Under Section 38 of the Arbitration and Conciliation Act, the arbitral tribunal can ask for deposit from the parties equally, as advance towards the cost of arbitration in respect of claim and counter claim. In case any party defaults in making his portion of the deposit, the other party may be called upon to pay the share of the defaulter in the first instance, which will be later on included in the award in his favour if he succeeds in arbitration. In the event, the other party is also not interested to pay the defaulter’s share in respect of the claim or the counter claim; the arbitral tribunal can suspend or terminate the arbitral proceedings in respect of such claim or counter claim.
On termination of arbitration as above, the arbitral tribunal shall furnish the parties with accounts of the deposit and return the balance money, if any.
Lien on Award
According to Section 39 of the said Act, the arbitral tribunal shall have lien on the arbitral award for any unpaid cost of arbitration.
When an arbitral tribunal, in the absence of any fixed or agreed arbitration fees, refuses to deliver its award to the parties without payment of the costs, as demanded by it, any aggrieved party can apply to the court for obtaining the award. On such application, the court shall direct arbitral tribunal to deliver the arbitral award to the applicant, upon his depositing in Court the full costs demanded by the arbitral tribunal.
After inquiry the court shall arrange to pay to the arbitral tribunal reasonable costs of arbitration from and out of the said deposit and refund of the balance money to the applicant.
