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Today while arguing in a matter pertaining to the dispute in arbitrator’s fees in arbitration where ONGC is a party, the Attorney General KK Venugopal told the top court that," Arbitrators believe they have a right to fix their own fees. Whatever fees they fix, should also be accepted by the parties."

Venugopal further submitted before the bench of Justices DY Chandrachud, Surya Kant and Sanjiv Khanna that public sector corporations are concerned about the fees of arbitrators.

"Arbitrators fixing their own fees will be highly anomalous. They ask for reading fees, conference fee, and a fee for the award. All these fees are becoming a problem for Public sector corporations....", the bench was further told.

It was further argued that the claimants- respondents had no problems in paying such exorbitant fees and this would lead to a bias in their favour.

Venugopal also submitted that there were four alternatives for deciding the payment of an arbitrator, the contractual fee and the fee as per Fourth Schedule of the Arbitration and Conciliation Act, 1996 or the arbitrators decide their own fee.

At this juncture, Justice Khanna quizzed Venugopal as to what was the stance before the Fourth schedule of the Act came into existence.

To this, Venugopal took the court through the list of dates and the fee clause, and stated that the arbitral tribunal in the midst of cross- examination decided to revise its fee after already having accepted the fee as per the Fourth schedule.

"In the present case the arbitrators said that we (the parties) are claiming a huge amount, so their fee was to be enhanced", submitted Venugopal.

"The arbitrators also ordered the respondents to pay the amount on behalf of the petitioners if they don’t pay, this is rather insulting and humiliating...", he added.

He further stated that, on the other hand, the arbitrators could not be blamed for enhancing the fee because till now the rules have not been fixed. Venugopal also raised the following question before the bench for its consideration,

"Are the arbitrators legally entitled to fix their own fees without the consent of one or the other party? What should be the standard of fees, can there be a limit, and will the IV schedule be an appropriate standard for the fees?"

"What would be the stand for a party who declines to pay the fee?" he added.

Venugopal also relied on the 246th report of the Law Commission. Thereafter, Court asked Venugopal if a fee can be fixed for a particular number of sittings of the tribunal and thereafter if the parties don’t agree for further sittings, there can be some judicial intervention. “Will this be efficacious?”, asked the Court.

On a lighter note, the AG told the bench that when he mentioned this matter before the CJI, the CJI was surprised that the AG was coming up with such a matter.

Recently, the Chief Justice of India NV Ramana while hearing the matter pertaining to the dispute in arbitrator’s fees had remarked, “We may have to stop arbitration in India.”

When the matter was called for hearing, AG Venugopal had argued before the CJI that the arbitrators are charging Rs.80 lakhs per arbitration in addition to a separate reading fees.

He had also said “We want the fourth schedule arbitration set up in the Act. It needs to be uniform.”

Cause Title: ONGC vs Afcons