Court ponders interest rate dilemma
A creditor who won a costs award in a civil claim has lost out on thousands of pounds of interest because, for nearly a decade, ministers have failed to set the applicable rate at which that interest should be paid.
Local legislation allows creditors to claim the interest accrued on financial awards from the moment a court hands down a judgement to whenever the debt is settled.
But the law requires the rate of interest payable to be set by the Minister for Justice and, according to a recent case before the Supreme Court, this has not been done since local legislation changed in 2007.
The failure to set the interest rate payable on court awards had never been highlighted until now.
The court was told that there was an order made by the Chief Justice in 2000 setting interest rates in line with those set by the UK High Court.
However Supreme Court Registrar Liam Yeats concluded that a 2007 change in Gibraltar’s legislation meant this order was no longer in force.
The 2007 law “…provides a right to interest and sets out how the rate of interest is determined,” Mr Yeats said in a judgement.
“If no order is made by the Minister with responsibility for justice as to the rate of interest, then no interest is payable.”
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