Liquidated Damages for Late/Non-Compliance with an Arbitration Award - Dealing with the Prohibition of Riba under Shari'ah in Awarding Post-Award Interest in International Arbitration
Published 19 March 2021
This article discusses the impact of the prohibition of Riba (interest) under Shari'ah on the ability of dispute settlement body (in particular an arbitral tribunal) to award post-award interest and on the enforcement of such awards in those Islamic countries that their legal systems are strongly influenced by principles of Shari'ah. It argues that this problem can be solved by issuing an award on specific performance combined with an award on liquidated damages for late/non- compliance with the arbitration award. In such circumstances, it is highly recommended that parties agree on such damages in advance. This approach secures the claimant's right to a reasonable interest on damages and provides leverage for voluntary compliance with an arbitration award.
This paper will be part of the TDM Special Issue on "Islamic Finance and Dispute Resolution". More information here www.transnational-dispute-management.com/news.asp?key=1832