grand Chamber [ECHR]Case of Neira Alegría et al v Peru, Neira Alegría and ors v Peru, Reparations and costs, IACHR Series C No 29, IHRL 1411 (IACHR 1996),  IACHR 7, 19th September 1996, Inter-American Court of Human Rights [IACtHR] IHRLCase of the 'Street Children' (Villagrán Morales et al) v Guatemala, Villagrán Morales and ors v Guatemala, Reparations and costs, IACHR Series C No 77, IHRL 1460 (IACHR 2001),  IACHR 7, 26th May 2001, Inter-American Court of Human Rights [IACtHR] IHRLLiberian Eastern Timber Corporation v Liberia, Award, ICSID Case No ARB/83/2, (1994) 2 ICSID Rep 343, (1987) 26 ILM 647, 31st March 1986, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID]Lustig-Prean and Beckett v United Kingdom, Merits and just satisfaction, App No 31417/96, App No 32377/96, IHRL 2820 (ECHR 1999), (2000) 29 EHRR 548, 7 BHRC 65, 27th September 1999, Council of Europe; European Court of Human Rights [ECHR] IHRLMetallgesellschaft Limited v Commissioners of Inland Revenue and HM Attorney General, Judgment, reference for a preliminary ruling, Case C-397/98,  ECR I-1727,  Ch 620,  2 WLR 1497,  All ER (EC) 496,  STC 452, 8th March 2001, Court of Justice of the European Union [CJEU]; European Court of Justice [ECJ]; European Court of Justice (5th Chamber)Pammel v Germany, Merits and just satisfaction, App No 17820/91, Case No 48/1996/667/853, ECHR 1997-IV,  ECHR 39, (1998) 26 EHRR 100, 1st July 1997, Council of Europe; European Court of Human Rights [ECHR]Scordino v Italy (No 1), Scordino and ors, Czech Republic (intervening) and ors (intervening) v Italy, Merits and just satisfaction, App No 36813/97, ECHR 2006-V, IHRL 3374 (ECHR 2006), (2007) 45 EHRR 7,  ECHR 276, 29th March 2006, Council of Europe; European Court of Human Rights [ECHR]; Grand Chamber [ECHR] IHRLStran Greek Refineries and Andreadis v Greece, Admissibility, merits and just satisfaction, App No 13427/87, Case No 22/1993/417/496, A/301-B, IHRL 3438 (ECHR 1994),  ECHR 48, (1995) 19 EHRR 293, (1994) 15 HRLJ 432, (1995) 1 ÖIM-Newsletter 21, 9th December 1994, Council of Europe; European Court of Human Rights [ECHR] IHRL(p. 617) the time of the taking. That principal sum will then be enhanced by interest for the period from the time of the taking to the date of the award. The resulting figure will constitute the sum awarded. Post-award interest may subsequently accrue in respect of any delay in the payment of the sum awarded.21 The judgment or award sum on which interest accrues until payment may also include other components, such as costs and expenses. International courts and tribunals for the most part now award post-award interest, including the regional human rights courts, the European Union courts, and arbitral tribunals. However, some courts and tribunals, for example the Iran-US Claims Tribunal, do not treat postaward interest separately from pre-award interest on principal compensation sums, allowing the interest awarded on the principal compensation sums to run from the start date, before the award, until payment. In those instances, post-award interest does not tend to be awarded on separate components of the award, such as costs and expenses. Where post-award interest is treated separately from pre-award interest, it is not uncommon for a court or tribunal to grant a period of grace—extending to days, weeks, or even months, depending on the circumstances—before post-award interest becomes payable.22
4 Compound interest versus simple interest
A major question in relation to any award of interest is whether it should be ‘simple’ or ‘compound’. ‘Simple’ interest is calculated only on the original principal amount, the stated interest percentage being added thereto at specified intervals or ‘breaks’, eg quarterly or annually, but is not itself added to the principal sum for the future calculation of Page Id: 617ReferencesFirst Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms (Council of Europe) ETS No 9, UKTS 46 (1954), 213 UNTS 262, UNTS Reg No I-2889, Cmd 9221Art.1Lustig-Prean and Beckett v United Kingdom, Merits and just satisfaction, App No 31417/96, App No 32377/96, IHRL 2820 (ECHR 1999), (2000) 29 EHRR 548, 7 BHRC 65, 27th September 1999, Council of Europe; European Court of Human Rights [ECHR] IHRL(p. 618) interest. ‘Compound’ interest is added at specified intervals to the principal sum and is thus included as part of the principal when calculating the next amount of interest due. This has sometimes been described as the payment of interest on interest.
For reasons which are not entirely clear,24 there has been some disposition on the part of international tribunals to award only simple interest. Marjorie Whiteman, in her major treatise on Damages in International Law, written in 1943, stated that ‘[t]here are few rules within the scope of the subject of damages in international law that are better settled than the one that compound interest is not allowable’.25 More recently, however, it has become increasingly recognized that simple interest may not always ensure full reparation for the loss suffered and that the award of interest on a compound basis is not excluded. This is because modern financial activity, eg in relation to consumer and commercial bank loans and accounts, normally involves compound interest. The reasoning behind this change in approach is that a judgment creditor promptly placed in the possession of the funds due would be able to lend them out or invest them at compound interest rates or, if forced to borrow as a result of the respondent’s wrong, will do so at compound rates. It is therefore unreasonable to limit the interest to simple interest.26
The first detailed discussion of this development was in the case of Compañia del Desarrollo de Santa Elena SA v Republic of Costa Rica
in terms which may helpfully be quoted in full. The Tribunal, having determined that the value of the property at the date of its taking in 1978 was US$4,150,000, continued as follows:
Page Id: 619ReferencesMTD Equity Sdn Bhd and MTD Chile SA v Chile, Decision on annulment, ICSID Case No ARB/01/7, IIC 177 (2007), (2008) 13 ICSID Rep 500, 16th February 2007, despatched 21st March 2007, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID] IC IICMaffezini v Spain, Award, ICSID Case No ARB/97/7, (2001) 16 ICSID Rev-FILJ 248, IIC 86 (2000), (2002) 5 ICSID Rep 419, (2003) 124 ILR 35, 13th November 2000, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID] IC IICMetalclad Corporation v Mexico, Award, ICSID Case No ARB(AF)/97/1, (2001) 16 ICSID Rev-FILJ 168, IIC 161 (2000), (2002) 5 ICSID Rep 209, (2001) XXVI YB Comm Arb 99, (2001) 40 ILM 36, (2002) 119 ILR 618, (2001) 13(1) World Trade and Arb Mat 45, 25th August 2000, despatched 30th August 2000, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID] IC IICMiddle East Cement Shipping and Handling Company SA v Egypt, Award, ICSID Case No ARB/99/6, (2003) 18 ICSID Rev-FILJ 602, IIC 169 (2002), (2005) 7 ICSID Rep 173, (2005) 7 ICSID Rep 178, 12th April 2002, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID] IC IICPope & Talbot Incorporated v Canada, Award in respect of damages, IIC 195 (2002), OXIO 561, (2005) 7 ICSID Rep 43, (2005) 7 ICSID Rep 148, (2002) 41 ILM 1347, 31st May 2002, Ad Hoc Tribunal (UNCITRAL) OXIO IC IICSD Myers Incorporated v Canada, First partial award on liability, merits and separate opinion, IIC 249 (2000), (2005) 8 ICSID Rep 18, (2001) 40 ILM 1408, (2003) 15(1) World Trade and Arb Mat 184, (2002) 121 ILR 72, 13th November 2000, Ad Hoc Tribunal (UNCITRAL) IC IICTécnicas Medioambientales Tecmed SA v Mexico, Award, ICSID Case No ARB(AF)/00/2, (2004) 19 ICSID Rev-FILJ 158, IIC 247 (2003), (2007) 10 ICSID Rep 130, (2004) 43 ILM 133, 19th May 2003, despatched 29th May 2003, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID] IC IIC(p. 620) Since the early 2000s the balance of investment treaty tribunal practice has shifted towards awarding compound interest where requested by the claimant,29 but not invariably.30 There are very few examples of compound interest awards in other international judicial practice.31 Notably, recent studies by two domestic law commissions have concluded that there is no reason in principle to preclude the award of compound pre-judgment interest in all types of claim, contract, delict, or otherwise, involving the award of monetary sums valued at a date before judgment.32 Moreover, depending on the circumstances of the case, a simple interest rate which is very high may overcompensate the claimant. Other factors such as ease and cost of calculation may, however, weigh against the award of compound interest for claims involving sums which are small or which have been outstanding for only short periods. The ability of courts and tribunals to award compound interest reflecting rates prevailing over the period of account has been made considerably easier by the availability of both technology able to make calculations easily and published historical interest rate data.
Where compound interest has been awarded, the intervals of compounding have varied. The question of whether interest should be compounded and at what intervals cannot really be considered separately from the question of rate: logically the intervals of compounding should be selected based on the intervals associated with the rate selected or normal banking practice.
∗ The authors express their great appreciation of the assistance given in the preparation of this chapter by Ms Michelle Bradfield, formerly Research Fellow, Lauterpacht Centre for International Law.
1 Motion for allowance of interest on awards from the date until their payment, Britain-Venezuela Commission, 9 RIAA 470, 470–1, Christern & Co, Becker & Co, Max Fischbach, Richard Friedericy, Otto Kummerow and A Dauman claims, German-Venezuelan Commission, 1903, 10 RIAA 363, Postal Treaty claim, Italian-Venezuelan Claims Commission, 1903, 10 RIAA 499, Illinois Central Railroad Co v Mexico, US-Mexico General Claims Commission, 1923, 9 RIAA 134.
2 A recent example is the United Nations Compensation Commission which decided that: ‘Taking into account all relevant circumstances, in particular the unavailability of adequate funds and the imminent completion of the Compensation Commission’s claims processing programme, Decides to take no further action with respect to the issue of awards of interest.’ S/AC.26/Dec.243 (2005).
3 Auditing of accounts between the Kingdom of the Netherlands and the French Republic pursuant to the Additional Protocol of 25 September 1976 of the Protection of the Rhine against Pollution by Chlorides, Permanent Court of Arbitration, 12 March 2004 (unofficial English translation available at <http://www.pca-cpa.org/upload/files/Neth_Fr_award_English.pdf>, para 139; First Eagle Sogen v Bank for International Settlements, Decision of 19 September 2003, 43 ILM 893 (2004), para 99.
4 The SS ‘Wimbledon’, 1923, PCIJ Reports, Series A, No 1, 4, 32.
5 Ibid. It could be doubted whether the PCIJ was correct in precluding the award of interest on elements of the compensation award that were suffered and valued at dates before the judgment.
6 Islamic Republic of Iran v United States of America, Case A-19, (1987) 16 Iran-US CTR 288, 86 ILR 307.
7 The M/V Saiga (St Vincent and the Grenadines v Guinea), Admissibility and Merits (1999) 120 ILR 143, para 173.
8 Case 238/78 Ireks-Arkady v Council and Commission  ECR 2955, paras 19–20. See more recently Case T-134/01 Fuchs v Commission  ECR II-3909, paras 56–57. Interest is also recoverable on fines improperly levied by the Community (Case T-171/99 Corus UK Ltd v Commission  ECR II-2967) and to restore the status quo ante where improperly paid state aid is recovered from an individual (eg Case T-459/93 Siemens SA v Commission  ECR II-1675, paras 96–100). Recovery of interest in claims by individuals against Member States for breaches of the European Community Treaty will depend on the application of the principle of national procedural autonomy, ie national procedural and remedial rules on interest will apply subject to the requirements of effectiveness and equivalence. For a recent application of the principle in an important English case, see Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Commissioners of Inland Revenue  UKHL 34,  3 WLR 354,  7 All ER 657.
10 S/AC.26/1994/2, 21 October 1994, para 51. The significance of this decision is not diminished by the Council’s subsequent Decision of 10 March 2005 not to award interest on damages (see n 2 above). This decision clearly reflected practical considerations rather than any reversal of the substantive position laid down in the Council’s earlier decision.
12 See: <http://arbiter.wipo.int/arbitration/rules/index.html>. Although, on its face, this paragraph could be read as contemplating only post-award interest, the reference to determination of the period for which the interest should be paid allows the award of interest on damage incurred and valued as of an earlier date, eg the date that the requirement to pay compensation arose.
13 See eg DP O’Connell, International Law (2nd edn, London, Stevens & Sons Limited, 1970), vol 2, 1122–1123; RY Jennings & AD Watts, Oppenheim’s International Law (9th edn, London, Longmans, 1992), vol 1, 529–530; JB Moore, A Digest of International Law (Washington, Government Printing Office, 1906), vol 6, 1029; J Ralston, The Law and Practice of International Tribunals (revised edn, California, Stanford University, 1926), 129. For closely related topics in private international law, see the detailed treatment by JY Gotanda, Supplemental Damages in Private International Law (The Hague, Kluwer, 1998).
14 Notable exceptions include, in the European Court of Human Rights, Stran Greek Refineries v Greece (App No 13427/87), ECHR, Series A, No 301-B (1995), paras 82–83, Scordino v Italy (No 1) (App No 36813/97), ECHR Reports 2006-V, para 258; Lustig-Prean & Beckett v United Kingdom (Art 41) (App Nos 31417/96; 32377/96), Judgment, 27 September 1999, paras 28–9; Beyeler v Italy (No 2) (Just Satisfaction), (App No 33202/96), Judgment, 28 May 2002, para 23; in the Inter-American Court of Human Rights, Neira Alegría (Reparations and Costs), Inter-Am Ct HR, Series C, No 29 (1996), para 46, Case of the ‘Street Children’ (Villagrán-Morales et al v Guatemala) (Reparations and Costs), Inter-Am Ct HR, Series C, No 77 (2001), para 81.
15 This is the conclusion of commentators who have reviewed international judicial and arbitral practice: see eg G Arangio-Ruiz, Second Report on State Responsibility, ILC Yearbook 1989, Vol II(1), para 78 and P Nevill, ‘Awards of Interest by International Courts and Tribunals’ (2007) 78 BYIL 255, 278–279, and the cases cited therein.
16 For example, see the ECJ decisions in Cases C-104/98 and C-37/90 Mulder v Commission (No 2)  ECR I-203 and Case T-17/89 Brazzelli v Commission  ECR II-293 where compensatory interest for a claim of non-contractual liability was expressly stated to cover inflation only, and to exclude an element of real return because of failure to prove such loss. In the ECHR, see Stran Greek Refineries v Greece (App No 13427/87), ECHR, Series A, No 301-B (1995); Beyeler v Italy (No 2) (Just Satisfaction) (App No 33202/96), Judgment, 28 May 2002.
17 For example, LETCO v Liberia, Award of 31 March 1986, 2 ICSID Reports 343.
18 For example, Pammel v Germany (App No 17820/91), ECHR Reports 1997-IV; Joined Cases C-397 and 410/98 Metallgesellschaft Ltd & Ors v Commissioners of Inland Revenue & Or  ECR I-1727 (ECJ).
19 G Arangio-Ruiz, Second Report on State Responsibility, ILC Yearbook 1989, Vol II(1), 20, and M Whiteman, Damages in International Law (Washington DC, US Government Printing Press, 1943), vol III, 186 7–1871.
20 For example, Case T-459/93 Siemens SA v Commission  ECR II-1675.
21 The fact that a DCF approach may have been adopted in calculating the value of an asset as at the date of the taking does not mean that the value thus reached is itself then incapable of generating pre-award interest to cover the period between the taking and the date of the award. But pre-award interest will not be given where an alternative method of calculating compensation is used which calculates the value of the loss suffered as at the date of the award.
22 The European Court of Human Rights commonly allows a three-month grace period, the Inter-American Court a year. Ad hoc investment treaty arbitral tribunals have allowed grace periods ranging between 30 and 90 days.
23 See eg Lustig-Prean & Beckett v United Kingdom (Art 41) (App Nos 31417/96; 32377/96), Judgment, 27 September 1999.
24 Probably due to the fact that international tribunals have in this area been influenced by domestic laws and judicial practices which have, for the most part, traditionally allowed (in codes in civil law countries and legislation and/or the common law in common law countries) only simple interest on sums due under contract, by law or court judgment, usually at specified rates, unless the parties have expressly agreed otherwise or where recognized commercial custom is to compound or capitalize interest charged or accrued.
25 M Whiteman, Damages in International Law (Washington DC, US Government Printing Press, 1943), vol III, 1997.
26 An earlier but still cogent consideration of the problem is to be found in FA Mann, ‘Compound Interest as an Item of Damage in International Law’, Further Studies in International Law (Oxford, OUP, 1990), 377. See also C Gray, Judicial Remedies in International Law (Oxford, OUP, 1987), 32; N Affolder, ‘Awarding Compound Interest in International Arbitration’ (2001) American Review of International Arbitration 45, 70–73; P Nevill, ‘Awards of interest by international courts and tribunals’ (2007) 68 BYIL 255, 307–330.
27 (2000) 5 ICSID Reports 157.
28 Ibid, 176–178. See also SD Myers v Canada, Award on Damages (2002) 8 ICSID Reports 124, 171; Maffezini v Spain (2000) 5 ICSID Reports 419; Metalclad v Mexico (2000) 5 ICSID Reports 209; Middle East Cement v Egypt (2002) 7 ICSID Reports 178; MTD Equity Sdn Bhd and TD Chile SA v Chile (2004) 12 ICSID Reports 6; Pope & Talbot v Canada (2002) 7 ICSID Reports 148; Técnicas Medioambientales Tecmed, SA v Mexico (2003) 10 ICSID Reports 130.
29 Before 2000, capitalized interest was awarded in Atlantic Triton v Guinea (1986) 3 ICSID Reports 13 on the basis of applicable French law and in SPP(ME) v Egypt (1992) 3 ICSID Reports 189 in accordance with the provisions of a loan agreement between the parties (however, only simple interest was awarded on the non-loan elements of the award). Since 2000 compound interest awards have been made in Maffezini v Spain, Award of 13 November 2000, 5 ICSID Reports 419; Metalclad v Mexico, Award of 30 August 2000, 5 ICSID Reports 209; Middle East Cement Shipping and Handling Co SA [ME Cement] v Egypt, Award of 12 April 2002, 7 ICSID Reports 173; AIG v Kazakhstan, Award of 7 October 2003, 11 ICSID Reports 3; Pope & Talbot v Canada, Award on Damages of 31 May 2002, 7 ICSID Reports 148; SD Myers v Canada, Second Partial Award on Damages of 21 October 2002, 8 ICSID Reports 124; Técnicas Medioambientales Tecmed SA v Mexico, Award of 29 May 2003, 10 ICSID Reports 130; Azurix v Argentina (ICSID Case No ARB/01/12), Award of 23 June 2006; LG&E Energy Corp & Ors v Argentina (ICSID Case No ARB/02/01) Award of 25 July 2007; Wena Hotels v Egypt, Award of 8 December 2000, 6 ICSID Reports 89, Siemens AG v Argentina (ICSID Case No ARB/02/8), Award of 17 January 2007; Enron v Argentina (ICSID Case No ARB/01/3), Award of 22 May 2007; Sempra Energy International v Argentina (ICSID Case No ARB/02/16), Award of 28 September 2007; Camuzzi International SA v Argentina (ICSID Case No ARB/03/7), Award of 18 September 2007; BG Group Plc v Argentina (UNCITRAL Case No 08-0485), Award of 24 December 2007; Rumeli Telekom AS & Or v Kazakhstan (ICSID Case No ARB/05/16), Award of 29 July 2008; Continental Casualty Company v Argentina (ICSID Case No ARB/03/9), Award of 5 September 2008; National Grid Plc v Argentina, Award of 3 November 2008; Waguih Elie George Siag & Clorinda Vecchi v Egypt (ICSID Case No ARB/05/15), Award of 1 April 2009.
30 See eg Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc v Mexico (ICSID Case No ARB(AF)/04/05), Award of 21 November 2007; Desert Line Projects LLC v Yemen (ICSID Case No ARB/05/17), Award of 6 February 2008; Duke Energy Electroquil Partners & Or v Ecuador (ICSID Case No ARB/04/19), Award of 18 August 2008.
31 In the European Court of Human Rights, see Beyeler v Italy (No 2) (Just Satisfaction) (App No 33202/96), Judgment, 28 May 2002; Wasserman v Russia (Merits and Satisfaction) (App No 15021/02), ECHR, Judgment, 18 November 2004. In the European Union courts, see Case 67/69 Simet v Commission  ECR 197, Case T-171/99 Corus UK Ltd v Commission  ECR II-2967, AfCon Management Consultants & Ors v Commission  ECR II-981 and the English courts applying European Union law in Sempra Metals Limited (formerly Metallgesellschaft Ltd) v Commissioners of Inland Revenue  UKHL 34,  3 WLR 354,  7 All ER 657.
33 As in, for example, much of the practice of the European Court of Human Rights.
34 Sylvania Technical Systems, Inc v Iran (1985) 8 Iran-US CTR 298, at 320–323.
35 Eg CMS Gas Transmission Company v Argentina (ICSID Case No ARB/01/08), Award of 12 May 2005.
36 Eg MTD v Chile, Award of 25 May 2004, 12 ICSID Reports 6. The award of an increment on top of the basic LIBOR rate is not uncommon: see eg PSEG Global Inc v Turkey (ICSID Case No ARB/02/05), Award of 1 January 2007, where the LIBOR rate plus 2% was awarded. Some domestic jurisdictions now use an interest rate formula based on central bank rates in legislation, eg the bank rate plus 1 or 2%: see eg the 2002 amended German Civil Code and the French legislative provisions. Some jurisdictions may build an element of penalty or default into statutory interest formulas—for example, twice the bank rate—but this is not appropriate in international law given its rejection of penalties and aggravated damages.