New York City Bar Association Addresses Awards of Interest in International Commercial Arbitration: New York Law and Practice

The New York City Bar Association has issued a report that addresses whether arbitral tribunals in international cases seated in New York and governed by New York substantive law are obligated to apply New York’s nine percent statutory prejudgment interest rate.

The report, issued by the City Bar’s International Commercial Disputes Committee, notes that, “[T]houghtful consideration of two guiding principles common to New York law and to international arbitration – the freedom of contracting parties to agree on the terms of their relationship, and the compensatory purpose of interest – should guide arbitrators in prioritizing the many factors that they may consider in awarding interest in a particular case.”

Based on the text and legislative history of CPLR Section 5001 et seq, and on New York case law precedent, the report concludes that, in arbitration arising from contracts governed by New York substantive law, arbitrators in international cases seated in New York have discretion to apply or not to apply the nine percent simple rate applicable to judgments of the state courts of New York.

The report goes on to recommend that, in exercising their discretion, arbitrators consider a number of factors in a priority consistent with New York law and international arbitration law emphasis on party autonomy. The report also provides schedules of relevant New York reported decisions and reported arbitral awards.

The report can be read here: http://bit.ly/2tMcyPB

About the Association
The New York City Bar Association, since its founding in 1870, has been dedicated to maintaining the high ethical standards of the legal profession, promoting reform of the law and access to justice, and providing service to the profession and the public. The Association, through its 24,000 members, continues to work for political, legal and social reform, while implementing innovative means to help the disadvantaged. Protecting the public’s welfare remains one of the Association’s highest priorities. www.nycbar.org