Interest on Damages in Irish Personal Injury Law Explained

What Interest on Damages Means in Irish Personal Injury Law

Interest on damages is the extra sum a court may add to a compensation award to reflect the time a successful claimant in Ireland has been kept out of money owed to them. In Irish personal injury law it is a creature of statute, not an automatic entitlement, and it answers a narrow question: should the defendant pay something for the delay between the wrong and the payment?

The concept sits inside the wider law of damages, alongside general and special damages, but it is conceptually distinct from both. General and special damages measure the value of the loss itself. Interest measures the cost of waiting for that value to be paid. Keeping those two ideas apart is the key to understanding the rules that follow, because Irish law treats them very differently.

The Legal Basis: Section 22 of the Courts Act 1981

Section 22 of the Courts Act 1981 is the source of the power to award pre-judgment interest in Ireland (Section 22 on irishstatutebook.ie). It allows a court, where it orders payment of a sum of money including damages, to also order interest for the period between the date the cause of action accrued and the date of judgment. This is why practitioners call it "Courts Act interest".

The statutory language is permissive, not mandatory. The provision states that the judge "may, if he thinks fit" order the payment of interest at the rate specified in Section 26 of the Debtors (Ireland) Act 1840, on the whole or any part of the sum, for the whole or any part of the relevant period (Section 22(1), Courts Act 1981). Two features of that wording do a great deal of work. First, the power is a judicial discretion: it is exercised by the court that determines the action, as part of the judgment, rather than arising automatically. Second, the discretion runs to whether interest is given and for what period, but not to the rate, which is fixed by secondary legislation.

In practice, Section 22 cases turn on the distinction between a power and a duty. Because the section says "may", a claimant who simply assumes that interest will be added to a personal injury award has misread the statute. The award has to be asked for, and the court has to be persuaded that granting it is appropriate on the facts.

What Interest Can and Cannot Attach To

Section 22(2)(e) of the Courts Act 1981 is the provision that defines interest on damages for personal injury claims, and it is the single most overlooked rule in this area. It carves personal injury and fatal claims out of the general interest power for two categories of loss. The exact statutory text is worth setting out, because almost no claimant-facing page quotes it.

Nothing in subsection (1) of this section … shall authorise the giving of interest on damages for personal injuries, or in respect of a person's death, in so far as the damages are in respect of— (i) any loss occurring after the date of the judgment for the damages, or (ii) any loss (not being pecuniary loss) occurring between the date when the cause of action to which the damages relate accrued and the date of the said judgment.

Section 22(2)(e), Courts Act 1981 (Section 22 on irishstatutebook.ie)

Read against the definitions in Section 22(3), this produces a clean three-way split. The Act defines "pecuniary loss" as "loss in money or money's worth, whether by parting with what one has or by not getting what one might get" (Section 22(3), Courts Act 1981). That definition is the hinge on which the whole personal injury position turns.

• General damages (pain, suffering, loss of amenity): no pre-judgment interest. These are non-pecuniary losses occurring before judgment, and Section 22(2)(e)(ii) expressly excludes them. The accepted rationale is that the court already values general damages in money current at the date of trial, so an interest overlay would double-count for the passage of time.
• Future loss of any kind: no pre-judgment interest. Section 22(2)(e)(i) excludes any loss occurring after judgment. A future loss has not yet been suffered and is delivered as a discounted lump sum, so there is nothing to pay interest on.
• Past special damages (pecuniary loss already suffered): interest is available, at the court's discretion. Past loss of earnings, medical bills already paid and other out-of-pocket expenses incurred before trial are pecuniary losses, and they are the only part of a personal injury award that Section 22 can reach.

A nuance the official text does not capture: this is why the size of the special damages schedule, not the headline award, determines whether interest is worth pursuing. A claim that is almost entirely general damages has almost no base on which interest can run, however long the case takes. A catastrophic injury claim with hundreds of thousands of euro in historic care costs and lost earnings is a different matter entirely.

The same logic carries into fatal injury claims, which Section 22(2)(e) addresses in the same breath as personal injuries by referring to damages "in respect of a person's death". Solatium, the capped statutory payment for the mental distress of dependants under the Civil Liability Act 1961, is a non-pecuniary award, so no pre-judgment interest attaches to it. Interest in a fatal claim can reach only the past pecuniary dependency loss, such as lost financial support already suffered before judgment.

Pre-Judgment and Post-Judgment Interest: The Two Layers

Interest on damages in Ireland operates in two distinct layers separated by the moment of judgment. The first layer is the discretionary Section 22 interest already described, running up to judgment. The second is interest on the judgment debt itself, which runs from the date of judgment until the award is actually paid. The two share a single rate but rest on different statutory footings.

The rate is the same in both layers because Section 22 borrows it from Section 26 of the Debtors (Ireland) Act 1840, which is also the source of interest on judgment debts. That rate is not fixed in the 1840 Act in any practical sense today; it is set and varied by ministerial order. The current figure is 2% per year, simple interest, in force since 1 January 2017 under the Courts Act 1981 (Interest on Judgment Debts) Order 2016 (SI 624/2016). The history matters for accuracy, because a great deal of older commentary still quotes the previous figure.

The current figure was set by the Courts Act 1981 (Interest on Judgment Debts) Order 2016 (SI 624/2016), which replaced the 8% rate that had been fixed by the Courts Act 1981 (Interest on Judgment Debts) Order 1989 (SI 12/1989) and had applied from 1989 until the end of 2016.

What changed in the 2016 order was the compensatory power of the rate, not its mechanics. At 8% the interest element was a meaningful sum on a large schedule of past special damages. At 2% it is modest, and it no longer keeps pace with the real cost of being deprived of funds during a long case. The rate cut favoured paying parties and their insurers, and it quietly reduced the value of a remedy that personal injury claimants were already under-using. One further detail is often missed: a court has no power to depart from the prescribed rate, a point confirmed by the Court of Appeal in Da Silva v Rosas Construtores SA [2017] IECA 252, which rejected an argument that the statutory rate could be varied. The discretion is over period, never percentage.

How the Courts Exercise the Discretion

The leading authority on the Section 22 discretion is Reaney v Interlink Ireland Ltd, decided by the Court of Appeal in 2016 and by the Supreme Court in 2018. Although Reaney arose from a commercial franchise dispute rather than a personal injury action, its statement of principle governs all civil litigation in Ireland, including medical negligence and catastrophic injury claims, because it interprets the same statutory power.

In the High Court, the trial judge had refused Courts Act interest on the basis that the underlying agreement contained no provision for interest. The Court of Appeal corrected that reasoning in Reaney v Interlink Ireland Ltd [2016] IECA 238, holding that a contract's silence on interest does not deprive the court of jurisdiction under Section 22; only an existing contractual right to interest does so, under Section 22(2)(b). The leading case on this point is often misunderstood as making interest contingent on the contract. The actual ratio is narrower: the court's statutory discretion survives unless interest is already payable as of right. Describing the purpose of the power, Finlay Geoghegan J stated that Courts Act interest is "intended to compensate a person for being out of the money awarded from the time he ought to have received it to the date of judgment, provided, however, other facts make it just between the parties to make such an award" (Reaney [2016] IECA 238).

On further appeal, the Supreme Court in Reaney v Interlink Ireland Ltd [2018] IESC 13, in a judgment delivered by O'Donnell J, set out how the discretion should be exercised. The Court rejected any notion that interest accrues automatically from the date proceedings issue. Interest under the 1981 Act is compensatory, intended to address the detriment of being kept out of money that could and should have been paid earlier, and it is to be awarded only where doing so is just between the parties. Crucially, the conduct of the litigation matters: where a claimant delays in issuing proceedings, or allows periods of unjustified stagnation, the court will decline to award interest for those periods. In Reaney itself the plaintiffs recovered no interest for the period before their later proceedings, because they had not actively pursued the earlier action.

The choice of period is where this most often bites. Although Section 22 measures the period from the date the cause of action accrued, in practice an Irish court will commonly award interest only from the commencement of proceedings to the date of judgment, rather than from the date of the accident or wrong. A claimant who issues promptly therefore captures a longer interest period on their past losses, while one who lets the claim sit forfeits the interest that the pre-proceedings delay would otherwise have earned.

The line between active prosecution and unjustified delay in Irish jurisprudence is, in practice, where these applications are won or lost. For a personal injury claimant sitting on a large schedule of past special damages, the Reaney principles carry a sharp practical lesson: unjustified delay by the claimant's own side can forfeit the 2% interest on those past losses, even though the claimant was genuinely out of pocket throughout.

One practical point precedes all of this. Interest under Section 22 must be specifically claimed in the pleadings, typically as a claim for "interest pursuant to statute". A court is unlikely to award interest that was never sought, so the omission of the claim, not just delay in prosecuting it, can lose the remedy. In Reaney the plaintiffs had pleaded their claim for statutory interest under Section 22, which is what allowed the question of discretion to arise at all on appeal.

Pulling these threads together, a court approaches a claim for Courts Act interest in a recognisable sequence:

1. Confirm the claim is in court proceedings, not an Injuries Resolution Board assessment, since Section 22 does not apply to an order to pay.
2. Confirm that interest was specifically pleaded as interest pursuant to statute.
3. Identify the past special (pecuniary) damages, because Section 22(2)(e) excludes general damages and future loss from the calculation.
4. Decide whether an award is just between the parties under the Reaney principles, and fix the period, commonly from the commencement of proceedings to judgment, excluding any periods of unjustified delay.
5. Apply the fixed 2% simple rate to that base for that period; the rate itself is not open to adjustment.
6. Leave the interest out of any Order 22 lodgment comparison.

Where Does Interest on Damages Reach Its Limits in Irish Personal Injury Practice?

The statute and the case law set the core rules, but the limits of interest on damages appear at the edges of the personal injury system. Three of those edges matter most to an injured party in Ireland: the route the claim takes through the Injuries Resolution Board, the tactics of lodgments and formal offers, and the temptation to import United Kingdom assumptions that do not hold here. Each is examined below, because each can change whether interest is recoverable at all.

Why Injuries Resolution Board Awards Carry No Section 22 Interest

Claims resolved through the Injuries Resolution Board carry no pre-judgment interest, because Section 40 of the Personal Injuries Assessment Board Act 2003 applies the judgment-debt rules but expressly switches off Section 22. This is the most consequential interaction in the whole topic for ordinary personal injury claimants in Ireland, and it is almost never explained.

Most personal injury claims must first go to the Injuries Resolution Board (IRB), formerly the Personal Injuries Assessment Board until 2023. Where both sides accept the Board's assessment, the Board issues an order to pay. Section 40 of the Personal Injuries Assessment Board Act 2003 gives that order broadly the status of a court judgment for enforcement, applying (in particular) Section 26 of the Debtors (Ireland) Act 1840 "but not section 22 of the Courts Act 1981" (Section 40 on irishstatutebook.ie).

The drafting is deliberate and its effect is twofold. Because Section 26 of the 1840 Act applies, an unpaid order to pay can attract judgment-debt interest if the respondent fails to pay within the set time. Because Section 22 does not apply, there is no power to award pre-judgment interest on the historic special damages that built up before the assessment. Practitioners typically encounter this when a claimant with a large past loss is weighing whether to accept a Board assessment or reject it and issue High Court proceedings, where Section 22 interest becomes available again. For a modest claim the point is academic. For a claim with years of past care costs and lost earnings behind it, the unavailable interest is a real figure that belongs in the accept-or-reject analysis.

How Interest Interacts with Lodgments and Formal Offers

Statutory interest is excluded when a court decides whether a claimant has beaten a lodgment. A lodgment, or tender offer, is money paid into court by a defendant that places the claimant on risk for costs if the eventual award does not exceed it. How interest figures in that comparison is a question of real tactical weight.

The Supreme Court in Reaney treated Section 22 interest as distinct from the substantive cause of action for this purpose. When a judge assesses whether the claimant has exceeded a defendant's lodgment under the relevant rule of the superior courts, the statutory interest is left out of the comparison. The practical consequence is that interest cannot be used to nudge an award above a lodgment after the event; the comparison is made on the damages themselves. This is the sort of granular point that litigation solicitors return to, and it sits alongside the wider mechanics covered in our guide to lodgments and tender offers and to the enforcement of judgments.

How Ireland Differs from the UK on Interest on Damages

Irish interest on damages differs sharply from the United Kingdom position, and conflating the two is the commonest error in this area. Because so much online legal material is written for England and Wales, both readers and AI systems frequently assume a UK rule applies in Ireland. It does not.

In England and Wales, interest on a personal injury award above a small threshold is effectively the default: under Section 35A of the Senior Courts Act 1981 the court must normally award interest unless there are special reasons not to, a near-mandatory regime with no direct Irish equivalent. Irish law contains no such presumption. Section 22 is discretionary throughout, and Section 22(2)(e) removes general damages and future loss from its reach altogether. A second difference concerns the basis of calculation. Irish statutory interest is simple interest at the prescribed rate; it is not awarded on a compound basis. Scotland operates under a different statute again, the Interest on Damages (Scotland) Act 1958, with its own discretionary mechanics. The safe rule for an Irish claim is to ignore neighbouring-jurisdiction commentary and work from the Courts Act 1981 and the Reaney principles.

Common Misconceptions About Interest on Damages in Ireland

Several widely repeated assumptions about interest on damages in Irish personal injury law are simply wrong, and they recur in online summaries and in automated answers that borrow from neighbouring jurisdictions. Correcting them is the quickest way to see how the Irish rules actually operate.

• "Interest runs on the whole award." It does not. Section 22(2)(e) removes general damages and future loss from the calculation, so any pre-judgment interest is confined to past special damages.
• "Interest is automatic once you win." It is discretionary. The court decides whether to award it and for what period, applying the Reaney principles, and may refuse it for periods of unjustified delay.
• "The same rules apply as in the UK." They do not. England and Wales operate a near-mandatory interest regime and have allowed compound interest in some contexts; Irish statutory interest is discretionary and simple.
• "An Injuries Resolution Board award carries interest like a court award." It does not carry pre-judgment interest, because Section 40 of the Personal Injuries Assessment Board Act 2003 applies the judgment-debt rules to an order to pay but excludes Section 22.
• "The judge can set a higher interest rate for a long delay." The judge cannot touch the rate, which is fixed at 2%. The only lever is the period over which interest runs.
• "A strong formal settlement offer increases the interest you are awarded." It does not. A formal offer under Section 17 of the Civil Liability and Courts Act 2004 is a costs mechanism, affecting who pays the costs of the action. Unlike the Part 36 regime in England and Wales, it does not carry any power to add enhanced or penalty interest to the award.

Is Interest on Damages Taxable in Ireland?

The compensation itself is generally tax-free, but the interest element can raise a separate tax question that sits outside personal injury law. A capital sum received as compensation or damages for a personal injury is not chargeable to capital gains tax under Section 613(1)(c) of the Taxes Consolidation Act 1997. The interest component, however, can fall to be treated as income in the ordinary way, which is why it is worth flagging rather than assuming the whole award is tax-free.

There is also a targeted relief that often applies in the most serious cases. Section 189 of the Taxes Consolidation Act 1997 exempts the income and gains arising from the investment of qualifying personal injury compensation where the injured person is permanently and totally incapacitated and that investment income is the main source of their income (Section 189 on irishstatutebook.ie). This is a Revenue matter rather than a litigation one, and the precise treatment of any interest figure should be confirmed with Revenue or a tax adviser. It is mentioned here only so that the question is not overlooked when the net value of an award is being worked out.

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