Pre-judgment interest on debts and damages

by Practical Law Dispute Resolution

A Practice note on the principles governing the recovery of pre-judgment interest on debts and damages. This note examines the various ways a claimant can be compensated for the period before judgment or payment. It outlines the different bases for an interest claim, including contractual provisions, statutory rights, and the court's equitable jurisdiction. The note provides guidance on the key statutory schemes, including the Late Payment of Commercial Debts (Interest) Act 1998, section 35A of the Senior Courts Act 1981, and section 69 of the County Courts Act 1984. It explores crucial questions such as whether an award of interest is mandatory or discretionary, the differences between simple and compound interest, and the period for which interest is recoverable. The note also discusses how interest rates are determined in practice, considering factors such as claims involving foreign currencies, and the potential to claim interest as an independent head of loss following the decision in Sempra Metals Ltd v HM Commissioners of Inland Revenue and another [2007] UKHL 34.