Interest and Damages.
Damages in Construction Claim | Interest
Interest is either interest as a component of the claim, or interest after the award.
Each is for different period of time. the rates may also different.
Interest can be a very substantial component of the claim. Sometimes, by the time the claim comes to trail, interest will be the largest component of the claim. It is always important to claim interest as a component of the claim.
Usually, if interest is not claimed as a component of the claim, a court, tribunal, arbitrator or adjudicator cannot include interest in the amount which the court, tribunal, arbitrator or adjudicator awards to the claimant.
if interest is claimed then, provided the claimant is successful, an amount of interest calculated up to the date of the award should be included in the amount awarded.
the claimant should include in the statement of claim a claim for such interest.
When claiming interest as a component as a component of claim, it is important to select the appropriate category of interest. Interest may be able to be claimed:
1- Under a provision in the contract.
2- Under a provision of an agreement for arbitration or expert determination.
3- Under statute, or as a damages.
as a component of claim, the claimant will usually only be entitled to one of the categories of interest.
Usually, interest after the award applies automatically to the amount of the award and does not have to be claimed.
The power of an arbitrator to award interest may be found in the arbitration agreement, and the arbitrator may include in the award interest on the whole or any part for the period between the date when the cause of action arose and the date on which the award made.
Interest Under the Construction Contract.
Most standard forms of construction contract contain a provision for interest on late payments.
If any moneys due to either party remain unpaid after the date upon which or the expiration of the period within which they should have been paid then interest shall be payable thereon from but excluding the date upon which or the expiration of the period within which they should have been paid to and including the date upon which the moneys are paid.
when the contract provides for rate of interest and the claimant claims interest at that rate, the court, arbitrator or adjudicator should give effect to the agreed rate unless there is a statutory minimum rate and the rate in the contract is less than the statutory minimum rate.
Interest Under an Agreement for Arbitration or Expert determination.
It is always open to the parties to an arbitration agreement to endow the arbitration with a greater or less power to award interest than exists in the applicable commercial arbitration act.
In expert determination, the power, if any, of the expert to include interest in the amount determined depends upon the terms of the agreement for expert determination.
When drafting an expert determination agreement it is important to consider this point.
Damages are the general remedy available for all kinds of breaches of contract. If monetary obligations are not performed, interest may be added as an additional remedy that does not exclude the simultaneous awarding of damages.