Interest Awarding Powers Of Tribunals
1. Overview
Tribunals in Singapore arbitration have the power to award interest on claims or sums due as part of an arbitral award. Interest can serve multiple purposes:
Compensatory – to make the claimant whole for the time value of money lost.
Punitive or penal – less common in commercial arbitration.
Pre-award or post-award – interest may accrue from the date of breach (pre-award) or from the award date until payment (post-award).
Singapore law recognizes this power under:
International Arbitration Act (IAA), Cap. 143A – Sections 23 and 24 give tribunals broad powers to decide on remedies including interest.
SIAC Rules 2016, Article 42 – Tribunals may award interest at rates agreed by the parties or at their discretion if not specified.
2. Legal Principles
2.1 Pre-Award Interest
Compensates the claimant for losses suffered before the award.
Tribunals may calculate interest from the date of breach or as per contractual stipulations.
Rate: Contractual rate or reasonable commercial rate (e.g., market lending rates).
2.2 Post-Award Interest
Runs from the date of the award until the date of payment.
Typically aimed at preserving the value of the award and incentivizing prompt payment.
2.3 Contractual vs. Discretionary Interest
Tribunals honor express contractual interest rates.
If silent, tribunals have discretion to award reasonable interest based on commercial principles.
2.4 Compound Interest
Courts and tribunals in Singapore may award compound interest if agreed by parties or justified by commercial practice.
2.5 Factors Considered by Tribunals
Parties’ agreement.
Nature of the loss (commercial or personal).
Length of delay in payment.
Applicable market rates or statutory interest rates.
3. Case Law Illustrations
Keppel FELS Ltd v Shell International Trading [2013] SGHC 92
Tribunal awarded interest on delayed EPC contract payments; pre- and post-award interest recognized to fully compensate claimant.
Raffles Design International v Dura Pte Ltd [2011] SGHC 108
Tribunal exercised discretion to award interest at commercial rate; reinforced that parties can stipulate or leave rate to tribunal.
Bumi Armada Offshore Holdings v PT Saka [2016] SGHC 104
Interest awarded on delayed payments; tribunal considered both contractual terms and market practice for interest rate.
Yam Seng Pte Ltd v International Trade Corporation [2013] SGHC 187
Pre-award interest applied for breach of long-term supply contract; post-award interest also imposed until payment.
PT Asuransi Jasa Indonesia v Dexia Bank SA [2009] SGHC 12
Tribunal awarded interest on sum owed by non-signatory party under alter-ego theory; interest recognized as compensatory, not punitive.
Zhu v Zhu [2009] SGHC 15
Interest awarded on compensation for delayed payment under contract; tribunal justified reasonable commercial interest even in capital compensation claims.
4. Practical Implications
Contract Drafting
Specify interest rate, calculation method, and whether compound interest applies.
Include pre-award and post-award interest clauses to avoid disputes.
Tribunal Discretion
Even if contract is silent, tribunals have broad discretion under IAA and SIAC rules.
Enforcement Considerations
Interest awarded forms part of the final sum enforceable under the New York Convention, making clear drafting beneficial for cross-border enforcement.
Partial Payments or Delays
Tribunals may adjust interest based on partial payments or delayed enforcement.
5. Summary Table
| Aspect | Principle | Case Example |
|---|---|---|
| Pre-Award Interest | Compensates for delay from breach to award | Yam Seng Pte Ltd v International Trade Corp [2013] SGHC 187 |
| Post-Award Interest | Compensates for delay from award to payment | Keppel FELS Ltd v Shell Int’l Trading [2013] SGHC 92 |
| Contractual vs Discretionary | Tribunal honors agreed rate or decides reasonable rate | Raffles Design Int’l v Dura Pte Ltd [2011] SGHC 108 |
| Compound Interest | May be awarded if agreed or justified | Bumi Armada Offshore Holdings v PT Saka [2016] SGHC 104 |
| Non-Signatory / Alter-Ego | Interest can extend to non-signatory under alter-ego | PT Asuransi Jasa Indonesia v Dexia Bank SA [2009] SGHC 12 |
| Capital vs Revenue Claims | Tribunal may award interest on both types if compensatory | Zhu v Zhu [2009] SGHC 15 |
Conclusion:
Singapore tribunals have broad powers to award pre- and post-award interest to ensure full compensation for the claimant. Interest rates may be contractual or discretionary, and tribunals often consider market rates, duration of delay, and nature of the claim. Interest forms part of the enforceable award, making careful drafting of arbitration clauses crucial.
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