Farstad Supply AS v Enviroco Ltd (The “Far Service”)(No 2) – Court of Session (Outer House)(Lord Hodge) – 14 September 2011

Practice – Pre-judgment interest – Mismatch between judicial rate of interest at 8 per cent and much lower rates available in market – Whether interest on damages should be awarded at a rate less than 8 per cent

The pursuer (“Farstad”) sued the defender (“Enviroco”) for £2,514,761 in damages for loss which it sustained when a fire broke out on the oil rig supply vessel Far Service in Peterhead harbour on 7 July 2002. The action settled on the eve of trial, on 23 August 2011. The parties agreed an order by which Enviroco was to pay £1,750,000 to Farstad together with interest from 31 December 2002 “at such rate or rates as the court shall think fit.”