ONGC has complained to the Supreme Court about Arbitrators overcharging. The Arbitration Act prescribes a maximum fee of Rs.30 lakhs that can be charged by Arbitrators. ONGC has through the Attorney General of India, asked the Supreme Court to fix uniform fees for arbitrators in India. In some cases their daily fees go up to Rs. 3 Lakhs or more and the total fees per Arbitrator goes up to Rs.80 Lakhs, which is way above the fees fixed under the Act. It was argued that whilst private parties can pay such huge fees Indian companies face a lot of problems if they pay more than the fixed fees. Counsel for the opposite side rebutted by saying that if there are 100 hearings the fees come to Rs.30,000/- per day and how can one expect retired judges to work at such meager fees.
Arbitration being a form of alternative dispute resolution is supposed to enjoy significant advantages such as lower costs and quicker resolution of disputes. It is noted that although disputes may get resolved quicker compared to regular litigation, the costs are substantially higher. Many a times it is seen that litigants are unable to bear such high costs which include costs of the Arbitrators, venue, stenographers, lawyers and counsel. It is imperative that the cap on the fees fixed under the Act be strictly adhered to, which are quite reasonable. Arbitrators should ensure that every hearing is effective and not allow unnecessary wastage of time, so that the Arbitration can be completed at the earliest. If the Arbitrators find it difficult to work on the fixed fee schedule, they should not take up the matter. Prior to the amendment fixing the fee schedule, the Supreme Court in Union of India vs Singh Builders Syndicate (2009) 4 SCC 523 has observed that the high arbitrator fees pose a major challenge to the growth of arbitration in India. The court felt that “it is necessary to find an urgent solution for this problem to save arbitration from the arbitration cost.” The Supreme Court observed that Institutional arbitration has provided a solution as the Arbitrators’ fees is not fixed by the Arbitrators themselves on case to case basis, but is governed by a uniform rate prescribed by the institution under whose aegis the Arbitration is held. They also felt that another solution is for the retired Judges offering to serve as Arbitrators, to indicate their fee structure to the Registry of the respective High Court so that the parties will have the choice of selecting an Arbitrator whose fees are in their `range’ having regard to the stakes involved. They felt, and we fully agree, that delay and high cost are two areas where the Arbitrators by self-regulation can bring about marked improvement. The Law Commission after taking note of the above judgment, suggested a fixed fee schedule, which came to be incorporated in the Act by an amendment in 2015.