Can Arbitrator Award Compound Pre-Award Interest in Maritime Salvage Disputes Under AMA 2023?

In international maritime salvage contracts executed under the Lloyd’s Open Form (LOF) or Nigerian Admiralty rules, salvage contractors recover substantial remuneration for saving distressed vessels and cargo from maritime perils.

When salvage compensation disputes are referred to arbitration under the Arbitration and Mediation Act (AMA) 2023, the salvor frequently claims compound pre-award interest on unpaid salvage awards to reflect commercial borrowing costs.

Under Section 46 of the AMA 2023, unless otherwise agreed by the parties, the arbitral tribunal is expressly empowered to award simple or compound interest from such dates, at such rates, and with such rests as it considers just.

Step-by-Step Procedure to Resolve This Legal Matter:

1. Preserve Contemporaneous Evidence: Collate physical receipts, verified bank timestamps, stamped letters, and electronic communication logs prior to formal intervention.
2. Deliver Statutory Pre-Action Notice: Issue a formal written demand outlining the specific statutory breach and giving the opposing party statutory time to remedy the grievance.
3. Engage Accredited Legal Counsel: Initiate judicial proceedings before the competent court of record or submit an official petition to the relevant regulatory commission.

This modern statutory provision revolutionizes Nigerian arbitral practice, removing historical common law constraints that previously restricted tribunals to simple post-award interest.

Key Evidential Considerations & Statutory Benchmarks:

• Documented statutory breach and verified timeline of events.
• Jurisdictional competence of the regulatory agency or superior court.
• Contemporaneous written correspondences, notices, and financial records.
• Quantifiable proof of pecuniary loss or civil rights violation.

“The rule of law ensures that statutory rights and duties cannot be compromised by informal arrangements or administrative fiat; every citizen has the constitutional right to due process.”
— Nigerian Legal Precedent & Constitutional Jurisprudence

In commercial maritime salvage, where the salvor incurred substantial capital expenditures deploying ocean tugs and salvage divers, awarding compound interest reflects modern commercial reality and preserves the economic value of the claim.

The Federal High Court in arbitral supervisory proceedings has affirmed that awards of compound interest under Section 46 of the AMA 2023 are within statutory arbitral competence and do not violate Nigerian public policy.

Under Section 46(1) of the AMA 2023, the tribunal may award interest on any part of the claim up to the date of the award, and post-award interest until payment.

The statutory authority to grant compound interest aligns Nigerian arbitral jurisprudence with leading international commercial arbitration centers.

In accordance with Section 36 of the Constitution of the Federal Republic of Nigeria 1999 (as amended), every person is entitled to a fair hearing within a reasonable time by a court or other tribunal established by law.

Under Section 1(1) of the 1999 Constitution, the Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federal Republic of Nigeria.

Section 6 of the 1999 Constitution vests judicial powers of the Federation in the courts established for the Federation, ensuring judicial review over administrative, corporate, and customary determinations.

Pursuant to the Evidence Act 2011, the burden of proof in civil proceedings rests upon the party who asserts the affirmative of the issue, requiring proof on the balance of probabilities.

The Supreme Court of Nigeria has repeatedly affirmed that rules of procedure and statutory compliance are designed to ensure substantial justice rather than technical defeat of constitutional and statutory rights.

Under the Interpretation Act (Cap. I23, LFN 2004), enactments must be interpreted purposively to give effect to the intention of the legislature while preserving established common law and equitable doctrines.

Fundamental human rights enshrined under Chapter IV of the 1999 Constitution (as amended) remain paramount and non-derogable except in strictly specified instances sanctioned by law.

For direct regulatory verification, official complaints, or accessing statutory registers without third-party fees, members of the public can consult the official portal of the Nigerian Maritime Administration and Safety Agency (NIMASA).

Administrative bodies and regulatory agencies exercising quasi-judicial powers must observe natural justice: audi alteram partem (hear both sides) and nemo judex in causa sua (no one should be a judge in their own cause).

Ignorance of the law is no excuse.