Interest Accrual During Expert Determination Proceedings

Not all decisions of the Federal Supreme Court (Bundesgerichtshof) on arbitration matters deal with sexy stuff or fundamental issues, be it sovereign immunity, intra-EU BIT arbitration or the limits of party autonomy. The mundane technicalities, such as the accrual of interest, however often translate into real money for the parties to the arbitration.

In a recent case, the Federal Supreme Court devoted 44 pages to the issue from what point in time interest was due, if a matter was subject to expert determination (schiedsgutachterliche Feststellung). To cut a long story short:

The Federal Supreme Cort held that an expert determination provision, if it is silent on the issue, must typically be construed as containing an implict agreement that the claim shall only become due and payable once it has been finally determined by the expert. Hence, no interest accrues pending the expert determination.

The same ist true if the power to make the determination passes to the court pursuant to Section 319 para. German Civil Code (BGB). The claim only becomes due and payable once the court decision becomes final. As a result interest can only be awarded from this point in time.

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