POSITION IN INDIA:

In a new York convention award, it has been held that an award of compound interest by the
arbitrators was not opposed to our public policy.

The position in Indian domestic law is that broadly, whether interest is to be awarded, its rate,
prior to the institution of the suit is a question of substantive law, which ought, therefore to be
determined by lex causae. Under the Indian interest act, 1978 interest prior to the institution of
the suit is payable under the contract, or a written notice demanding interest had been served on
the defendant, or it was payable under rules of equity, if interest was payable under a statute such
as the sale of goods act, 1930 or negotiable instruments act, 1881.

In india, interest pendente lite, and after the judgement till payment, is governed by section 34 of
civil procedure code, 1908 and would be regarded as the matter of procedure, to be governed by
lex fori.

Interest as damages is generally not awarded in india but can however, be awarded if there is
usage to that effect, or if the defendant has acted fraudulently.

Courts in india generally award simple interest, but do award compound interest if the contract
so provides, as contracts with banks usually do.

In disputes involving a foreign element, these questions would, it is submitted be determined, as

in England by the applicable foreign law.

Section 31 of arbitration and conciliation act, 1996 expressly empowers arbitrators to award
interest from the date the cause of action arose. It is, however settled law in india that ordinarily
interest cannot be awarded on unliquidated damages till the amount is crystallise, though in some
cases damages can be awarded as by way of interest. It is uncertain whether the express power
conferred on arbitrators to award interest from the date when the cause of action arose would
empower them to award interest on unliquidated damages from the date of breach.

LITERATURE REVIEW

SUBSTANCE AND PROCEDURE IN PRIVATE INTERNATIONAL LAW BY GEORGE

PANAGOPOULOS

It is an unquestioned principle of private international law that matters of procedure are governed
by the lexfori whereas matters of substance are governed by the lex causae. This principle is
described as an eternal truth of every system of private international law. As it is not possible to
examine all specific issues regarding substance and procedure this article specifically deals about
three issues. Firstly, limitation of actions where there has been application of rule. Secondly,
remedies and limitations on damages. And lastly, examine the area of equity. I have studied the
second aspect regarding the limitations on damages. It has been said that matters concerning
quantification of damages are matters of procedure, whereas matters relating to heads of
damages are matters of substance. also referred to the case of harding v wealands.

SUBSTANCE AND PROCEDURE IN THE CONFLICT OF LAWS: A CONTINUING

DEBATE IN RELATION TO DAMAGES BY JANEEN M. CARRUTHERS

Published by: Cambridge University Press on behalf of the British Institute of International and
Comparative Law.

This article deals about the treatment of damages in tort and delict which might be said to fall
within the substance-procedure twilight zone. With reference to the common law, Lord Hodson
in Boys v Chaplin, pronounced that the law relating to damages is partly procedural and partly
substantive. The distinction appears to have been preserved in the statutory regime put in place
by the Private International Law (Miscellaneous Provisions) Act 1995. With regard to damages,
it is thought that while arithmetical assessment is a procedural matter for the forum, matters such
as heads of damage and remoteness are substantive issues to be decided by the lex causae.