State responsibility subject of damages in international law that are better settled than the one that compound interest is not allowable” … Even though the term “all sums” could be construed to include interest and thereby to allow compound interest, the Tribunal, due to the ambiguity of the language, interprets the clause in the light of the international rule just stated, and thus excludes compound interest. 614 Consistent with this approach, the tribunal has gone behind contractual provisions appearing to provide for compound interest, in order to prevent the claimant gaining a profit “wholly out of proportion to the possible loss that [it] might have incurred by not having the amounts due at its disposal”.615 The preponderance of authority thus continues to support the view expressed by Arbitrator Huber in the British Claims in the Spanish Zone of Morocco case: the arbitral case law in matters involving compensation of one State for another for damages suffered by the nationals of one within the territory of the other … is unanimous … in disallowing compound interest. In these circumstances, very strong and quite specific arguments would be called for to grant such interest.616 The same is true for compound interest in respect of Stateto-State claims. (9) Nonetheless, several authors have argued for a reconsideration of this principle, on the ground that “compound interest reasonably incurred by the injured party should be recoverable as an item of damage”.617 This view has also been supported by arbitral tribunals in some cases.618 But given the present state of international law, it cannot be said that an injured State has any entitlement to compound interest, in the absence of special circumstances which justify some element of compounding as an aspect of full reparation. (10) The actual calculation of interest on any principal sum payable by way of reparation raises a complex of issues concerning the starting date (date of breach,619 date on which payment should have been made, date of claim or demand), the terminal date (date of settlement agreement or award, date of actual payment) as well as the applicable interest rate (rate current in the respondent State, in the applicant State, international lending rates). There 614 Iran-U.S. C.T.R., vol. 7, p. 181, at pp. 191–192 (1984), citing Whiteman, Damages in International Law, vol. III (see footnote 568 above), p. 1997. 615 Anaconda-Iran, Inc. v. The Government of the Islamic Republic of Iran, Iran-U.S. C.T.R., vol. 13, p. 199, at p. 235 (1986). See also Aldrich, op. cit. (footnote 357 above), pp. 477–478. 616 British Claims in the Spanish Zone of Morocco (see footnote 44 above), p. 650. Cf. the Aminoil arbitration (footnote 496 above), where the interest awarded was compounded for a period without any reason being given. This accounted for more than half of the total final award (p. 613, para. 178 (5)). 617 F. A. Mann, “Compound interest as an item of damage in international law”, Further Studies in International Law (Oxford, Clarendon Press, 1990), p. 377, at p. 383. 618 See, e.g., Compañía del Desarrollo de Santa Elena, S.A. v. Republic of Costa Rica, case No. ARB/96/1, ICSID Reports (Cambridge, Grotius, 2002), vol. 5, final award (17 February 2000), paras. 103–105. 619 Using the date of the breach as the starting date for calculation of the interest term is problematic as there may be difficulties in determining that date, and many legal systems require a demand for payment by the claimant before interest will run. The date of formal demand was taken as the relevant date in the Russian Indemnity case (see footnote 354 above), p. 442, by analogy from the general position in European legal systems. In any event, failure to make a timely claim for payment is relevant in deciding whether to allow interest. 109 is no uniform approach, internationally, to questions of quantification and assessment of amounts of interest payable.620 In practice, the circumstances of each case and the conduct of the parties strongly affect the outcome. There is wisdom in the Iran-United States Claims Tribunal’s observation that such matters, if the parties cannot resolve them, must be left “to the exercise … of the discretion accorded to [individual tribunals] in deciding each particular case”.621 On the other hand, the present unsettled state of practice makes a general provision on the calculation of interest useful. Accordingly, article 38 indicates that the date from which interest is to be calculated is the date when the principal sum should have been paid. Interest runs from that date until the date the obligation to pay is fulfilled. The interest rate and mode of calculation are to be set so as to achieve the result of providing full reparation for the injury suffered as a result of the internationally wrongful act. (11) Where a sum for loss of profits is included as part of the compensation for the injury caused by a wrongful act, an award of interest will be inappropriate if the injured State would thereby obtain double recovery. A capital sum cannot be earning interest and notionally employed in earning profits at one and the same time. However, interest may be due on the profits which would have been earned but which have been withheld from the original owner. (12) Article 38 does not deal with post-judgement or moratory interest. It is only concerned with interest that goes to make up the amount that a court or tribunal should award, i.e. compensatory interest. The power of a court or tribunal to award post-judgement interest is a matter of its procedure. Article 39. Contribution to the injury In the determination of reparation, account shall be taken of the contribution to the injury by wilful or negligent action or omission of the injured State or any person or entity in relation to whom reparation is sought. Commentary (1) Article 39 deals with the situation where damage has been caused by an internationally wrongful act of a State, which is accordingly responsible for the damage in accordance with articles 1 and 28, but where the injured State, or the individual victim of the breach, has materially 620 See, e.g., J. Y. Gotanda, Supplemental Damages in Private International Law (The Hague, Kluwer, 1998), p. 13. It should be noted that a number of Islamic countries, influenced by the sharia, prohibit payment of interest under their own law or even under their constitution. However, they have developed alternatives to interest in the commercial and international context. For example, payment of interest is prohibited by the Iranian Constitution, articles 43 and 49, but the Guardian Council has held that this injunction does not apply to “foreign governments, institutions, companies and persons, who, according to their own principles of faith, do not consider [interest] as being prohibited” (ibid., pp. 38–40, with references). 621 The Islamic Republic of Iran v. The United States of America (Case No. A-19) (see footnote 606 above).