J&K High Court Resolves Arbitrator Fee Stalemate, Directs Centre To Deposit Fee As Per 4th Schedule Arbitration Act
In an order addressing the long-pending stalemate in an arbitration matter, the Jammu and Kashmir High Court directed the Union of India to deposit the arbitrator’s fee as per the Fourth Schedule of the Arbitration and Conciliation Act, 1996, enabling the pronouncement of the arbitral award.
The issue before the court was whether a government-prescribed internal fee structure for empanelled arbitrators could override the statutory fee scale in the Fourth Schedule of the 1996 Act.
The Court directed the Union of India to deposit its share of the arbitrator’s fee with the Registrar Judicial, Jammu within 30 days, to be kept in a fixed deposit, without prejudice to its right to contest the claim in appropriate proceedings later.
A bench of Justice Rahul Bharti passed the order in a matter involving a contractual dispute between the Union of India and private contractor. The arbitrator in the case had reserved the matter for award after receiving an extension in february 2025.
The case hit an impasse when the Union of India declined to pay its share of arbitrator’s fee as per the Fourth Schedule, insisting on a lower fee structure prescribed by the Engineer-in-Chief’s Branch, MES, referred to in the arbitrator’s empanelment letter dated 07.02.2022.
While the petitioner complied and paid its share of the fee in accordance with the Fourth Schedule (introduced through Section 11(3A) of the Arbitration Act, the government refused, prompting the arbitrator to withhold the award pending resolution.
The Centre also moved an application seeking modification of previous orders, arguing that the arbitrator was only entitled to the MES-prescribed fee. However, the arbitrator stood firm on applying the statutory fee structure under the Arbitration Act.
Noting the stalemate and its impact on the delivery of justice, the Court held that arbitrator’s fees under Section 11(3-A) must be guided by the Fourth Schedule, which represents the “prescribed fee” under the law.
The Court directed the Union to deposit its share of the arbitrator’s fee to be kept in a fixed deposit, without prejudice to its right to contest the claim in appropriate proceedings later.
The court further allowed the arbitrator to proceed with the pronouncement of the award, and asked for a copy of the award to be placed on the record.
Background
The arbitration arose out of a contractual dispute adjudicated under the Jammu & Kashmir Arbitration and Conciliation Act, 1997. The arbitrator had been appointed via prior court orders. The core issue was whether a government-prescribed internal fee structure for empanelled arbitrators could override the statutory fee scale in the Fourth Schedule of the 1996 Act.
APPEARANCE:
R. K. Gupta, Sr. Advocate with Ms. Ishna Vaid, Advocate. For Petitioners
Vishal Sharma, DSGI For Respondents
Case-Title: Tarmat Ltd. Vs Union of India and others, 2025
