In a move to cut down on claims against the State, the National Government has enacted a law to deal with this issue.
Minister for Justice and Attorney General Ano Pala in a statement said the new legislation reduced the annual interest rate awarded by the court on pre-judgment interest and post-judgment interest and costs for claims against the State from 8% to 2% annually.
The Judicial Proceeding Act, 2015 provided for an 8% interest on judgments to reflect the bank lending rates.
However, in the new legislation, the 2% applies only for pre-judgements and judgements made on, or after January 1, 2014.
The Judicial Proceedings (Interest on Debts and Damages) Act 2015 was passed by Parliament on May 28, 2015 and took effect on March 9, 2016.
The Act repealed the Judicial Proceedings (Interests on Debts and Damages) Act (Chapter 25).
The repealed Act provided for an 8% interest on judgments to reflect the bank lending rates at that time.
Pala said the interest rates prescribed at that time were determined according to the socio-economjc situation then.
“The 8% interest rate is no longer supported by the country’s current socio-economic climate and other prevailing circumstances.”
He said the reduced rate applies to interest awarded from the day when payment is due until judgment is entered or payment made.
It also applies to interest rate for judgments entered.
The reduction is consistent with the current lending rates of commercial banks and financial institutions which is 1% to 2% per annum.