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How can the tribunal recover the cost (during and after completion of the proceedings)?

How can the tribunal recover the cost (during and after completion of the proceedings)?

Each arbitrator working for the adjudication of disputes between parties must be paid appropriately for the service that they have provided. Every situation is different. Parties can decide the remuneration for the Tribunal in advance and include it in the arbitration clause as well (provided that the arbitrator is agreeable to working for that fee). If the remuneration is not included in the arbitration clause, then the same can be decided in a procedural hearing of the arbitration. The parties providing reference of adjudication of their dispute to an arbitrator makes an implied agreement to pay the arbitrator appropriate remuneration for his services.

With the inclusion of Schedule IV, the remuneration to be provided to the Tribunal has also become feasible. Earlier, the arbitrators use to consider adjudication via arbitration as an extra source of income. They would charge exorbitant fees from the parties only to make money out of very simple disputes. With Schedule IV coming to place, the amount that should be charged is also available to the parties so that they don't get fooled by the arbitrators. It is not compulsory to abide by the Schedule provided under the Act. However, it comes as an accurate measure to realise the amount deserved by the Arbitrators.

There have also been cases where the arbitral award has been pronounced and the tribunal has become functus officio, but the party/parties have not paid them any money for the time, energy and money that the arbitrator invested in adjudicating their dispute.

In order to save such a situation, Section 39 of the Arbitration & Conciliation Act provides a right to the arbitrators to have a lien on the arbitral award, pending any unpaid dues of the arbitration. This means that the tribunal may not issue the award until the fees are paid by the parties.

Section 39 also provides authority to the court to order deposit of costs of arbitration to safeguard the interests of the tribunal as well as the parties. If the arbitrator does not provide the award for any other reason except the payment of costs, then any party may approach the court to direct the arbitral tribunal to pronounce the award. Under this application, the court may direct the parties to deposit the costs of the arbitration in the court and at the end of the dispute resolution process shall divide the costs appropriately amongst the arbitral tribunal. If the court finds that there is any amount remaining from the deposit, then they will refund the same to the parties.

The court has been given a huge responsibility under this section to treat the situation around the costs of the arbitration with justice and equity. In certain technical disputes, the arbitrators may deserve more than the amount provided under Schedule IV of the Act. Such situations have to judge appropriately by the Court. The Court may make such orders as it thinks fit, depending upon the facts of each case and the situation that has unfolded during the arbitration process.

If the arbitral tribunal orders for payment of a certain amount of his fees in advance, then he is allowed to do so. Arbitrators can not demand the entire fees in advance, but they are allowed to ask for a certain amount in advance; as long as it is not excessive. Certain arbitration procedures also have a per hearing fee where the arbitrators are paid after every hearing. Specific procedures, as long as agreeable to all the parties involved are allowed as party autonomy is extremely important in arbitration.


This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. 

  • How can the tribunal recover the cost (during and after completion of the proceedings)?
  • functus officio
  • Section 39

BY : Mr. kartikeya Awasthi

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