The High court of Delhi, on 3rd June 2020, in the case of Entertainment City ltd v. Aspek media private ltd., held that the fees chargeable by the sole arbitrator in the present case are not subject to the statutory limits, stipulated in the 4th schedule to the acts.
The arbitral disputes that arose between the petitioner and the respondent were preferred before the High Court of Delhi, for the appointment of an arbitrator to arbitrate on the disputes. a retired judge was appointed as Sole Arbitrator. However, the said order did not fix any fees, as payable to the learned Sole Arbitrator. Even the contract/agreement that existed between the petitioner and the respondent too contained an arbitral clause but does not fox any fees as payable to the Arbitrator.
The grievance on the part of the petitioner on the basis whereof the prayer that terminates the mandate of the learned Sole Arbitrator is being urged in these proceedings essentially relates to the fees that were being charged by the learned Sole Arbitrator.
Whether the fees that are chargeable by the Sole Arbitrator, in the present case, were subject to the statutory limits that are stipulated in the 4th schedule to the Act?
The petitioner before the arbitrator preferred an application, pleading that the fees demanded by her infracted Section 11(14) of the Act, read with the Fourth Schedule thereto. The petitioner pleaded financial stringency as well. However, the Arbitrator rejected the objection pleaded by the petitioner, regarding the fees charged by her.
The High Court of Delhi held that:
i. Under subsection (3) of Section 12 the use of the word “only” evinces, unmistakably, the statutory intent of delineating the grounds of challenge that is available under Section 12 to the two contingencies stipulated therein i.e., the existence of the justifiable doubts, regarding the independence or impartiality of the arbitrator, or absence of required qualifications.
ii. Sub-Section (4) of Section 12 has necessarily to be read within conjunction with sub-Section (3) of Section 12 and also cannot be regarded as a standalone provision.
iii. The pre-amended position of the sub-section (14) of Section 11 of the Act remains the same till date and no rules have been framed under the Section 11 (14) of the Act by this court, whereby the fees of the arbitrators that are directly appointed by the court could be governed.
iv. It was always open to the petitioner of a condition regarding the fees payable in arbitral proceedings as one of the parties dated, to insist on the incorporation for the same. Neither did the petitioner choose to do so nor apparently, did the petitioner insist on any fees being fixed at the time of appointment of the learned Sole Arbitrator by this court.
v. No case, for holding that the learned Sole Arbitrator has become de jure, or de facto, unable to perform her functions, exists, in the present case.
The court also held that it is certainly not open to the petitioner, at the present stage, to seek for the termination of the mandate of the Sole Arbitrator on the sole ground of the fees, fixed by her, or to invoke, for the said purpose, Section 14 (1)(a)of the Act. It can’t be said that the learned Sole Arbitrator has become de jure unable to perform her functions.