One of the major challenges the arbitration community of India has been facing is the unacceptable fees fixed by a few arbitrators in Adhoc arbitrations. The other larger challenge faced by the community today is the arbitrators getting appointed in high-value arbitration matters do not understand even the difference between an Adhoc arbitration and institutional arbitration. The Third problem faced by us is that none of the stakeholders understand or recognize the concept of Party autonomy in arbitrations. It is very important to note that parties sign an arbitration agreement, waiving their right to approach the court in case of a breach of contract, statutory appeal rights etc., and in return, they get certain rights and privileges. Those rights include specifying a qualification for the arbitrator, a number of arbitrators, procedure for appointment, procedure of the arbitrations, Fixing the fee for the arbitrators. Such specifications in the arbitration clauses must be strictly protected by the Courts and arbitrators also, in the case of Adhoc Arbitrations, to ensure party autonomy.

The First Challenge of arbitrators fixing their own fees, in ad-hoc arbitrations was dealt with by Government departments and Public Sector Companies by prescribing a fee schedule for such disputes and some others signed supplementary agreements specifying arbitrator fees. And since most of the Arbitrators were retired Government officers, they were following the same. The said fee schedules prescribed very low fees for arbitrators, like hearing fee Rs.20,000 per hearing etc., To balance both situations, a recommended fee schedule is incorporated by the Government under Schedule IV of the Arbitration and Conciliation (Amendment) Act 2015. But most of the High Courts neither published the rules nor specified in their orders that the fee schedule given in Schedule IV shall be applicable while passing orders under S.11 appointing arbitrators. But still, parties like Government bodies, found that fee schedule in the Act is expensive. Some of the Arbitrators who were handling high-value infrastructure arbitration misunderstood that the Schedule IV fee is the fee which should be collected as per law and started demanding the Schedule fees ignoring the supplementary agreements signed by the parties and the department circulars. Delhi High court also gave a judgment that the parties cannot fix the fees of the arbitrators and arbitrators can fix their own fees since the power to fix the fees can be traced from the power to fix costs. The said judgment totally ignored the concept of party autonomy and gave courage to arbitrators to switch over to either Schedule IV fee or their own fees.

Many Arbitrators are not aware of the fundamental structure of the arbitration system and hence they are not able to

Understand the importance of Administering Arbitral Institution Rules and the importance of the terms of the Arbitration agreement. Once an arbitrator gives consent to be an arbitrator in an arbitration, administered by an arbitral institution, the arbitrator should conduct the proceedings as per the rules of the institution and receive the fees as per the terms of the institution. But some Arbitration panels have refused to accept the fees of Arbitral institutions like SAROD (Society for affordable Redressal of Disputes) even though the arbitration is administered by that Institution and cases challenging those orders are under Appeal before the High Court.

In a recent Judgment dated 20th July 2018, in the matter of National High Ways Authority Limited Vs Gammon Engineers and Contractors Pvt Limited, Delhi High Court dealt with a matter in which the Arbitrators refused to accept the fee agreed by the parties, a petition under Section 14 of the Arbitration and Conciliation Act, 1996 was filed by the petitioner in the above said case, seeking termination of the mandate of the Arbitral tribunal that was handling the disputes arisen between the parties in relation to the agreement. During the arbitration proceedings, the arbitration tribunal fixed a different fees structure, other than the fees prescribed in the arbitration agreement. The Petitioner sought for a review of the above-said order fixing fees but the said application was dismissed by the Arbitral Tribunal vide its order. Hence the petitioner approached the High Court and contended that the arbitral tribunal is de jure and de facto unwilling to perform its functions in terms of the arbitration agreement and hence the tribunal should be removed. The Respondent contended in the court that the Arbitrators have not fixed excessive fees and have followed the fee schedule provided under Schedule IV of the Act and hence the said fees cannot be said to be unreasonable.

The High Court finally held that the Arbitral Tribunal is bound by the Arbitration agreement between the parties and removed the arbitrators for not following the arbitration agreement. It further held that if the arbitrator fees are also a part of the arbitration agreement and if the arbitrators refuse to accept the fees schedule agreed by the parties in the arbitration agreement, they can be removed by the High Court exercising its powers under S.14 of the Arbitration and Conciliation Act,1996. Hence, the above said Judgment has brought clarity to the issue of the powers of the parties to fix arbitration fees of the arbitrators by way of an agreement and the requirement of arbitrators to follow that.