Arbitrator's Can't Unilaterally Fix Fees At A Later Stage : Amicus Curiae Tells Supreme Court

The Supreme Court on Wednesday continued the hearing on the issue of fixation of standards for fees for arbitrators.The bench of Justices D. Y. Chandrachud, Sanjiv Khanna and Surya Kant was considering the issue regarding the mandatory nature of the 'model' fee scale for arbitrators prescribed under the Fourth Schedule of the Arbitration and Conciliation Act 1996. In the hearing today, Senior Advocate Hufeza Ahmadi (appointed amicus curiae) while emphasizing on the essence of arbitration namely fairness, efficiency and integrity, submitted that party autonomy must trump over all the rules. "If parties are appointing an arbitrator then in the 1st hearing itself, then fees must be determined. Kindly consider the agony of the parties as to what happened, consider the wastage of time for the parties. If the arbitrators withdraw at that stage there should be some sort of reprimand. You can't change the rules of the games later. Kindly consider what the parties will have to go to. Even if you have accepted it and if you go for too long, you'll have to accept it. It should be done in the first 2 or 3 hearings," submitted Senior Counsel. Submissions were also made by Advocate(s) K Parameshwari and Manu Sheshadhri. If Parties Agree To A Particular Procedure Irrespective Of Whether It's Just Fair So Far As It's In Accordance With Law, Party Autonomy Must Trump Over All Other Rules; Scheme Of The Act As It Stands Today Does Not Make The 4th Schedule Mandatory At All: Senior Advocate Hufeza Ahmadi Senior Advocate Hufeza Ahmadi (appointed amicus curiae) commenced his submissions by emphasizing on the essence of arbitration namely fairness, efficiency and integrity. Referring to the same, Senior Counsel contended that the same should not be compromised in any manner in case where the arbitrator feels that the remuneration is not appropriate. Focusing on the aspect of "party autonomy" in arbitration, he said, "Legislature in its wisdom has limited challenge to award in arbitration proceedings to a very limited ground. So it is necessary for an overarching guiding principle that fairness, efficiency and integrity of arbitration is not compromised in any manner. Emphasized on party autonomy because arbitration and reference to arbitration is a creature of contract. If parties agree to a particular procedure irrespective of whether it's just fair so far as it's in accordance with law, party autonomy must trump over all other rules." He further contended that as per the scheme of the Act, 4th schedule was not mandatory at all. "Scheme of the act as it stands today does not make the 4th schedule mandatory at all. Fact that a party agrees to the 4th schedule is also part of party autonomy as it adopts the 4th schedule since it's convenient to do so," submitted Ahmadi. 4th Schedule If Interpreted Appears To Suggest That Claim And Counter- Claim Can Be Charged Separately; Rule Should Not Be Very Rigid & There Should Be Certain Amount Of Flexibility In Procedure With regards to 4th schedule, the amicus submitted that, "4th schedule if interpreted appears to suggest that claim and counter- claim can be charged separately. Also emphasize on retention of certain flexibility with the parties in matters of procedure. Rule should not be very rigid and there should be a certain amount of flexibility in the procedure." There Cannot Be Unilateral Fixation Of Fees By The Arbitrator At The Later Stage; First Hearing Must Stipulate The Fees Of The Arbitrator And If You Have Agreed To That There Should Not Be Any Question Of Modification: Senior Advocate Hufeza Ahmadi Senior Advocate Ahmadi also argued that the parties in the first hearing of the arbitration should stipulate the fees of the arbitrator and that there could not be unilateral fixation of fees at the later stage. He further suggested that in a court appointed arbitrator, the court's order should also have a clause pertaining to the arbitrator's fees. "To say that in court appointed arbitrator, order of court must stipulate the fees of the arbitrator and it must also have the clause. If it exceeds this then you may charge so much but all that should be watertight and there cannot be unilateral fixation of fees by the arbitrator at the later stage. The first hearing must stipulate the fees of the arbitrator and if you have agreed to that there should not be any question of modification because that puts the parties in an embarrassing situation," submitted Senior Counsel. Arbitrator's Fees Should Be Fixed In First 2 or 3 Hearings; If Arbitrators Withdraw During Middle Of Arbitration Proceedings There Should Be Some Sort Of Reprimand: Senior Advocate Hufeza Ahmadi Throwing light on the agony suffered by the parties on the arbitrator demanding a different fees in the mid of the arbitration proceedings, Ahmadi said, "If parties are appointing an arbitrator then in the 1st...

Arbitrator's Can't Unilaterally Fix Fees At A Later Stage : Amicus Curiae Tells Supreme Court

Shruti Kakkar

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