New Delhi, March 9 -- The Supreme Court has ruled that an arbitral tribunal cannot grant pre-award or pendente lite interest as compensation if the underlying contract expressly prohibits such payments.
This decision could have implications for MSMEs, which often rely on arbitration to recover delayed payments.
If contracts bar pendente lite interest, smaller firms may not be able to claim compensation for financing costs during disputes, potentially increasing financial strain—particularly in public sector projects where such clauses are common.
A bench of Justices Sanjay Karol and Vipul M. Pancholi set aside part of a ruling by the Allahabad High Court that had upheld the award of pre-award interest.
Referring to Sections 3...