1979 Act

One section of the 1950 Act which has remained unaffected by the 1979 Act, allows relief in certain circumstances when one party has strictly raised against the other the time bar, due to the failure by the other party to appoint his arbitrator within the time allowed (perhaps this is a feature of what Lord Denning meant when he said the law was about justice and not strictness). If to stand firm on the time bar would cause the other party undue hardship, then the Court is empowered to extend the time at its discretion. In the VIRGO case (1978 2 Lloyds) the Court of Appeal said that it would be quite wrong if shipowner/his P & I Club, could profit from their own laxness/inactivity during investigation of a claim, by ‘leaping in and screaming time bar’. The time bar cannot be applied absolutely and strictly if to do so would result in undue hardship, whether the time bar itself is regarded as totally extinguishing the claim or as merely barring the remedy. Can an Arbitrator award interest? Yes, he is cloaked with the same authority as any commercial judge and is given ample discretion, provided that it is just and equitable to do so. Interest is in effect compensation for a person who is being kept from his money. What should be the interest rate? Should it be the lending or the borrowing rate? i.e. Should the party be compensated because he has had to borrow money to meet a commitment which he would not have had to borrow had he been timely paid the capital sum due to him or because he has been robbed of the opportunity to timely invest the capital sum due to him and thus earn interest? One view has been that a suitable rate of interest should be the minimum lending rate plus 1% to arrive at a reasonable borrowing rate (Wallersteiner v Moir – 1975 IQB 373). Note particularly the Tehno Impex case (1981 1 Lloyds) which confirms that the Arbitrator’s discretionary power in relation to awarding interest includes even situations where the principal sum has actually been paid before or after the arbitration has been commenced or before or after the award has been made. Thus it seems that Arbitrators have power to award interest where, e.g. the respondent has paid up only at the ‘eleventh hour’ before the award was made.