Section 31(7) Arbitration Act 1996 provides for INTEREST on awards:
Answer & Solution
Correct answer: D.
1. Section 31(7) Arbitration and Conciliation Act 1996 deals with INTEREST awarded by the arbitral tribunal:
2. (a) Unless otherwise agreed by the parties, the arbitral tribunal MAY award INTEREST at such rate as it deems reasonable for the WHOLE OR ANY PART OF THE MONEY for the WHOLE OR ANY PART OF THE PERIOD between the date on which the CAUSE OF ACTION AROSE and the date on which the AWARD IS MADE (PRE-AWARD INTEREST);
3. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, CARRY INTEREST at the rate of 2% HIGHER THAN THE PREVAILING RATE (post-2015 amendment — earlier 18%) from the DATE OF THE AWARD until the date of payment (POST-AWARD INTEREST).
4. The PREVAILING RATE refers to the rate of interest in commercial transactions.
5. The provision provides COMPENSATION for delay in payment.
6. Hence option B is correct.
_Source: Arbitration and Conciliation Act 1996 (Bare Act) + Mediation Act 2023 — Arbitration and Conciliation Act 1996, Section 31(7)_
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