Interest on delayed compensation: the entitlement nobody claims

Most compulsory acquisition frameworks in the region provide for interest on compensation that is not paid promptly, often at a rate fixed by statute and running from the date of possession or of the award. It is one of the few protections displaced households have against delay, and it is almost never paid, because almost nobody knows it exists.

What the provision is for

Interest on delayed compensation exists because a sum assessed at one date and paid at another is not the same sum. The household has lost the use of the money and the money has lost value. Statutory interest is a rough correction for both.

It also creates an incentive: delay costs the acquiring body something. Where the provision is never invoked, the incentive disappears and delay becomes free to the party that controls it.[4]

An entitlement that only informed claimants can access is not an entitlement. It is a privilege distributed by legal literacy.

Why it is not claimed

Three reasons, in order of weight. Claimants do not know the provision exists, because nothing in the process tells them. Claiming it usually requires a formal step — a written demand, sometimes a court application — that a rural household will not take. And raising it risks being seen as obstructive by the body that controls the payment they are still waiting for.

The result is a right that operates for well-advised commercial claimants and not for anyone else, which is the opposite of how it should distribute.[2]

What a project should do about it

A project working to international standards has a straightforward position available: if compensation must be adequate at the date it is paid, then delay is the project's problem rather than the household's.

• Disclose the provision. Include it in the entitlement framework summary, in the local language, alongside everything else the household is told.
• Calculate it automatically where the statute provides for it, rather than requiring a claim. The dates are in the register; the arithmetic is trivial.
• Provide for indexation or revaluation where the statute is silent, so the adequacy of compensation does not depend on how fast the approval chain moved.
• Report the interval as a monitoring indicator: median and tail days from assessment to funds received.[3]

Interest is not a substitute for paying on time

A programme that pays interest on two years of delay has compensated for the time value of the money and not for what the household went through in the interim: possession taken, land gone, no payment, no ability to acquire a replacement, and a season or two of reduced income.

The standards require payment before displacement precisely because money later is not equivalent to money now.[1] Interest is a remedy for a failure, not a mechanism that makes the failure acceptable.

Where the delay actually comes from

The long tail is not evenly distributed. It concentrates in a small number of records with documentation problems: a deceased registered owner, a contested boundary, a claimant without identification, a parcel in litigation.

Those cases are identifiable on the day they are enumerated. Routing them into resolution immediately, rather than discovering them when payment is attempted, is the single largest available reduction in delay — and therefore in the interest that ought to be paid on it.