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SUPREME COURT OF INDIA
Dhananjaya Y Chandrachud, Surya Kant, Sanjiv Khanna, JJ.
Oil and Natural Gas Corporation Ltd. – Petitioner
Versus
Afcons Gunanusa JV – Respondent
Arbitration Petition (Civil) No. 05 of 2022 With Civil Appeal No 5880 of 2022 With Civil Appeal No 5879 of 2022 And With Miscellaneous Application Nos. 1990-1991 of 2019 in Special Leave Petition (Civil) Nos. 10021-10022 of 2017
Decided On : 30-08-2022
Key Points: - The expression "sum in dispute" in the Fourth Schedule refers to the aggregate amount of both the claim and the counter‑claim, not to each separately (!) (!) . - In the absence of an agreement or a court order fixing fees, the arbitral tribunal is entitled to determine a fair and reasonable fee, but this power is not absolute and must respect party autonomy and be exercised transparently (!) (!) . - The ceiling of Rs 30,00,000 in the Fourth Schedule applies to the sum of the base amount and any variable amount, and this ceiling is for each individual arbitrator, not for the entire arbitral tribunal (!) (!) .
JUDGMENT
D.Y. Chandrachud, J.
This judgment has been divided into sections to facilitate analysis. They are:
| A Factual Background |
| A.1 Facts of Petition for Arbitration (Civil) No 5 of 2022 |
| A.2 Facts of Special Leave Petition (Civil) No 13426 of 2021 |
| A.3 Facts of Special Leave Petition (Civil) No 10358 of 2020 |
| A.4 Facts of Miscellaneous Application Nos. 1990-1991 of 2019 |
| B Submissions of Counsel |
| B.1 Submissions on behalf of the petitioners |
| B.2 Submissions on behalf of the respondents |
| B.3 Submissions on behalf of the amicus curiae |
| C Determination of arbitrators’ fee |
| C.1 Comparative outlook |
| C.1.1 Position of international organisations |
| (i) United National Commission on International Trade |
| (ii) Permanent Court of Arbitration |
| (iii) London Court of International Arbitration |
| (iv) International Centre for Dispute Resolution |
| (v) International Chamber of Commerce |
| (vi) Singapore International Arbitration Centre |
| (vii) Hong Kong International Arbitration Centre |
| (viii) International Centre for Settlement of Investment Disputes |
| (ix) Summary |
| C.1.2 Position in other national jurisdictions |
| (i) England |
| (ii) Italy |
| (iii) Sweden |
| (iv) Germany |
| (v) Japan |
| (vi) Singapore |
| (vii) United States |
| (viii) Summary |
| C.2 Statutory scheme on payment of fees to arbitrators in India |
| C.2.1 Party autonomy |
| C.2.2 Fourth Schedule and regulation of arbitrators’ fees |
| C.2.3 Costs and fees: Two different paradigms |
| C.2.4 Directives governing fees of arbitrators in ad hoc arbitrations |
| D Interpretation of “sum in dispute” in the Fourth Schedule |
| D.1 Statutory Framework |
| D.2 Definition of claim and counter-claim |
| D.2.1 In re arbitration proceedings |
| (i) Statutory Framework of the Arbitration Act |
| (ii) Academic discourse |
| (iii) Judicial pronouncements ................................................... |
| D.2.2 In re civil proceedings |
| (i) Statutory Framework of CPC |
| (ii) Academic discourse |
| (iii) Judicial pronouncements |
| D.3 Analysis |
| E Fee Ceiling in Fourth Schedule |
| E.1 Difference between the English and Hindi translations |
| E.2 Exception to literal interpretation |
| E.3 Interpretation based on legislative intent |
| F Ceiling applicable to individual arbitrators |
| G Conclusion |
| G.1 Findings |
| G.2 Directions |
A. Factual Background
A.1 Facts of Petition for Arbitration (Civil) No 5 of 2022
1. On 29 May 2009, the petitioner, Oil and Natural Gas Corporation Limited,1[“ONGC”], and the respondent, Afcons Gunanusa JV2[“Afcons”], entered into a Lump Sum Turnkey Contract3[“LSTK Contract”], for the construction of an ICP-R Platform. The ICP-R Platform is alleged to have been completed on 31 October 2012.
2. Due to ongoing disputes and differences, Afcons invoked arbitration on 20 July 2015, in accordance with Clause 1.3 of the LSTK Contract. Afcons appointed Justice Mukul Mudgal as their arbitrator.
3. The relevant parts of Clause 1.3 of the contract are extracted below:
“1.3 Laws/Arbitration
[…]
1.3.2 Arbitration
Except as otherwise provided elsewhere in the contract, if any dispute, difference question or disagreement arises between the parties hereto or their respective representatives or assignees, in connection with construction, meaning, operation, effect, Interpretation of the contract or breach thereof which parties are unable to settle mutually, the same shall be referred to Arbitration as provided hereunder:
1.3.2.1 A party wishing to commence arbitration proceeding shall Invoke Arbitration Clause by giving 60 days notice to the other party. The notice Invoking arbitration shall specify all the poi
Section 2 (d) of the Act the Arbitral Tribunal is defined either as a sole arbitrator or a Panel of arbitrators and the language used in Sub Section (14) of Section 11 is for "determination of Fees o....
The principle of party autonomy is crucial in arbitration proceedings, and the Arbitral Tribunal cannot impose its will and wishes without reason or cause.
The arbitration fees can be separately fixed for claims and counter-claims as per the provisions of the Arbitration and Conciliation Act, 1996, which is consistent with the statutory intent.
The main legal point established in the judgment is the importance of party autonomy in determining arbitral fees, as well as the interpretation and application of the 2020 Circular in the context of....
Arbitration fees under ICA Rules must be calculated separately for claims and counter-claims, as clarified by the court's interpretation of the rules, reaffirming the Arbitral Tribunal's authority.
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