Arbitral interest must be compensatory and currency-linked; excessive post-award rates and uniform foreign-currency interest were modified.

Under Section 31(7) of the Arbitration and Conciliation Act, 1996, arbitral interest must be reasonable, compensatory and consistent with the statutory challenge period; a 15% post-award rate after 120 days was treated as excessive and was deleted. In an international commercial arbitration seated in India, a single domestic rate was held inappropriate for a foreign currency component; the EUR portion required a currency-linked benchmark, and LIBOR plus 3 percentage points was applied from the date of award until realization. The INR component at 9% was maintained.

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Issues: (i) Whether the arbitral tribunal was justified in awarding post-award interest at 15% after 120 days. (ii) Whether a uniform rate of 9% interest could be applied to the EUR component of the award.

Issue (i): Whether the arbitral tribunal was justified in awarding post-award interest at 15% after 120 days.

Analysis: Interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 must be reasonable and compensatory. The post-award period is governed by the statutory scheme, and the interest rate cannot be punitive or disproportionate. The higher rate of 15% after 120 days was found to be excessive, arbitrary, and inconsistent with the award debtor's statutory right to challenge the award within the prescribed period.

Conclusion: The 15% post-award interest was deleted, and the appeal succeeded to that extent.

Issue (ii): Whether a uniform rate of 9% interest could be applied to the EUR component of the award.

Analysis: In an international commercial arbitration seated in India, the rate of interest must correspond to the currency of the award and the prevailing commercial context. A single domestic rate for different currencies was held to be unjustified where the award included a foreign currency component. The EUR portion required a currency-linked benchmark, and LIBOR plus a margin was treated as the appropriate measure.

Conclusion: The 9% rate on the EUR component was modified to LIBOR plus 3 percentage points from the date of award till realization.

Final Conclusion: The award of interest was modified only on the issues of the post-award rate and the EUR component, while the INR component at 9% was maintained.

Ratio Decidendi: Under Section 31(7) of the Arbitration and Conciliation Act, 1996, arbitral interest must be reasonable, compensatory, and aligned with the currency of the award, and a punitive or uniform rate unrelated to the applicable currency or commercial reality is liable to be modified.

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