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The Provision of Compound Interest Under International Law

Published online by Cambridge University Press:  06 June 2017

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Abstract

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Type
Contemporary Practice of the United States Relating to International Law
Information
American Journal of International Law , Volume 95 , Issue 3 , July 2001 , pp. 633 - 635
Copyright
Copyright © American Society of International Law 2001

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References

1 McKesson Corp. v. Iran, 116 F.Supp.2d 13, 41 (D.D.C. 2000).

2 See Compañía del Desarrollo de Santa Elena, S.A. v. Costa Rica, 15 ICSID Rev.-Foreign Investment L. J. 169, as rectified by 15 ICSID Rev.-Foreign Investment L.J. 205 (2000) (ICSID Convention tribunal 2000), reprinted in 39 ILM 1317 (2000). The tribunal consisted of L. Yves Fortier (president), Sir Elihu Lauterpacht, and Prosper Weil. The judgment and rectification are available online at <http://www.worldbank.org/icsid/cases/awards.htm>.

3 Compañía del Desarrollo de Santa Elena, SA v. Costa Rica, 15 ICSID Rev.-Foreign Investment L. J. 169, para. 95.

4 Id., para. 97 (citing, e.g., Sylvania Technical Services v. Iran, 8 Iran-U.S. CI. Trib. Rep. 298 (1985) ; Fabiani Case (Fr.v.Venez.), 10 R.I.A.A. 83 (1905); Affaire des Chemins de Fer Zeltweg-Wolfsberg, 3 R.I.A.A. 1795, 1808 (1934); Kuwait v. Aminoil, 66 ILR 518, 613 (1982); Norwegian Shipowners’ Claims, 1 R.I.A.A. 307, 341 (1922); Great Britain v. Spain (Spanish Zone of Morocco), 2 R.I.A.A. 615, 650 (1924)).

5 Compania del Desarrollo de Santa Elena v. Costa Rica, 15 ICSID Rev.-Foreign Investment L.J. 169, paras. 103-04.

6 The Tribunal found that full compound interest was inappropriate, however, since the claimant corporation, while bearing the burden of maintaining the property, had remained in possession of it and had been able to use and exploit it to a limited extent. The Tribunal proceeded to award the claimant $16 million, but without explaining the exact method of calculation. An attorney for the claimant thereafter noted that this award was “mathematically the equivalent of taking the 1978 valuation of US $4,150,000 and applying either a simple interest rate of 13.13 percent (about 50 percent higher than generally prevailing rates) or a compound interest of 6.40 percent (about 30 percent lower than generally prevailing rates).” Juster, Kenneth I., The Santa Elena Case: Two Steps Forward, Three Steps Back, 10 Am. Rev. Int’l Arb. 371 (1999)Google Scholar.

7 116 F.Supp.2d at 45-46.