Lien on Award
As mentioned above, the arbitrator is well within his right to demand payment before final pronouncement of award, for his services rendered. The ordinary practice is for him to notify the parties the charges for his services as soon as the award is ready. He may retain the award until the charges are paid by the parties. This retention of award may be called the arbitrator’s lien on the award. This lien, however, does not extend to the documents and other information rendered by the parties to the arbitrator. Thus the arbitrator cannot hold and retain the official documents of any party, until they have paid the charges. Arbitrator only has a lien on the arbitral award and nothing else.
It sometimes happens that at the absolute end of an arbitration proceeding, one or both of the parties refuse to pay the fees of the arbitrator. The arbitrator can send a time bound notice to the parties for them to pay the appropriate amount. If the parties on completion of the time don't pay the fees, then the arbitrator sends a final notice informing them of the pronouncement of the award and the failure to pay his fees will lead to lien on the award and retention of the same.
An arbitrator has two ways to recover the money due to him:
- a) By the exercise of his lien:
The arbitrator, so far his payment of fees is concerned, is entitled to withhold the pronouncement of the award. The lien on the award covers not only his fees for his services but also all the out of pocket expenses that the arbitrator has occurred in connection to the dispute. These out of pocket expenses include travel expenses, knowledge and resources expenses, secretarial expenses, accommodation etc.
- b) By suit:
Section 39(2) allows the arbitrator to approach the court to entertain an application towards unpaid costs. The court shall direct the parties to make a deposit in the court. The arbitrator shall then deliver the award to the parties and the court. The court after being satisfied shall order that out of the money deposited in the court, the arbitrator shall be paid such amount which the court may consider reasonable.
Both of these resorts are only to be chosen if the arbitrator is not paid for his services by either party. If one party accepts to pay the amount due by the other party in full, then the arbitrator cannot take recourse of Section 39. Thus if one party fails to pay his share, and the other party does not come forward to pay on behalf of the defaulting party; then the arbitrator can take help from Section 39.
The arbitrator may include in his award who has paid the costs of the arbitration and the arbitrator’s fees. The award generally directs a certain party to pay the costs of the arbitration. It is common to add another direction for the successful party, if he has paid the arbitrator’s fees on behalf of the other party; to reimburse him for such costs.
Having said all of the above for the right of the arbitrators, it is important to note that they cannot charge exorbitant fees for a noble cause of dispute resolution. The arbitrator cannot fix unreasonable and excessive fees that a humble party will not be able to pay.
The fees of the arbitrator should also be decided only after consideration by both the parties and the Tribunal. The arbitrator should not bargain for the fees. The fees in a 3 or 5-person arbitral tribunal should also not be changed unilaterally by one arbitrator. The consent of all arbitrators on the tribunal is required to make any changes in the fee schedule or amount.
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.