Standard Chartered Bank v Ceylon Petroleum Corporation

A contractual term preserving interest after judgment prevents merger of the contractual right. It does not ordinarily exclude the creditor’s separate statutory entitlement to judgment interest.

For a judgment expressed in foreign currency, section 44A of the Administration of Justice Act 1970 permits the court to substitute a rate appropriate to that currency. Interest on costs ordinarily runs from judgment. Postponement requires justification, which may exist where substantial disputed costs raise real issues of proportionality and reasonableness.

Following an order that the defendant pay a judgment debt of US$166,476,281, the court had to determine post-judgment interest. The competing rates were the 8% rate under the Judgments Act 1838, the 3.25% US Prime Rate and the contractual default rate of 1.63%.

The court also considered when statutory interest should begin to run on the claimant’s costs. A payment on account of 50% had been ordered, while the disputed balance remained subject to assessment.

1. Judgment debt. Post-judgment interest on the US-dollar judgment was awarded at the US Prime Rate rather than the 8% rate under the Judgments Act 1838.

2. Unless the contract provides otherwise, a contractual right to interest merges in the judgment. A term expressly preserving interest after judgment prevents that merger and protects the creditor where the contractual rate exceeds the statutory rate. Such a term does not ordinarily remove the debt’s status as a judgment debt or exclude the creditor’s statutory entitlement. The relevant term therefore preserved contractual interest but did not cap the claimant’s entitlement at the contractual rate: [2002] 1 AC 481 applied (paras [9]–[13]).

3. For a sterling judgment, the court cannot vary the statutory rate. For a foreign-currency judgment, section 44A of the Administration of Justice Act 1970 permits such interest as the court thinks fit. The discretion enables the rate to reflect the judgment currency and extends the principle that a foreign-currency creditor has no relevant concern with sterling (paras [15]–[22]).

4. The difference between the US-dollar rate and the statutory rate was substantial and sustained. The claimant had no sufficient concern with sterling. An English jurisdiction clause did not preclude exercise of the statutory discretion. The parties agreed that the US Prime Rate was appropriate if a currency-specific rate were selected (paras [21]–[23]).

5. Costs. An order for assessment of costs falls within the Judgments Act 1838. Under the incipitur rule, interest ordinarily runs from the date judgment is pronounced. The court may nevertheless postpone the statutory rate under rule 40.8 of the Civil Procedure Rules. Postponement should not be routine, but may be justified where large disputed costs raise real issues of proportionality and reasonableness (paras [24]–[27]).

6. The statutory rate continued to apply to the 50% payment on account. Its application to the disputed balance was postponed for four months because the costs were large and likely to raise genuine issues on assessment (para [28]).

This was a further first-instance judgment following the order of 11 July 2011 for payment of the principal judgment sum and costs. No appellate history is stated in the judgment.