India: Arbitrator Fees In India: In A Fix?

The Law Commission of India, in its 246th report, noted that one of the problems associated with arbitration in India (especially ad hoc arbitrations) is the high quantum of fees charged by arbitrators.1 The Report went so far as to call the fees "arbitrary, unilateral and disproportionate". The Commission recommended the adoption of a model schedule of fees for Courts to consider while framing rules for fixing of the fees of arbitrators appointed in accordance with Section 11 of the Arbitration and Conciliation Act, 1996 (the Act). The Commission restricted its suggestions to ad hoc domestic arbitrations, noting that different standards may apply in institutional arbitrations and in international commercial arbitrations (where the Commission recommended greater deference to party autonomy).

In 2015, in accordance with the recommendations of the Law Commission, the Act was amended to include sub-section 11(14), which gives High Courts the power to frame rules for determining the fees of an arbitral tribunal and the manner of its payment, after taking into consideration the rates specified in the model Schedule of Fees set out in the Fourth Schedule to the amended Act. The Explanation to the sub-section clarifies that it would not apply to international commercial arbitrations or institutional arbitrations.

The Act, as it stood prior to the 2015 amendment, empowered arbitral tribunals to fix the costs of the arbitration, unless otherwise agreed by the parties. The Law Commission, in its 246th report, recommended statutory recognition of the "loser pays" or "costs follow the event" principle. Pursuant to the recommendation, sub-section 31(8) of the Act was amended in 2015. The phrase "unless otherwise agreed by the parties" was deleted from sub-section 31(8) and arbitral tribunals were given the power to fix arbitration costs in accordance with the newly introduced Section 31A. It was clarified that for the purposes of Section 31A, "costs" would inter alia mean reasonable costs relating to the fees and expenses of the arbitrators.

In 2017, the Delhi High Court in the case of National Highways Authority of India v. Gayatri Jhansi Roadways Limited2 (Gayatri Roadways Case), interpreted sub-section 11(14) of the Act and the effect of the specific deletion of the expression "unless otherwise agreed by the parties" from sub-section 31(8) of the amended Act. The Court held that the legislature had specifically taken away the power of the parties to enter into an agreement with regard to fixing of the arbitral tribunal's fees. The Court further held that, in light of the explanation to sub-section 11(14), the right of the parties to enter into an agreement with regard to determination of arbitrator fees has been restricted to international commercial arbitrations and arbitrations (other than international commercial arbitrations) where parties have agreed for determination of fees as per the rules of an arbitral institution.

In 2018, the Delhi High Court in the case of National Highways Authority of India v. Gammon Engineers and Contractor Pvt. Ltd.3 (Gammon Engineers Case) once again interpreted sub-section 31(8) of the amended Act and this time held that "costs" under sub-section 31(8) and Section 31A of the Act are the costs that are awarded by an arbitral tribunal as part of its award in favour of one party to the proceedings and against the other. Deletion of the words "unless otherwise agreed by the parties" was found to only signify that the parties, by an agreement, cannot contract out of payment of "costs" and "denude" the arbitral tribunal of its power to award "costs" of arbitration in favour of the successful party. With respect to fixing of fees by the arbitral tribunal, the Court held that an arbitral tribunal is bound by the arbitration agreement between the parties, which is the source of its power. Similar findings were arrived at by the Bombay High Court in Transocean Drilling Services (India) Pvt. Ltd. v. Oil and Natural Gas Corporation Ltd.4.

Essentially, the Delhi High Court in the case of Gayatri Roadways held that the tribunal was free to fix its own fees but could do so only in cases of ad hoc domestic arbitrations. However, a year later, the Delhi High Court in the case of Gammon Engineers held that the tribunal would be bound by the parties' agreement as to the tribunal's fees.

Special Leave Petitions were filed challenging the orders passed by the Delhi High Court in the Gayatri Roadways and Gammon Engineering Cases. The Supreme Court observed that the arbitrator's fees may be a component of "costs" to be paid but it is a "far cry" to state that sub-section 31(8) and Section 31A of the Act would "directly" govern contracts in which a fee structure has already been laid down. The Supreme Court overruled the decision of the Delhi High Court in the Gayatri Roadways Case and upheld the decision of the Delhi High Court in the Gammon Engineers Case (insofar as it pertained to the interpretation of sub-sections 11(14), 31(8) and Section 31A).5

The 2019 amendment to Section 11 of the Act (which is yet to be notified) makes it mandatory for the appointing authority (a designated arbitral institution) to fix arbitrator fees subject to the rates stipulated in the Fourth Schedule to the Act. This provision does not apply to international commercial arbitrations or to institutional arbitrations. It also does not seem to apply to domestic ad hoc arbitrations where the tribunal is appointed by the parties without recourse to Section 11 of the amended Act.

The rationale for the distinction drawn between an ad hoc domestic arbitration and an institutional arbitration or an international commercial arbitration, insofar as fixing of arbitrator fees is concerned, is unclear. For example, the maximum fees payable to an arbitrator under the Fourth Schedule to the Act is INR 30 Lakhs (with a further 25% or INR 7.5 lakhs if the arbitration is conducted by a sole arbitrator), whereas the maximum arbitrator fees payable under the Schedule of Fees of the Mumbai Centre for International Arbitration is INR 8.5 Crores.

Consider a situation where arbitrator 'X' is empaneled with an institution and also accepts appointments by Courts (or designated arbitral institutions) in ad hoc domestic arbitrations. Under the present arbitration regime, depending on whether or not parties have agreed to resolve their disputes through institutional arbitration, arbitrator 'X' will be paid higher fees (if he is appointed by an institution such as the MCIA) or lower fees (if he is appointed under Section 11 in an ad hoc arbitration) for deciding the same dispute. Similarly, parties may well have stipulated the arbitral tribunal's fees in the arbitration agreement. Given that the judiciary has fiercely protected party autonomy, can such an agreement between parties simply be ignored when appointments are made under Section 11? These and other concerns have already been raised in our previous blog on arbitral tribunal fees.

Unqualified deference to party autonomy in fixing of tribunal fees is also not without its challenges. Contracts involving the state or state-owned entities, for example, are often standard form contracts that prescribe unreasonably low arbitrator fees. In other cases, parties may have agreed to arbitrator fees decades in advance of disputes actually arising. Insistence on adherence to party autonomy and consequently adherence to unreasonably low rates of arbitrator fees would result in a leaner pool of experienced arbitrators willing to adjudicate the dispute. This may result in stonewalling the arbitral process, with the arbitrators most competent to adjudicate such disputes refusing to do so since adjudication would require extensive time and effort and would simply not be commercially feasible for them.

Another problem with absolute deference to party autonomy in the matter of fixing of tribunal fees is that pre-dispute agreements on tribunal fees rarely account for how complex disputes referred to arbitration can be. Even agreements that prescribe an ad valorem basis for calculation of the tribunal fees cannot fully account for the complexities involved in future disputes. It does not necessarily follow that a dispute involving a larger claim will be more complex, nor that a dispute involving a smaller claim will be less complex. Institutional rules (which often prescribe tribunal fees on an ad valorem basis) account for this by stipulating that variation in the fees may be allowed depending on the circumstances of the case. The Act, as it stands, unfortunately does not assuage these concerns.


While party autonomy is the bedrock of arbitration, a more nuanced approach to determining arbitrator fees may be necessary. The fixing of fees may best be left to discussions between the parties and the tribunal after the dispute has arisen. Perhaps any pre-dispute agreement in relation to arbitrator fees or the fees prescribed under the Fourth Schedule to the Act (whichever is higher) could serve as a starting point for discussions between the parties and the arbitral tribunal.

1 Law Commission of India, Report No. 246, "Amendments to the Arbitration and Conciliation Act, 1996", (August 2014).

2 2017 SCC OnLine Del 10285.

3 2018 SCC OnLine Del 10183.

4 Commercial Arbitration Application No. 131 of 2018, Order dated 8th October 2018.

5 2019 SCC OnLine SC 906.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions