Lloyd's Maritime and Commercial Law Quarterly
A MATTER OF SOME INTEREST
The Lu Shan
At first sight it seems remarkable that an issue of such practical and theoretical importance for the assessment of damages, as was recently decided in the Admiralty Court, had been left unresolved for so long. The question that arose before Clarke, J., in The Lu Shan
1 was whether interest should be added to the claims of colliding ships before they were set off against each other, or whether it should be added only to the net balance of the principal elements of the claims. The point was important because the ships were repaired on different dates; the claims were expressed in different currencies; and the interest rates appropriate to the two currencies were different.
The collision occurred in December 1985 [not 1986 as shown in the report of the judgment]. The plaintiffs paid for the repair of their ship, Bottany Triad, in February 1986, whereas repairs to Lu Shan were deferred and the defendants paid for them in January 1987. The plaintiffs’ claim was in Australian dollars, for which an average interest rate of 17% a year had been agreed, whereas the defendants’ claim was in United States dollars, for which the average annual rate was 10%. The plaintiffs contended that interest should be added to the claims before set-off, whereas the defendants argued that interest should be added only to the balance of the principal elements of the claims after they had been set off against each other. The precise monetary difference between the two approaches is not stated in the judgment, but from the figures that are given, and making allowance for the agreement that
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