Case Nos: CL-2022-000294; CL-2022-000557; - [2025] EWHC 2529 (Comm)

It is helpful to recall what was said in Lonestar by Foxton J at [14] - [16]:

“[14] There are some contexts (for example which side of the road to drive on) when the existence of a clear default rule is important, even if there is much which can be said for both competing options. I am satisfied that the default interest rate for US$ awards in the Commercial Court going forward should be US Prime, irrespective of whether the claimant has a US place of operations or not and irrespective of whether the claim is a maritime claim or not. I have reached that conclusion for the following reasons:

There are long-standing decisions of the Commercial Court which have referred to US Prime as a starting point for US$ awards: see [4]-[7]. That practice is referred to in Civil Procedure §16AI.2.

LIBOR is in the course of being discontinued.

LIBOR itself is an interbank rate, rather than a commercial borrowing rate.

The trend of the more recent authorities has been to favour the use of US Prime.

A default rule would not achieve the requisite clarity if it did not apply to particular commercial sectors of indeterminate scope.

[15] There being no contrary evidence in this case, the starting point will be US Prime.

The uplift

[16] As its name indicates, US Prime is the rate offered by US banks to their most creditworthy business customers. In these circumstances, it would not be appropriate to have a default rule that there will always be an uplift over and above US Prime in an interest award. In some cases, even without evidence, it will be obvious from the general characteristics of the claimant that it would have to pay a higher rate to borrow US$ than a bank’s most creditworthy customers. In such cases, the court may well be persuaded to order interest at US Prime plus 1% or US Prime plus 2% for certain types of claimant. Higher uplifts than that are likely to require evidence to justify them.”

As Foxton J there said, US Prime is to be taken as a default interest rate. It represents the rate offered by US banks to their most creditworthy customers. It is recognised that there may be cases in which it will be appropriate to award interest at an uplift over Prime, because not all claimants are amongst the ‘most creditworthy customers’.

In light of the nature of Prime, and of the default position, it appears to me that if a defendant wishes to contend that the rate to be awarded on a US$ sum is less than Prime, on the basis that the actual borrowing costs of the claimant are less than those which would be paid by US banks’ ‘most creditworthy customers’, that would need to be put properly in issue by being pleaded. It would not be enough for the defendant, as War Risks Insurers did here, simply to deny that the claimant should recover interest at Prime. The result of its not being pleaded was that there was no proper exploration of whether there is a category of corporate borrowers who pay lower rates than US banks’ most creditworthy customers, and/or whether AerCap does so. The spreadsheet I have referred to was not an adequate substitute for such an exploration, not least because it left unanswered questions as to whether the internal funding costs there specified reflected what would have been external funding costs, and as to whether the rates specified were reflective of what would actually have been the borrowing costs if loan arrangements had been made during the relevant period.

Thus, the appropriate rate to take for pre-judgment interest is the default rate for US$ awards in the Commercial Court, namely US Prime.

As to post-judgment interest, and given that the sums awarded are in US dollars, it was, as I understood it, common ground that this should be at the same rate as is applied in relation to pre-judgment interest. Thus post-judgment interest should be at US Prime.