Arbitration:
Fee of Arbitrator – Whether to be governed by Fourth Schedule of the Arbitration Act dehors the agreement between the parties – Held: The fee schedule fixed by the agreement between the parties would govern the fee of Arbitrator and not Fourth Schedule to the Arbitration Act – Arbitration and Conciliation Act, 1996 [As amended by Arbitration and Conciliation (Amendment) Act, 2015] – Fourth Schedule.
Arbitration and Conciliation Act, 1996:
s. 31(8) r/w. s. 31A – Scope of – Held: Section 31(8) r/w s.31A deals only with the costs generally and not with arbitrator’s fee – It is true that the arbitrator’s fees may be a component of costs to be paid, but it is not correct to say that s. 31(8) and 31A directly govern contracts in which fee structure has already been laid down.
Disposing of the appeals, the Court
HELD: 1. In the facts of the present case, the fee schedule was fixed by the agreement between the parties. This fee schedule, being based on an earlier circular of 2004, was now liable to be amended from time to time in view of the long passage of time that has ensued between the date of the agreement and the date of the disputes that have arisen under the agreement. Therefore, the fee schedule that is contained in the Circular dated 01.06.2017, substituting the earlier fee schedule, will now operate and the arbitrators will be entitled to charge their fees in accordance with this schedule and not in accordance with the Fourth Schedule to the Arbitration Act. [Para 12] [1007-A-C]
2. The application that was filed before the High Court to remove the arbitrators stating that their mandate must terminate, is wholly disingenuous and would not lie for the simple reason that an arbitrator does not become de jure unable to perform his functions if, by an order passed by such arbitrator(s), all that they have done is to state that, in point of fact, the agreement does govern the arbitral fees to be charged, but that they were bound to follow the judgment in National Highways Authority of India vs. Gayatri Jhansi Roadways Limited case passed by the Delhi High Court which clearly mandated that the Fourth Schedule and not the agreement would govern. [Para 13] [1007-C-D]
3. However, the Single Judge’s conclusion that the change in language of Section 31(8) read with Section 31A of Arbitration and Conciliation Act, 1996 which deals only with the costs generally and not with arbitrator’s fees is correct in law. It is true that the arbitrator’s fees may be a component of costs to be paid but it is a far cry thereafter to state that Sections 31(8) and 31A would directly govern contracts in which a fee structure has already been laid down. To this extent, the Single Judge is correct. The declaration of law by the Single Judge in Gayatri Jhansi Roadways Limited case is not a correct view of the law. [Para 15] [1007-F-H]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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