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Compounding Interest In Interest: The Global Economy, Deflation, And Interest

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Chapter Summary

In recent years, perhaps no area of private international law has undergone more significant changes than the awarding of interest. Today there is a growing trend among international tribunals, particularly investment tribunals, to award interest at floating rates and on a compound basis. Despite these developments, awards of interest remain erratic and unpredictable. In many cases, interest awards are not governed by international law and are left to domestic laws, which can be highly inconsistent. This chapter examines developments in four areas concerning interest: (1) national laws relating to interest, (2) the impact of the global recession on interest awards, (3) the awarding of interest at floating rates, and (4) compound interest in international law. It then offers some suggestions for parties and tribunals to make awards of interest more accurate and more predictable, and offers some thoughts on the future of interest awards in international law.

Keywords: compound interest; deflation; domestic laws; floating rates; global recession; interest awards; international law; investment tribunals



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