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Arbitrator Fees Fixation - The Court or arbitral tribunal is responsible for determining and fixing arbitrator fees, often guided by statutory provisions such as Section 39(2) of the Arbitration Act, which mandates courts to make inquiries and pass appropriate orders for fee fixation ["Jacob Mathew S/o Late M. Jacob vs P.T.C. Builders - Kerala"].
Arbitrator's Authority and Limitations - Arbitrators may set their own fees within limits, but cannot unilaterally impose or modify fees beyond what is agreed upon or prescribed by law. For example, an arbitrator cannot charge fees exceeding the capped limit or alter fees once fixed by mutual consent ["Shanklesha Construction VS Ashok Mohanraj Chhajed - Bombay"], ["Subhash Infraengineers Pvt. Ltd. VS NTPC Ltd. - Delhi"].
Statutory and Schedule Guidelines - The Fourth Schedule of the Arbitration Act, last revised in 2016, provides standardized fee structures for arbitrators, which courts and arbitrators are expected to adhere to. The Schedule aims to standardize fees across arbitration proceedings and prevent arbitrary or unreasonable charges ["Anay Kumar Gupta VS Jagmeet Singh Bhatia - Delhi"], ["G. D. Goenka Pvt. Ltd. VS Shri Tikam Chand Educational And Charitable Trust - Delhi"].
Court’s Role and Enforcement - Courts have a crucial role in fixing arbitrator fees, especially in ad hoc arbitrations, and may issue directives or guidelines to ensure fees are reasonable and within prescribed limits. Courts also consider the conduct of arbitration and efficiency, but generally focus on whether arbitrators act with expedition rather than fee disputes, unless contested ["Anay Kumar Gupta VS Jagmeet Singh Bhatia - Delhi"], ["Managing Director, Kerala State Film Development Corporation Ltd VS L. Rajendran - Kerala"].
Disputes and Non-Payment - Non-payment of arbitrator fees can lead to proceedings being stalled or the arbitrator refusing to act. Arbitrators can be entitled to fees as per the arbitration agreement or statutory schedule, and parties are typically responsible for paying their share in stages, aligned with arbitration milestones ["Shanklesha Construction VS Ashok Mohanraj Chhajed - Bombay"], ["Subhash Infraengineers Pvt. Ltd. VS NTPC Ltd. - Delhi"].
Arbitrator’s Fees in Institutional vs. Ad Hoc Arbitrations - In institutional arbitrations, fees are often governed by specific rules such as the Delhi International Arbitration Centre Rules, while in ad hoc arbitrations, courts may fix fees based on statutory schedules and guidelines ["Space 4 Business Solution Pvt. VS District Election Officer North East - Delhi"], ["Colliers International (India) Property Services Pvt. Ltd. vs Arrowline Real Estate Private Limited - Jharkhand"].
Analysis and Conclusion:Arbitrator fees are primarily determined by courts or arbitral institutions, guided by statutory provisions, schedules, and arbitration agreements. The Fourth Schedule of the Arbitration Act provides a standardized fee structure to prevent arbitrary charges. Courts play a vital role in fixing, reviewing, and enforcing arbitrator fees, ensuring transparency and reasonableness. Arbitrators cannot unilaterally set or modify fees beyond agreed or statutory limits, and non-payment can hinder arbitration proceedings. Overall, the system aims to balance fair compensation for arbitrators with protecting parties from unreasonable costs ["Jacob Mathew S/o Late M. Jacob vs P.T.C. Builders - Kerala"], ["Shanklesha Construction VS Ashok Mohanraj Chhajed - Bombay"], ["Anay Kumar Gupta VS Jagmeet Singh Bhatia - Delhi"], ["G. D. Goenka Pvt. Ltd. VS Shri Tikam Chand Educational And Charitable Trust - Delhi"], ["Space 4 Business Solution Pvt. VS District Election Officer North East - Delhi"], ["Colliers International (India) Property Services Pvt. Ltd. vs Arrowline Real Estate Private Limited - Jharkhand"].
In the realm of dispute resolution, arbitration has become a preferred mechanism in India for its efficiency and confidentiality. However, one persistent concern for parties is the remuneration of arbitrators. A key question often arises: What is the Maximum Rate of Interest that can be Granted by Arbitrator? While the phrasing may evoke interest awards, the underlying issue frequently pertains to the maximum fees arbitrators can claim, governed strictly by law to prevent exorbitant charges. This blog explores the legal framework under the Arbitration and Conciliation Act, 1996 (the Act), focusing on Schedule IV, judicial interpretations, and practical implications. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878
Understanding these limits is crucial for businesses, contractors, and litigants engaging in arbitration, ensuring cost predictability and fairness.
Arbitrator fees in India are not left to unilateral discretion. The Act, along with judicial precedents and institutional rules, mandates that remuneration be determined by:- Party agreement: Ideally fixed at the outset. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878- Schedule IV of the Act: A default model fee structure based on the 'sum in dispute'. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878- Court or institutional oversight: To ensure reasonableness. EDAC Engineering Ltd. , Rep. by its Assistant Manager-Legal, Chennai VS Industrial Fans (India) Pvt. Ltd. , Rep. by its Managing Director C. Arunagiri - 2023 0 Supreme(Mad) 2691
The Supreme Court has repeatedly clarified that arbitrators do not possess an absolute or unilateral right to fix their own fees. Instead, fees must align with agreements, statutory guidelines, or be subject to review. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878 This prevents arbitrators from imposing arbitrary charges, a problem highlighted in cases where High Courts failed to notify rules, leading to court-appointed arbitrator(s) continuing to impose unilateral and arbitrary fees on parties. National Highways Authority of India VS Ae Tollway Ltd. - 2023 Supreme(Del) 789
Central to fee calculation is the 'sum in dispute' under Schedule IV, which provides a sliding scale up to a ceiling. Courts have interpreted this phrase to mean the aggregate of claims and counter-claims, not separate amounts. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878
Key judicial insights include:- The Schedule mirrors the DIAC fee schedule, considering the total dispute value. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878- Disjunctive language like plus and Hindi version commas indicate a collective ceiling. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878- Legislative intent promotes cost-effectiveness by capping total fees. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878
In a notable NHAI case, the tribunal charged fees separately for claims and counter-claims, contrary to a 2020 Circular. The court ruled that fees of the Tribunal should be computed on the basis of the total sum in dispute, inclusive of the claims and counter-claims. The mandate termination petition was disposed, directing the tribunal to reconsider. National Highways Authority of India VS Ae Tollway Ltd. - 2023 Supreme(Del) 789
Schedule IV's Serial No. 6 sets a Rs 30,00,000 ceiling on the total fee for the arbitration, encompassing base and variable components—not just variable. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878
Exceeding this without consent is impermissible. Courts can modify awards or fees if unreasonable, as seen in construction disputes where awards were upheld but modified to align with agreement terms on fees. Vinod Seth (Deceased) Thr Kunal Seth VS Sudershan Kumar Bhayana - 2019 Supreme(Del) 1306 For instance, one ruling specified, The fees of the learned Arbitrator will be in terms of the DHCAC (Arbitrators Fees) Rules. Vinod Seth (Deceased) Thr Kunal Seth VS Sudershan Kumar Bhayana - 2019 Supreme(Del) 1306
Arbitrators lack authority to unilaterally hike fees. Judicial decisions emphasize:- Acceptance or refusal of agreed terms. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878- Review powers vested in courts under Section 39 of the Act. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878
International practices (UNCITRAL, ICC, LCIA) reinforce this, subjecting fees to agreement, rules, or reasonableness standards without absolute arbitrator power. EDAC Engineering Ltd. , Rep. by its Assistant Manager-Legal, Chennai VS Industrial Fans (India) Pvt. Ltd. , Rep. by its Managing Director C. Arunagiri - 2023 0 Supreme(Mad) 2691 Domestically, ad hoc arbitrations default to Schedule IV, while institutional ones follow specific rules. EDAC Engineering Ltd. , Rep. by its Assistant Manager-Legal, Chennai VS Industrial Fans (India) Pvt. Ltd. , Rep. by its Managing Director C. Arunagiri - 2023 0 Supreme(Mad) 2691
A Chhattisgarh case underscored party obligations: Parties shall pay the fees and expenses of the Arbitrator, with liberty for expert assistance, but within contractual bounds. P. C. JAIN VS STATE OF C. G. - 2013 Supreme(Chh) 303
Other contexts, like construction contracts, confirm arbitrability of delay claims but tie fees to clauses: The fees, if any of the arbitrator shall XXXX XXXX XXXX. WINNER CONSTRUCTIONS PRIVATE LIMITED VS UNION OF INDIA - 2016 Supreme(Del) 1824
To navigate fee uncertainties:1. Specify fees upfront using Schedule IV or custom terms. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 8782. Choose institutions with clear rules for predictability. EDAC Engineering Ltd. , Rep. by its Assistant Manager-Legal, Chennai VS Industrial Fans (India) Pvt. Ltd. , Rep. by its Managing Director C. Arunagiri - 2023 0 Supreme(Mad) 26913. Seek court intervention if fees seem exorbitant—Section 39 allows scrutiny. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 8784. Document everything: Agreements on fees prevent disputes. National Highways Authority of India VS Ae Tollway Ltd. - 2023 Supreme(Del) 789
In refund scenarios post-referral to arbitration, courts have mandated refunds under state fee acts, treating it as settlement under CPC Section 89. Seetharam C.N., S/O Sri C.K.Narasimha Iyengar vs Skytop Builders Private Limited - 2025 Supreme(Online)(Kar) 21948
Arbitrator fees in India are capped and regulated to promote accessible justice. The Rs 30 lakh ceiling under Schedule IV applies to total fees based on aggregate claims and counter-claims, with no unilateral hikes allowed. Courts retain oversight for fairness, as affirmed across judgments. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878EDAC Engineering Ltd. , Rep. by its Assistant Manager-Legal, Chennai VS Industrial Fans (India) Pvt. Ltd. , Rep. by its Managing Director C. Arunagiri - 2023 0 Supreme(Mad) 2691
Key Takeaways:- Fees by agreement or Schedule IV; aggregate 'sum in dispute'. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878- Ceiling: Rs 30L total; reviewable by courts. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878- Avoid unilateral claims; prioritize party autonomy. National Highways Authority of India VS Ae Tollway Ltd. - 2023 Supreme(Del) 789
This post provides general information based on judicial interpretations and is not legal advice. Consult a qualified lawyer for specific cases.
References:1. Oil and Natural Gas Corporation Ltd. VS Afcons Gunanusa JV - 2022 0 Supreme(SC) 878: Core on Schedule IV, sum in dispute, Rs 30L ceiling.2. EDAC Engineering Ltd. , Rep. by its Assistant Manager-Legal, Chennai VS Industrial Fans (India) Pvt. Ltd. , Rep. by its Managing Director C. Arunagiri - 2023 0 Supreme(Mad) 2691: Oversight and no absolute fee-fixing power.3. National Highways Authority of India VS Ae Tollway Ltd. - 2023 Supreme(Del) 789: Unilateral fees, NHAI case on total sum.
#ArbitratorFees #ArbitrationIndia #LegalInsights
Section 39 (2) before the Court, and the Court shall make an enquiry and then pass an order for fixing the arbitration fees.
Ashok Mohanraj Chhajed, who in turn claims that no ground is made out either under Section 14 or under Section 29-A(6) of the Arbitration Act for substitution of the learned arbitrator. ... On 25.09.2019, the arbitrator passed an order holding that since capping limit of the fees had been reached, no fees could be charged on the counter-claim except 1/4th of the ad-valorem amount payable....
The failure of many High Courts to notify the rules has led to a situation where the purpose of introducing the Fourth Schedule and sub-Section (14) to Section 11 has been rendered nugatory, and the court-appointed arbitrator(s) are continuing to impose unilateral and arbitrary fees on parties. ... Article 44.3.1(vii) of the Agreement provides for fees and expenses payable to the arbitrator#HL_E....
The law is also well settled that the Court while considering an application under Section 29A of the Act, is only concerned with the issue as to whether the Arbitrator has acted with expedition in the matter; issues relating to the conduct of the Arbitration and/or arbitral fees are not relevant for ... Subsequently, an application came to be filed by the respondent before the learned arbitrator raising a grievance with r....
The arbitrator will be at liberty to take any expert assistance. MANU/TN/2457/2018 considering the interplay between Section 16 of the Court Fees Act and Section 69A of the Tamil Nadu Court Fees Act, which is in pari-materia with the Court Fees Act quoted hereinabove, has held as follows: Section 8 of the Act and the order is passed transferring the case to the #HL_STA....
The learned Arbitrator shall give a declaration under Section 12(1) of the 1996 Act before entering upon reference and the arbitration proceedings shall be conducted under the aegis of DIAC. Fees of the learned Arbitrator shall be regulated as per the Fourth Schedule of the 1996 Act. ... 19.1.5 The fees and expenses of the arbitrators and all other expenses of the arbitration shall be initially borne and....
The collection of unreasonable fees by the Arbitrator and insistence of the Arbitrator to pay fees in excess of the limits of de facto inability of the Arbitrator to perform his functions. ... Moreover, the Arbitrator has no right to modify his fees, once the same has been fixed by consent of both the parties. ... (6) Where an arbitral award is set aside on an applicat....
Where the proceedings are put in abeyance or terminated on account of mutual settlement of dispute by the parties, the fees payable to the arbitrator shall be determined as under: (i) 40% of the fees if the Pleadings are complete. ... The learned Sole Arbitrator may proceed with the arbitration proceedings subject to furnishing to the parties requisite disclosures as required under Section 12 of the Act. ....
Learned Arbitrator would endeavor to conclude the proceedings expeditiously by taking into regard the mandate of the Legislature under Section 29 -A of the Act of 1996. ... Learned Arbitrator would be free to lay down the fees and other expenses towards conduct of the arbitration proceedings, however, while doing so he shall take into account the ceiling prescribed under Schedule IV of the Act of 1996 as amended. ... This....
The Learned Sole Arbitrator shall be paid fees as prescribed under the Delhi International Arbitration Centre (Administrative Cost and Arbitrators Fees) Rules, 2018 as amended vide notification dated 15th November 2022; IV. ... The Learned Sole Arbitrator, before entering the Arbitration reference, shall ensure compliance of Section 12(1) of the Arbitration and Conciliation Act, 1996; III. ... (Oral)--The....
(xxi) The Explanation to Section 31A(1) of the Arbitration Act states for the purpose of this sub-Section, “costs” means reasonable costs relating to the “fees” and expenses of the arbitrator. Section 31(8) read with Section 31A deals with costs generally but not with arbitrator(s) fees; The Explanation takes away the effect of the legislative intent enshrined in Sections 11(14) read with the Fourth Schedule and Section 38(1) of the Arbitration Act. (xx) In Gayatri Jhansi Roa....
(5) If the award is not made within the period specified in sub-section (4), the provisions of subsections (3) to (9) of section 29A shall apply to the proceedings. Correction and interpretation of award; additional award. (6) The fees payable to the arbitrator and the manner of payment of the fees shall be such as may be agreed between the arbitrator and the parties." "33.
The fees of the learned Arbitrator will be in terms of the DHCAC (Arbitrators Fees) Rules.
The fees, if any of the arbitrator shall XXXX XXXX XXXX” The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion.
19. Registry is directed to communicate this order to Mr. Justice L.C. Bhadoo, Former Judge, High Court of Chhattisgarh. Parties shall pay the fees and expenses of the Arbitrator. The learned Arbitrator is free to take assistance of technical expert in conducting arbitration.
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