Scottish Law Commission (Reports)

 


Part 8: Tribunals

8.1           Although the terms of our reference include interest on claims for payment of money within the jurisdiction of tribunals, most tribunals have an administrative jurisdiction and rarely express their decisions as awards of sums of money. It is unusual for their procedural rules to make any provision for interest and, at common law, even tribunals whose jurisdiction includes making awards of compensation or directing other forms of payment, have no power to award interest. The commencement of tribunal proceedings does not constitute a "judicial demand" and accordingly interest does not run from the date of such commencement. There are, however, some tribunals which are exceptional in that they make monetary awards and have statutory powers to award interest. Tribunals which sit in Scotland^[1] and make monetary awards can be divided into two categories: those which have a specific power to award or refuse interest and those which simply apply legislation which includes an element of interest. Those in the latter category^[2] are not within the scope of our proposals as the claimant's entitlement to interest will depend upon the terms of the legislation which the Tribunal is applying. Tribunals in the former category are the following:

•    Employment Tribunals: an award carries interest at a prescribed rate if it remains unpaid 42 days after the date of sending the decision to the parties.^[3] The prescribed rate is currently set at 8%, in line with the judicial rate.^[4]

•    The Lands Tribunal for Scotland: the Tribunal has power to determine that an award of compensation shall carry interest from the date of the award.^[5]

8.2           In the Discussion Paper we proposed that, with one exception, the statutory powers of tribunals to award interest should be excluded from the scope of the reforms proposed in the paper. The exception is where the existing legislation specifies a rate of interest which is related to the current judicial rate for periods prior to the date of the award. An example can be found within the jurisdiction of the Employment Tribunals. The Employment Tribunals (Interest on Awards in Discrimination Cases) Regulations 1996^[6] confer power on an Employment Tribunal to award simple interest on compensation for discrimination on the grounds of sex, race, disability, sexual orientation, religion or belief from certain specified dates prior to the date of the award. The rate of interest specified (subject to an overriding discretion which may be exercised in exceptional circumstances) is the rate fixed for the time being for sheriff court decrees: in other words, the judicial rate. The effect of our recommendations will be that there will no longer be a "judicial rate" applying either before or after decree in court actions. It would therefore be anomalous to continue to use it in discrimination claims to an Employment Tribunal.
8.3           In non-discrimination cases within the jurisdiction of the Employment Tribunal, interest runs on a pecuniary award from a date 42 days after the date of the Tribunal's determination.^[7] The rate of interest stipulated (for Scotland as well as for England and Wales) is the rate specified in section 17 of the Judgments Act 1838.^[8] As with discrimination cases, we propose that there should be substituted an entitlement to interest at the rate specified for statutory interest. This entitlement will in any event be superseded, to some extent, by our recommendations that arrears of income from employment should carry statutory interest.^[9] However it will remain applicable to other claims, such as claims for damages consisting of wages lost as a result of unfair dismissal. It might be regarded as anomalous that Tribunal claimants must wait until 42 days after determination of their claim for interest to begin to run whereas pursuers in court actions will, under our recommendations, be entitled to interest from the date when the loss is sustained. We consider, however, that if the Tribunal's powers in this regard are to be amended, this should be done on a UK-wide basis, and we suggest that this apparent anomaly be referred to the Council on Tribunals for further consideration.
8.4           As noted in the preceding paragraphs, there may be situations in which an award made by a tribunal will be for payment of a sum upon which statutory interest runs in terms of our recommendations. We have considered whether tribunals should have the same power as the court to remit statutory interest in whole or in part in the same circumstances as the court would be empowered to do, ie where it would be in the interests of justice to do so by reason of any conduct of the person to whom interest would be payable. Our view is that tribunals should have the same power.
8.5           We therefore recommend that:

(a) Where a tribunal presently has power to award interest at the judicial rate, this should be replaced by a power to award interest at the rate prescribed by statute.

(b) Where a sum awarded by a tribunal carries statutory interest, the tribunal should have the same power as would a court to remit the interest in whole or in part.

(c) In all other respects, the powers of particular tribunals to award interest should remain unaffected by our recommendations.

(Draft Bill, sections 9 and 16(1); schedule 1, Part 2)

Note 1   Some tribunals with interest-awarding powers, such as the Copyright Tribunal and the Competition Appeal Tribunal may in theory sit in Scotland but in fact rarely or never do.     [Back]

Note 2   Eg the Unified Appeals Tribunal in relation to social security; and the VAT and Duties Tribunal for Scotland, the General Commissioners of Income Tax and the Special Commissioners of Income Tax in relation to taxation.     [Back]

Note 3   The Employment Tribunals (Interest) Order 1990 (SI 1990/479), art 2. See para 8.2 below regarding awards for discrimination cases.     [Back]

Note 4   Ibid art 4. This provision applies the rate specified in s 17(1) of the Judgments Act 1838.     [Back]

Note 5   Law Reform (Miscellaneous Provisions) (Scotland) Act 1980, s 18. Interest is awarded at the judicial rate.     [Back]

Note 6   SI 1996/2803.     [Back]

Note 7   Employment Tribunals (Interest) Order 1990 (SI 1990/479).     [Back]

Note 8   Ibid art 4. The rate under s 17 of the 1838 Act is presently the same as the judicial rate in Scotland.     [Back]

Note 9   See Recommendation 10.     [Back]