Delhi High Court: Schedule IV Of Arbitration Act Dealing With Tribunal's Fees Not Mandatory For International Commercial Arbitration

The petition before the High Court challenged the orders passed by a three-member Arbitral Tribunal currently seized of disputes between the petitioner and the respondent.

Considering the fact that the matter at hand was a case of International Commercial Arbitration, the Single Bench of Justice Sachin Datta held, “The Arbitral Tribunal also rightly notes that in terms of Section 2(1)(f)(ii) of the A&C Act read with explanation to Section 11(14) of the A&C Act, the IVth Schedule of the A&C Act is not mandatorily applicable in the present case.”

Advocate Ankur Mittal represented the Petitioner while Advocate Navin Kumar represented the Respondent.

Factual Background

The dispute in the present matter arose out of a Contract Agreement executed between the parties for the ‘four laning of Jhansi-Lakhanadon section KM 297 to KM 351 of National Highway-26 in the State of Madhya Pradesh. Disputes having arisen between the parties, the petitioner invoked the arbitration. The petitioner was aggrieved by the fact that the Arbitral Tribunal fixed fees of Rs.3,00,000 per Arbitrator per sitting.

Feeling aggrieved by such fixation of fees, the petitioner preferred an application seeking modification of the said order to the extent of seeking that the Arbitral Tribunal may fix an upper limit of Rs.30,00,000 on the fees of each Arbitrator as contemplated under IVth Schedule of the Arbitration and Conciliation Act, 1996. The Arbitral Tribunal rejected the aforesaid modification and observed that the present arbitration, being an international commercial arbitration in terms of Section 2(1)(f)(ii) of the A&C Act, the IVth Schedule was not applicable in terms of the explanation to Section 11(14) of the A&C Act. Aggrieved thereby, the petitioner approached the High Court.

Reasoning

On a perusal of the orders passed by the Arbitral Tribunal, the Bench found that the very premise of the petition viz. that the Arbitral Tribunal had fixed its fees unilaterally, was non-existent. No objection whatsoever was raised by the petitioner in the immediate aftermath of the order as regards the fixation of fees by the Arbitral Tribunal. As far back as July 12, 2023, the Arbitral Tribunal had recorded in the proceedings of the second sitting that the fee proposed to be charged was Rs 3 Lakh per Arbitrator per sitting to be shared equally by the parties. No reservation was expressed by the petitioner in the aftermath of this order.

It was noted that more than 4 months had passed since the fees were fixed on October 30, 2023, and it was only on May 16, 2024, that an application came to be filed by the petitioner/claimant for modification of this order. However, the application did not specifically allege that the fixation of fees by the Arbitral Tribunal was “unilateral”. “Thus, the assertion by the petitioner in the present proceedings that the fees has been unilaterally fixed by the Arbitral Tribunal is not borne out from the record”, it said.

Thus, the Bench concluded that the application seeking modification of the order dated October 30, 2023, was rightly dismissed by the Arbitral Tribunal and the Tribunal also rightly noted that in terms of Section 2(1)(f)(ii) read with explanation to Section 11(14) of the A&C Act, the IVth Schedule of the A&C Act is not mandatorily applicable in the present case.

Finding that the present case did not reveal the existence of any exceptional circumstances or bad faith warranting exercise of jurisdiction under Article 226 of the Constitution of India, the Bench dismissed the Petition.

Cause Title: National Highway Authority of India v. Ssangyong Engineering Construction Co Ltd. (Neutral Citation: 2025: DHC: 2110)

Appearance:

Petitioner: Advocates Ankur Mittal, Ashish Gajwani

Respondent: Advocates Navin Kumar, Surbhi Agarwal, Rashmeet, Shantanu Sharma

Click here to read/download Order