Arbitrator's Fees : If There Are HC Rules, They Should Apply; 4th Schedule Can Be A Default Provision, Supreme Court Says During Hearing

The Supreme Court on Thursday 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, submissions were made by Attorney General for India KK Venugopal, Solicitor General of India Tushar Mehta and Senior Advocate Dr AM Singhvi. Submissions Of Counsels 4th Schedule Yardstick or Template By Which Domestic Arbitration Which Is Commercial In Nature Should Continue; Ceiling Of 30 Lakhs To Be Applied Entirely To The Table; Claim and Counterclaim Should Be Aggregate; 4th Schedule Fees Is Separate For Separate Arbitrators: AG KK Venugopal AG KK Venugopal commenced his submissions by referring to section 11(14) of the Act which empowers the High Court to frame the rules as may be necessary for determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal after taking into consideration the rates specified in the Fourth Schedule. He further contended that arbitrators could not unilaterally fix the fees. Referring to the rules framed by various High Courts such as Bombay, Delhi and Kerala, he contended that the High Court should formulate uniform rules so that there is uniformity throughout the country. "If there are rules made by the High Court, then the rules of the High Court would apply. Bombay High Court and Delhi High Court have formulated the rules," remarked Justice Sanjiv Khanna. "If the HC has framed rules and those are lower than the 4th schedule, then the HC rules will apply. Then in ad hoc arbitration you'll be guided by the rules. The 4th schedule of 2015 is in force and it provides a template and it can be in a sense a default provision except when it has been agreed by the parties," remarked Justice DY Chandrachud. "Even if this comes into force, it does not deal with the powers of the tribunals to fix the fees. The only difficulty will be where the rules have not been made. There would be templates," replied AG. AG further argued that claim and the counterclaim have to be bundled together with a ceiling of Rupees 30 lakhs for the determination of fees as per the 4th Schedule of the Arbitration Act. In this regard, he said, "If it's not aggregated then there will be huge liability on the parties which would mean either that this 30 lakhs would apply to anything above 20 crores. If you don't aggregate there would be 50 lakhs to each arbitrator, plus very heavy expenses of the counsel". "You can't charge a different set of fees for counterclaim and claim. They should charge the same set of fees. Some ground rules we may have to set here subject to hearing the other parties," remarked Justice Chandrachud at this juncture. It was also AG's contention that the ceiling of 30 lakhs should apply entirely to the table. To further substantiate his contention, AG referred to the Law Commission's 46th report and the Top Court's judgment in Union of India v Singh Builders. Reliance was also placed by AG on the Delhi High Court's judgment in Rail Vikas Nigam Ltd. vs Simplex Infrastructures Ltd. "Basis of arbitration where your lordship is noting as to what has been happening on ground. And your lordship's judgment will be of great value. If they agree they have to answer to the Dept and CAG and if they don't agree they have this belief of prejudice," he further added. To conclude his submissions, AG argued that: The 4th schedule is the yardstick or the template by which the arbitration in this country should continue- dometic arbitration which is commercial in nature. Claim and counterclaim - to be aggregated for having one single lump sum Fees cannot be fixed per day, per hour per sitting because it could lead to abuse. Lump sum would ensure that there is urgency and even the arbitrator would also complete the hearing as swiftly as possible. Because the quicker the arbitration is completed, it would save the expenses of parties to render it truly a cheap and efficacious remedyIn addition to aggregation- max fees is 30 lakhs. While AG was concluding his submissions he urged the bench to lay down the norms to be applied formally across the board for domestic arbitration which would be a boon for arbitration across the country. Absence Of Comma Should Not Make Difference As Object Of Cap Of 30 Lakh Was To Reduce Cost Of Arbitration; CAP Was Intended To Be On Ceiling Which Was Overall Chargeable; Section 38 Is Intended To Be Used At Outset & Not Periodically: SG Tushar Mehta Solicitor General Tushar Mehta on whether the ceiling of 30 lakhs in the sixth item in Schedule IV (which says that for sums in dispute of Rs. 20 crores and above, the fee will...

Arbitrator's Fees : If There Are HC Rules, They Should Apply; 4th Schedule Can Be A Default Provision, Supreme Court Says During Hearing

Shruti Kakkar

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