Section 39: Arbitration and Conciliation Act, 1996
By Nivedita Dhiman
Table of Contents
Introduction of Section 39
Section 39 of arbitration and conciliation act recognizes arbitrator’s lien on the award. It conceives of a situation where there may be a dispute between the arbitral tribunal and the party as to the costs of the arbitration. If the tribunal declines to give the award, the party aggrieved may file an application in the court for directing the arbitral tribunal to deliver the award whereupon the court shall make appropriate directions.
The act does not provide for fixation of the fee of the arbitrator by the court at the same time of making the reference to arbitration at any time prior to the award presumably because it is not possible for the court to have a correct idea of the magnitude of the task which the arbitrator is called upon to perform.
Section 39 of arbitration and conciliation act
Lien on arbitral award and deposits as to costs
(1) Subject to the provisions of sub-section (2) and to any provision to the contrary in the arbitration agreement, the arbitral tribunal shall have a lien on the arbitral award for any unpaid costs of the arbitration.
(2) If in any case an arbitral tribunal refuses to deliver its award except on payment of the costs demanded by it, the Court may, on an application in this behalf, order that the arbitral tribunal shall deliver the arbitral award to the applicant on payment into Court by the applicant of the costs demanded, and shall, after such inquiry, if any, as it thinks fit, further order that out of the money so paid into Court there shall be paid to the arbitral tribunal by way of costs such sum as the Court may consider reasonable and that the balance of the money, if any, shall be refunded to the applicant.
(3) An application under sub-section (2) may be made by any party unless the fees demanded have been fixed by written agreement between him and the arbitral tribunal, and the arbitral tribunal shall be entitled to appear and be heard on any such application.
(4) The Court may make such orders as it thinks fit respecting the costs of the arbitration where any question arises respecting such costs and the arbitral award contains no sufficient provision concerning them.
Landmark Judgements of section 39
Davis u Whitney Urban Development Council, (1899)
If an arbitrator or umpire is removed, he shall not be entitled to receive any remuneration in respect of his services. It has also been held that if the arbitrator exceeds his jurisdiction, and on that ground the award is set aside as being wholly bad, the party to whom the arbitrator has awarded the costs of the proceedings cannot recover them.
John B Paes v Soomar, AIR 1943
If after an order under this section, the applicant obtains possession of the award, he has a right to file it in court. Otherwise he would have sought the assistance of the court to no practical purpose whatever and the court will have made an order which affords the applicant no material relief.
Jeevan Industries Put Ltd v Haji Bashirrudin Madhusudan Dayal, AIR 1975
The arbitrator should make a record about his fees and the reasons thereof, if any, in the record of the proceedings itself within the knowledge of both the parties. If he does not do so, he will be involved in defending himself against the allegations of misconduct, if made.
Burn Standard Co Ltd v McDormett International Inc., AIR 1997
If the arbitrator, after making the award, refuses to deliver the same except on fees demanded by him, the court may, on an application made by a party, order the arbitrator to deliver the award to the applicant on payment into court by him of the fees demanded and further that the fees demanded may be taxed and, out of the money paid into court, the arbitrator may be paid by way of fees the sum found due on such taxation.
Assam State Weaving & Manufacturing Co Ltd v Vinny Engg. Enterprises Put Ltd, 2010
This section recognizes arbitrator’s lien on the award. It conceives of a situation where there may be a dispute between the arbitral tribunal and the party/ parties as to the costs of the arbitration. If the tribunal declines to give the award, the party aggrieved may file an application in the court for directing the arbitral tribunal to deliver the award whereupon the court shall make appropriate directions.
Conclusion of Section 39
The above-mentioned section does not apply where the arbitration is still at the initial stage and the arbitrators demand exorbitant fee. There is nothing in this section which can compel the arbitrator to act without payment of fees. This section does not say that the arbitrator must proceed with the arbitration without payment of fees in case he wanted the same to be paid before acting in the arbitration proceedings.
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