Legal Alert: SCC Opens the Door to Compound Interest – and Bigger Awards – in Commercial Arbitrations

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Legal Alert: SCC Opens the Door to Compound Interest - and Bigger Awards - in Commercial Arbitrations

: October 7, 2013

On October 4, 2013 the Supreme Court of Canada decided whether an arbitrator under provincial commercial arbitration legislation has the power to award commercial rates of compound – rather than merely simple – interest. In British Columbia (Forests) v. Teal Cedar Products Ltd., the SCC found that an arbitrator acting under the BC commercial arbitration legislation – in this case dealing with compensation for an expropriation – does not have such power. However, commercial arbitration legislation varies by province and/or territory. The SCC expressly opened the door for a different result outside of BC:

Accurate Compensation. The SCC specifically accepted that compound interest is a more accurate way to compensate parties for the time-value of money.
Provincially Determined. The SCC opened the door to a different result outside BC, expressly noting that other provinces may empower arbitrators to award compound interest in cases where BC does not.

Parties seeking compensation under a commercial arbitration or expropriation proceeding outside of BC may be entitled to a higher award as a result of the SCC’s decision: an award of interest based on commercial rates of compound – instead of simple – interest can result in a substantially higher compensation award.

Click here to read the SCC’s decision in British Columbia (Forests) v. Teal Cedar Products Ltd.

Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Litigation Team to discuss this topic or any other legal issue.

McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.

© McInnes Cooper, 2013. All rights reserved. McInnes Cooper owns the copyright in this document. You may reproduce and distribute this document in its entirety as long as you do not alter the form or the content and you give McInnes Cooper credit for it. You must obtain McInnes Cooper’s consent for any other form of reproduction or distribution. Click here to request our consent.

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