The discretion of the arbitrator to award interest must be exercised reasonably.
An arbitral tribunal while making an award for Interest must take into consideration a host of factors, such as:
(i) the ‘loss of use’ of the principal sum;
(ii) the types of sums to which the Interest must apply;
(iii) the time period over which interest should be awarded;
(iv) the internationally prevailing rates of interest;
(v) whether simple or compound rate of interest is to be applied;
(vi) whether the rate of interest awarded is commercially prudent from an economic standpoint;
(vii) the rates of inflation,
(viii) proportionality of the count awarded as Interest to the principal sums awarded.
