Dual Rate Of Interest Not Allowed In Arbitral Awards

Introduction and Facts of the case

In the recent case of Vedanta Ltd. vs. Shenzen Shandong Nuclear Power Construction Co. Ltd. judgment passed on October 10, 2018¹, the Hon'ble Supreme Court faced a peculiar issue of dual interest rate imposed on the final arbitration award by an Arbitral Tribunal. On May 22, 2008, the present Appellant and Respondent entered into four interrelated contracts which were collectively called as "EPC Contract" for the construction of a 210-MW Co-Generation Power Plant.

The Appellant in the present case was an Indian company while the present Respondent was a company incorporated in People's Republic of China. All four contracts entered between the parties had an arbitration clause, where the governing laws for these contracts were the laws of India and the seat of arbitration was chosen as India. These contracts also had a termination clause where the purchaser was required to pay 105% of the cost incurred by the supplier till the