Arbitrator can be dismissed for overcharging

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Rajasthan High Court, while deciding a writ petition, recently held that an arbitrator charging exorbitant fees can have their mandate terminated if they create a doubt in the mind of a party regarding prejudice against it.

In Doshion (P) Ltd v Hindustan Zinc Ltd & Anr, Rajasthan High Court appointed a retired high court judge as a sole arbitrator to adjudicate upon the disputes between the parties in terms of the arbitration agreement and in accordance with the Manual of Procedure for Alternative Dispute Resolution, 2009.

During the arbitration proceedings, the arbitrator fixed the arbitration fee as ₹7.5 million (US$105,000), which was contested by the petitioner and it sought its reconsideration in light of schedule IV of the Arbitration and Conciliation Act, 1996. However, this was declined by the arbitrator. Meanwhile, the high court issued a notification on 23 March 2017 providing for fees to be charged by arbitrators, which was made applicable with effect 23 October 2015. The petitioner made another submission based on the above notification. However, this too was declined. The arbitrator offered a discount by record of proceedings on 26 May 2017 and total fees were fixed at ₹5.5 million.

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