Arbitrator Fees – Unilateral fixation and rejection of counter claim for non payment of fees

In the arbitration proceedings as per the agreement dated 24.5.2018 in respect of tender to run the sand block, the claimant filed claim of Rs.2,56,26,000/- with interest and counter claim of Rs.6,90,98,132/- with interest.  

The Arbitrator claimed lumpsum fees of Rs.30 lakhs in violation of the Fourth Schedule to the Arbitration and Conciliation Act, 1996.

According to the Schedule of Fees, the total fees payable to the sole Arbitrator are Rs.9,93,426.25/- calculated on total claim and counter claim of Rs.5,57,24,132/-.

In addition, the Arbitrator had rejected counter claim of the petitioners for non-payment vide order dated 22.12.2022.

HELD that the Arbitrator has liberty to fix own fees and other terms & conditions but with the consultation of the parties.  The contractual agreement on fees takes precedence over the statutory provisions.

The Arbitrator has ample jurisdiction to decide on fees including objection of the parties to his fees as per Section 16(3) of the Arbitration Act.

 Section 38(2) of the AA permits the Arbitrator to suspend or terminate the arbitral proceedings in respect of such claim or counter claim where the party does not share the fees.   Therefore, the Arbitrator has powers to reject the counter claim for non-payment of fees of the Arbitrator.

 The remedy of Article 227 of the Constitution of India for challenging the order of the Arbitrator on unilateral fixation of fees is not available, since appropriate recourse available to the petitioner would be to challenge the final arbitral award.

Judgment dated 29.4.2025  of the High Court of Calcutta (AS) in C.O. 140 of 2023 of P & P Business Private Limited    Vs.   Marco Franceso Shoes (India) Private Limited