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Dr Derek Ross is the Immediate Past Master of the Worshipful Company of Arbitrators.  He is a Chartered Arbitrator, Accredited Mediator, Conciliator, Adjudicator and Dispute Board Member, who accepts appointments in UK and worldwide as the neutral person in each of these construction dispute resolution procedures.  He is listed on to the FIDIC President’s List of Adjudicators.  Being also a Chartered Civil Engineer, he also accepts appointments as a Civil Engineering Expert Witness. 

If you feel Dr Ross can assist you, please call him for a no obligation discussion on +44 1932 856463, or simply reply to this email with your details.

Below is an article he has written, which he hopes you will find of interest.




In the absence of an express provision concerning the payment of interest on late payment within a contract for the supply of  goods and services within the UK, suppliers usually have a statutory entitlement to interest on late payment under the provisions of the Late Payment of Commercial Debts (Interest) Act 1998 ('the Late Payments Act'), provided the purchaser is also acting in the course of a business.  Even where there is such an express provision within the relevant contract, the provisions of the Late Payments Act may still apply, if the express provision concerning interest is judged not to provide a substantial remedy for late payment.

By specifying simple interest at the rate of 8% per annum over the Bank of England official lending rate on the date the unpaid debt fell due for payment, to be applied for the duration the debt has remained unpaid, the Late Payments Act has intentionally, as a deterrent, stipulated a punitive rate of interest on late payment.  This however does not always deter cash strapped purchasers from paying late, or not at all, until forced to do so by the directions of adjudicators, arbitrators or judges.  

An unwelcome side effect of this punitive interest rate, compared with the rate of interest a supplier could earn by placing a similar sum to the sum owed on deposit in a Bank, is that it may encourage suppliers who are not in dire need of payment right away to be tardy about pursuing their debtors promptly as soon as the due date for payment has passed, with the intention of reaping a handsome statutory interest return, currently at the rate of 8.5% per annum for the period the debt has been outstanding, when they do eventually bring their debtor to book by one of the many available means of compelling payment.

Cash rich suppliers tempted to play this particular extended credit game ought however to be careful not to overplay their hands.  Apart from the obvious risk of the insolvency of the purchaser in the mean time, when all will be lost, it is useful to bear in mind that the Late Payments Act does not give the unpaid supplier an absolute entitlement to interest at the prescribed punitive rate for the entire period the debt has been outstanding, even though such awards are not uncommon.   Section 5 of the Late Payments Act makes provision for the remission of statutory interest if the interests of justice so require, and the interests of justice may so require if the supplier is judged to have waived its entitlement to statutory interest by not pursued its entitlement to payment with reasonable expedition.  Thus prudence suggests that the wisest course of action is to try to collect the money we are owed as quickly as we can, and not to purposely delay matters in the risky expectation that the generous interest rate payable under the Late Payments Act may further enhance our returns.

Dr Derek Ross

30 May 2015


Please Note: The foregoing article has been prepared by Dr Derek Ross for the general interest and benefit of readers.  It is not intended to be a definitive analysis of the law or of other matters discussed.  Neither does it create a client relationship between the recipient and Dr Ross.  Thus no liability is accepted in respect of any reliance placed on any statements made in the foregoing article.  Proper advice ought always to be taken before deciding to take, or not to take, action in respect of a specific issue.


© 2015 Dr Derek Ross & Layng Ross Construction Disputes Resolution.

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