Prejudgment Interest Rules in Arkansas

At a glance

Requirements one by one

Governing law

Ark. Code Ann. § 16-65-114(a)(1) directs a court judgment to bear prejudgment interest "if appropriate under the facts of the case." The Arkansas Supreme Court's Woodline decision applies that phrase to damages fixed by mathematical computation or other definite evidence. The legal test applies to contract and tort claims alike.

Interest rate

For a contract action, § 16-65-114(a)(1)(A) selects the contract's rate or the Federal Reserve primary credit rate in effect when judgment is entered plus two percentage points, whichever is greater. For another action, § 16-65-114(a)(1)(B) selects the Federal Reserve rate plus two points. Ark. Code Ann. § 16-65-114(a)(2) makes the maximum rate permitted by Amendment 89 an additional limit; Amendment 89 § 3 states a 17% ceiling for loans or contracts outside its first two sections.

When interest starts running

The Woodline test asks whether damages were fixed in both time and amount. In Ozarks, a lease stated monthly rent and an annual adjustment formula, so the court could calculate the loss from when the tenant vacated. A disputed repair estimate that depends on opinion did not meet that test in Woodline.

Mandatory or discretionary

Once the fixed-damages test is satisfied, Ozarks says the injured party is "always entitled to it as a matter of law." Whether evidence establishes a fixed amount and starting point remains the threshold question.

Claims against the government

Ark. Const. art. 5, § 20 bars making the state a defendant in its own courts; claims against the state use a separate Claims Commission process. Under Ark. Code Ann. § 19-10-215(a)-(b), the Commission cannot pay more than $15,000 without referring a larger award to the General Assembly. For counties, § 16-65-114(b) specifically bars interest on judgments involving a county warrant or other county indebtedness.

What trips people up

The six-percent default in Ark. Code Ann. § 4-57-101(d) concerns a contract that does not specify its own interest rate. The separate judgment-interest formula in § 16-65-114(a)(1) controls the rate addressed here. The statute specifies a rate and a judgment-date benchmark, but gives no compounding schedule.

Common questions

Does a property-damage claim qualify? It can. Woodline involved property damage but denied interest because competing repair and replacement estimates required opinion to fix the amount.

Is a contract claim automatically eligible? No. The claimant must still establish a loss fixed in time and amount; the statute's contract formula determines the rate after that threshold is met.

Does the county exception cover every claim against local government? The text of § 16-65-114(b) addresses a county warrant or other evidence of county indebtedness. It does not state a blanket rule for all local defendants.

Statutes and sources

• Ark. Code Ann. § 16-65-114(a)-(b), as amended by 2019 Act 995 — judgment-interest rates, Amendment 89 limit, and county-debt exception. Official enrolled act, accessed 2026-10-06.
• Ark. Code Ann. § 4-57-101(d), added by 2013 Act 1223 — "The rate of interest under a contract in which a rate of interest is not specified is six percent (6%) per annum." Official enrolled act, accessed 2026-10-06.
• Ark. Const. amend. 89, § 3 and art. 5, § 20 — constitutional interest limit and state immunity. Official Secretary of State constitution, accessed 2026-10-06.
• Ark. Code Ann. § 19-10-215(a)-(b), as amended by 2019 Act 785 — Claims Commission payment threshold and legislative referral. Official enrolled act, accessed 2026-10-06.
• Woodline Motor Freight, Inc. v. Troutman Oil Co., 938 S.W.2d 565 (Ark. 1997), and Ozarks Unlimited Resources Cooperative, Inc. v. Daniels, 969 S.W.2d 169 (Ark. 1998) — fixed-damages and entitlement decisions; Woodline and Ozarks, accessed 2026-10-06.