This clause specifies whether the losing party must pay interest on top of the money owed, and at what rate, from the date the dispute arose until the award is paid. It matters because interest can add 20-50% or more to the final amount owed, depending on the rate and how long the dispute takes. For example, if you're owed £100,000 and the dispute takes two years at 8% annual interest, you'll receive £116,640 instead. UK law automatically adds "statutory interest" (currently around 8% per year) unless the contract says otherwise; US law varies by state. This clause lets you control that outcome in advance rather than leaving it to a judge's discretion.
If you're likely to be owed money, negotiate for interest at the highest rate the law allows in your jurisdiction—this incentivizes the other party to settle quickly rather than delay. If you might owe money, try to cap interest at a lower rate or exclude it entirely. Always specify whether interest compounds (grows on top of itself) or is simple (calculated only on the original amount), as compounding can double the final bill. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause specifies whether the losing party must pay interest on top of the money owed, and at what rate, from the date the dispute arose until the award is paid.
Why should I care about this clause?
It matters because interest can add 20-50% or more to the final amount owed, depending on the rate and how long the dispute takes.
What are my options?
For example, if you're owed £100,000 and the dispute takes two years at 8% annual interest, you'll receive £116,640 instead.
How does this affect small businesses?
UK law automatically adds "statutory interest" (currently around 8% per year) unless the contract says otherwise; US law varies by state.