M/s Unibros vs All India Radio
(2023) 11 SCC 55
Interest on Arbitral Awards
Read the judgmentBackground
Unibros, a contractor, had an arbitral award in its favour against All India Radio. A dispute arose about the interest rate applicable on the awarded amount during the pre-award and post-award periods. The contractor argued for 18% interest; the government argued for a lower rate. The Arbitration Act allows arbitrators to set their own interest rates but courts had been inconsistent.
What the court decided
The Supreme Court held that arbitrators have full discretion to award interest at any rate they deem appropriate, including rates above the contractual rate, and courts should not interfere with this discretion unless the rate is patently unreasonable. The judgment supports higher interest awards on delayed government payments and limits courts from replacing an arbitrator's rate with a lower one.
What this means for your contracts team
When drafting your claim statement for arbitration, expressly claim interest from the date of cause of action to the date of award, and from award to realisation. Claim a rate that reflects your actual cost of borrowing (typically 12-18% in the Indian construction market). The arbitrator has discretion to award it, and courts cannot reduce it unless it is patently unreasonable.
The law is on your side. The documentation has to be too.
M/s Unibros won on contemporaneous records. CivilBolt structures your correspondence and site records so the evidence exists when you need it.