“SUPREME COURT RULES ARBITRATOR’S FEE CAP AS RS. 30 LACS PER ARBITRATOR & NOT TRIBUNAL AS A WHOLE”
OIL and Natural Gas Corporation Ltd., – PETITIONER Vs. Afcons Gunanusa JV – RESPONDENT (Arbitration Petition (Civil) No. 05 OF 2022
The petitioner and the Respondent, entered into a Lump Sum Turnkey Contract for the construction of an ICP-R Platform.
On account of certain disputes and differences amongst the parties above, arbitration was invoked as per the contract.
Since the dispute involved a claim amount filed by Respondent for Rs. 679 Crores and counter claim of Petitioner for Rs. 407 crores, the Abitral tribunal was of the view that the fees of Arbitrators as per ceiling fees of Rs 30,00,000 as provided in the entry at Serial No 6 of the Fourth Schedule of the Arbitration & Conciliation Act, 1996 was too low to adjudicate the dispute involving huge claim amount as in the instant case.
The Arbitral Tribunal stated that the case would involve perusal of voluminous documents which would be filed by the parties, it would involve number of hearings, examination of witnesses.
Further the tribunal also indicated that it may also charge a reading fee or conference fee (for conferences between the members).
Although the Respondent – Afcons was concurring for revision of fees as suggested by the Arbitral Tribunal as against the fees provided in the Contract or ceiling fees in the entry at Serial No 6 of the Fourth Schedule of the Arbitration & Conciliation Act, 1996, ONGC – Petitioner was reluctant.
ONGC – Petitioner was however in consideration of ceiling fees in the entry at Serial No 6 of the Fourth Schedule of the Arbitration & Conciliation Act, 1996.
Further the Arbitral Tribunal was also of the view that the ceiling of Rs 30 lakhs in the Fourth Schedule is not applicable to the present dispute since it arose before the amendment of the Act which added the Schedule.
However, Arbitral Tribunal agreed to reduce the fee of each arbitrator to Rs 1 lakh per whereas reading fee was kept open to be decided at a later stage.
ONGC – Petitioner filed a petition before the Bombay High Court for the termination of the mandate of the arbitral tribunal and the substitution of a fresh set of arbitrators.
The petition was dismissed by the Bombay High Court on the ground of a lack of jurisdiction since the arbitration was an international commercial arbitration
ONGC then filed the present arbitration petition before Hon’ble Supreme Court.
The Hon’ble Supreme Court while considering the above petition along ruled that the ceiling fees of Rs 30,00,000 as in the entry at Serial No 6 of the Fourth Schedule of the Arbitration & Conciliation Act, 1996 is applicable to the sum of the base amount (of Rs 19,87,500) and the variable amount over and above it.
Consequently, the highest fee payable to each Arbitrator of an Arbitral Tribunal shall be Rs 30,00,000 and not the arbitral tribunal as a whole.
Whereas in case of a Sole Arbitrator, 25 per cent over and above Rs 30,00,000 shall be paid in accordance with the Note to the Fourth Schedule.
The Hon’ble Supreme Court while ruling above have taken into account a detailed comparatives outlook, position of International Organisations, position in other national jurisdictions, statutory framework of payment of Arbitrator’s fees in India.
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