Awarding Interest In Arbitration Cases

The Massachusetts Appeals Court, sitting in Boston, recently reversed a Trial Court Order granting pre-award interest to the prevailing party of an arbitration. The case began as a negligence action in Boston’s Suffolk Superior Court, and negligence cases include the personal injury and car accident cases handled by the Boston attorneys at the Law Office of Neil Burns. Thus, the attorney’s at the Boston Law Office of Neil Burns informs its clients of this decision because it may directly impact their individual case.

The Appeal Court noted that because the interest component was not authorized by the arbitrator it had to be stricken from the judgment and could not be awarded. The Court stated that “the parties entered an agreement for binding arbitration. That agreement was silent with respect to pre-award interest should the defendant be found liable in arbitration, which it was. At argument before us, counsel for both parties agreed that the plaintiff orally asked the arbitrator to award pre-award interest should the defendant be found liable. The arbitrator’s award did not provide for, or address the question of, such interest.”
Notwithstanding, the lower court judge confirmed the arbitrators award and included pre-award interest. But relying on precedent, the Appeal Court stated that ‘in the absence of an explicit agreement to the contrary, pre-award damage claims, including interest,’ . . . must be considered ‘to have been submitted to arbitration.'” But since the arbitration award was silent as to interest, the Court noted “that the arbitrator must at the least state that conclusion in the award before the plaintiff can seek prejudgment interest in a court. … A silent award will not suffice. …”