How Much Does Arbitration Cost in India? Arbitrator Fees and Other Costs

The short answer on what arbitration costs

Take a domestic commercial dispute worth Rs 50 lakh to Rs 5 crore. One side's total spend usually lands somewhere between a few lakh rupees and a few tens of lakhs, spread over one to two years. The arbitrators' fee is the biggest chunk. Then come your own lawyers, an expert witness if you need one, the venue and stenographer, GST, and at the very end stamp duty on the award. A small claim decided on documents can cost far less. A big infrastructure fight before three retired judges can cost far more.

There's no fixed price, because Indian law lets the parties agree the fee. What the law does give you is a benchmark. The Fourth Schedule to the Arbitration and Conciliation Act, 1996 sets model fees according to the sum in dispute. Courts lean on it when they appoint arbitrators. Institutions publish their own scales. In ad hoc cases, the parties and the tribunal settle the figure at the first sitting.

So the honest answer is a range. It turns into a number only after three choices are made. How many arbitrators? On what fee basis (scale, per sitting or lump sum)? And will an institution administer the case? We take each one in turn below, with the law behind it.

Where the money goes

Split the bill in two. One part is shared. That's the tribunal's fees, the institution's administrative charges if there's an institution, room hire, the stenographer or transcription service, and any secretary to the tribunal. The parties usually split these equally while the case runs. The other part is yours alone: your advocates, your expert, travel for your witnesses, document preparation, translation of vernacular records, and the hours your managers lose to the case.

Then there are the costs around the edges, which people forget. Getting an arbitrator appointed through a Section 11 petition in the High Court means a court fee and another round of legal work. A Section 9 petition for interim relief is no different. After the award, the winner may have to pay stamp duty before enforcing it, and a loser who files a Section 34 challenge pays for that court round. You won't see any of these in the arbitrator's fee proposal. They still belong in your budget.

GST catches people out too. When an arbitral tribunal supplies services to a business entity, GST is paid under the reverse charge mechanism. Your company pays the tax to the government on the arbitrator's fee. The arbitrator doesn't add it to an invoice. An advocate's legal services to a business are treated the same way. Tell your accounts team before the first deposit goes, because input tax credit and the timing of payment both depend on it. Confirm the current notification and rate with your chartered accountant.

The sections that govern fees and costs

The Fourth Schedule fee scale

Must arbitrators stick to the Fourth Schedule?

No, not automatically. The Supreme Court settled this in Oil and Natural Gas Corporation Ltd v. Afcons Gunanusa JV (2022). The Fourth Schedule isn't mandatory, and the parties are free to agree a fee with the tribunal. What the tribunal can't do is fix its own fee by a one-sided order and bind the parties to it. It can ask for deposits. It holds a lien on the award. But the fee itself rests on agreement.

The same judgment answered three questions we hear in almost every fee discussion. First, the Rs 30 lakh ceiling in the last entry caps the total of the base amount and the percentage, not just the percentage. Second, the ceiling applies to each arbitrator separately, not to the tribunal as a whole, so three arbitrators can cost up to three times the ceiling. Third, in ad hoc arbitration, fees on a claim and on a counter claim are calculated separately, not on the combined value. The Court also asked ad hoc tribunals to settle fees at preliminary hearings and record them in the terms of reference, which then bind the tribunal and both parties.

In Delhi, ad hoc tribunals often propose either the Fourth Schedule figure or a per-sitting fee with a cap. When the Delhi High Court appoints under Section 11, it frequently directs the arbitrator to charge as per the Fourth Schedule or the Delhi International Arbitration Centre's fee schedule, depending on the order. Our sister site goes into when the Delhi High Court fixes arbitrator fees under the Fourth Schedule in more depth.

When a fee proposal lands on Advocate B.K. Singh's desk, the first thing he looks at is the figure taken as the sum in dispute. Three things commonly push a fee into a higher slab. Interest claimed up to the date of the claim. A notional value put on an unquantified damages claim. Or a counter claim added to the claim instead of being taken separately. Fixing the base number at the first sitting often saves more than any argument about the rate.

How the fee gets set: ad hoc, institutional and court-appointed

In an ad hoc arbitration, the parties and the tribunal sort everything out between themselves. The tribunal usually puts forward a fee at the first procedural hearing. It might be a Fourth Schedule figure. It might be a fixed fee per sitting of two or three hours, with a fee for reading days and a separate one for writing the award. Or a lump sum. Per-sitting fees look modest. They multiply fast when the other side keeps seeking adjournments or drags out cross-examination. If you accept them, ask for a cap.

In an institutional arbitration, the institution fixes the arbitrators' fees and its own administrative charges from a published schedule, usually tied to the sum in dispute, and it collects the deposits. You don't negotiate fees with the arbitrator. That spares everyone an awkward conversation, and the risk of a fee dispute halfway through the case. The Delhi International Arbitration Centre, for example, publishes a schedule of administrative costs and arbitrators' fees, and our sister site explains DIAC arbitration fees and who pays them. To see how other centres compare, read which institutional arbitration centres are used in India.

When the court appoints the arbitrator under Section 11, the order often says how the fee will be fixed: by the Fourth Schedule, by an institution's rules, or by agreement. If it's silent, the fee is settled with the tribunal at the first sitting, following Afcons. If you're about to go to court because the other side won't agree on an arbitrator, read when you can go to court under Section 11. That petition is a cost item in itself.

Which is cheaper depends on the case. For a plain recovery claim, a sole ad hoc arbitrator on Fourth Schedule rates is often the least expensive. For a high-value dispute against a party likely to dodge deposits, an institution's discipline can save money over the life of the case. We weigh the two in ad hoc or institutional arbitration: which your contract should choose.

Other costs to budget for

The venue. A lot of ad hoc arbitrations in Delhi happen in arbitration rooms run by bar bodies or private centres, in hotel business centres, or in the arbitrator's own chambers. Rooms are charged by the day or half day, and the cost is shared. Institutional cases usually cover rooms for hearings at the centre within the administrative charge, though longer use may cost extra. Ask what's included.

Stenographers and transcripts. Evidence is often taken down by a stenographer in the room, or by a transcription service if the parties want a verbatim record. Transcription on every evidence day is a real expense. It adds up. In a mid-sized dispute, a stenographer recording questions and answers is usually enough.

Experts. Construction quantum, quality complaints about manufactured goods, IT systems that failed, valuation fights: these often need an independent expert. Experts bill for the site visit or inspection, the written report, and the days they attend for cross-examination. Where the case turns on quantum, the expert can cost as much as the tribunal.

Paperwork and translation. Indexed, paginated volumes of documents don't put themselves together. Hindi or regional-language records have to be translated, and certified copies of court or government records take money and time to get. If the parties agree to secretarial support for the tribunal, that's shared too.

Stamp duty on the award. An arbitral award is an instrument that can attract stamp duty under the state's stamp law. When you come to enforce it, the court may insist it's stamped, and an unstamped award can be impounded until the duty and any penalty are paid. Rates differ from state to state, and sometimes depend on the amount awarded. Check the current schedule in the state where you'll enforce.

Costs stage by stage: what you pay, when, and who pays

Who ends up paying?

While the case is running, each party pays half the shared costs and all of its own. At the end, the tribunal decides who bears what. Section 31A starts from the rule that costs follow the event. The loser pays the winner's reasonable costs. The tribunal can depart from that, but it must give reasons.

Section 31A(3) lists what the tribunal weighs. How the parties behaved. Whether someone succeeded only in part. Whether a party filed a frivolous counter claim that held things up. And whether a party turned down a reasonable settlement offer from the other side. That last one counts for more than most businesses realise. Make a reasonable offer in writing, and make it early. If the other side rejects it and then does no better at the award, it weighs heavily when costs are decided.

Two practical limits. The tribunal awards reasonable costs, and it wants proof: fee receipts, invoices, deposit acknowledgments and a costs statement. Ask for costs without documents and you'll often see the claim trimmed or refused. And an agreement that one party pays all costs whatever happens is valid only if it was made after the dispute arose (Section 31A(5)). So a clause in your original contract saying the supplier bears all arbitration costs in any event won't stand.

A costs award is part of the arbitral award. It's enforced the same way, as a decree under Section 36. If the tribunal also gives interest on costs, that runs from the date of the award under Section 31(7).

When the other side won't pay its share of the deposit

It happens a lot. Respondents who'd rather the arbitration never took place are the usual culprits. Section 38(2) gives you a choice. Pay their share yourself so the case can move, or let the tribunal suspend or terminate the proceedings on that claim. Most claimants pay. Then they ask the tribunal to record the payment and fold it into the costs awarded at the end.

Before you pay, ask the tribunal to fix separate deposits for the claim and the counter claim, which Section 38(1) allows. You then cover the respondent's share on your own claim only. If the respondent wants its counter claim decided, it has to fund it. Institutional rules usually have a similar mechanism, and the tribunal or centre can treat a counter claim as withdrawn if the deposit isn't made in time.

Keep a running ledger. Every deposit, who paid it, the receipt number. When the award comes, that ledger is your evidence for costs.

Estimating and controlling your arbitration cost

Do this before the notice goes out. Then update it at the first sitting.

1. Read the clause for what drives cost

   Note how many arbitrators it calls for, any institution it names, the seat and venue, the language, and any clause on fees or costs. Three arbitrators or a foreign seat will move your budget more than anything you control later.

2. Get the sum in dispute right

   Work out the principal, interest up to the date of the claim, and any damages. Decide whether interest goes into the claim itself or is asked for under Section 31(7). And think about how a likely counter claim will be valued.

3. Run the tribunal's fee on the scale

   Apply the Fourth Schedule, or the institution's schedule, to the claim and the expected counter claim separately. On a Fourth Schedule basis, add 25 percent for a sole arbitrator. Then add GST under reverse charge.

4. Fix the fee in writing at the first sitting

   Ask the tribunal to record the fee basis, the deposit stages, a cap if it's per sitting, and any fee for writing the award, in the terms of reference or the first procedural order. If you object to anything, object then. Not after the award.

5. Budget your own side stage by stage

   Ask your lawyers for an estimate broken into notice, pleadings, evidence, arguments and any court petitions. Add expert fees and venue costs. Keep something back for a Section 9 or Section 11 petition.

6. Track every rupee

   Keep the receipts, invoices and bank entries for deposits and fees. Before the award, file a costs statement backed by these papers, so the tribunal can award costs under Section 31A without guessing.

Where the bill quietly grows

• Per-sitting fees with no cap. Adjournments and cross-examination done in bits can mean twenty short sittings, and those can cost more than the Fourth Schedule figure for the whole case. Ask for a cap, or a lump sum.
• A puffed-up sum in dispute. Tacking speculative damages or loss of reputation onto a clean invoice claim pushes the fee into higher slabs, and it rarely succeeds. Claim what you can prove.
• Three arbitrators for a modest claim. Plenty of standard forms say three. If both sides agree after the dispute has arisen, you can have a sole arbitrator instead, and save on fees and on finding dates that suit three busy people.
• Oral evidence nobody needed. When the facts are all on paper, a documents-only hearing or fast track under Section 29B saves venue, stenographer and witness costs. Read our note on fast track arbitration under Section 29B before you insist on a full trial.
• Delay. Each extra year brings more sittings, more fees, and another round of court applications under Section 29A. We explain the causes and the time limits in how long arbitration takes in India.
• Objecting to the fee too late. Advocate B.K. Singh's practice is to raise fee and deposit questions in writing at the first procedural hearing. A party that pays without protest for a year will struggle to question the fee basis afterwards.

Is it cheaper than a commercial suit or the MSME Council?

In rupees, often not. In a commercial suit, you pay court fee once on the plaint, ad valorem under the state's court fee law, and the judge costs you nothing more. In arbitration, you pay the judge. On a Rs 30 lakh invoice claim, the tribunal's fee and the venue can come to more than the court fee on a suit. Arbitration saves in other ways. It can be quicker. An arbitrator who knows construction or IT brings that knowledge with them. And if both parties cooperate, the road to a final award is shorter. Our article on arbitration or litigation for business disputes compares the two properly.

If you're a registered micro or small supplier, the MSME Facilitation Council under Section 18 of the MSMED Act is usually the cheapest way to pursue a delayed payment. Councils generally charge the supplier little or nothing. The Council conciliates first and then arbitrates, and the supplier can claim interest at three times the bank rate. The Supreme Court has held that a Section 18 reference overrides a private arbitration clause. The MSMED (Amendment) Act, 2026 recasts Sections 18 and 19, but we couldn't find the new provisions notified as of late October 2026, so check the current position. If you qualify, read how the MSME Facilitation Council works before you pay for a private tribunal.

Where the clause makes arbitration compulsory and you're not an MSME supplier, the question isn't whether to arbitrate. It's how to keep the thing proportionate. One arbitrator, a sensible sum in dispute, written evidence wherever possible, and a timetable everyone sticks to.

How the numbers look for different businesses

• Suppliers chasing invoices. Your claim is mostly on paper. Ask for a sole arbitrator and documents-only or short hearings, and back your costs claim with receipts. But check first whether the MSME Council route is open to you.
• Service firms and IT vendors. Fights over acceptance, scope and change requests usually need someone technical in the witness box. Budget for one expert, not several, and agree a joint expert if the other side is willing.
• Startups. Cash flow matters more than the final costs order. Covering the respondent's share of deposits can squeeze the business, so plan for it, or think about an institution that enforces deposit discipline.
• Lenders and NBFCs. Loan recovery arbitrations run on documents, and borrowers often don't turn up. The cost worries are mostly unilateral appointment clauses, which courts no longer accept, and getting the award stamped and enforced.
• Large companies and PSUs. Waiting for internal approval to release a deposit can hold the case up. Settle fee terms at the first sitting and you won't need board approval every few months. PSU contracts often carry their own fee clauses. Check them against Afcons.

Papers to keep for your costs claim

• The arbitration clause, and any later agreement about fees or the number of arbitrators.
• The terms of reference or first procedural order where the fee basis and deposit schedule were recorded.
• A receipt or acknowledgment for every deposit paid to the tribunal or institution, including any share you paid for the other side.
• Invoices and proof of payment for venue hire, the stenographer, transcription and secretarial help.
• Your lawyers' engagement letters, invoices and bank entries, stage by stage.
• The expert's engagement letter, invoices and report.
• Any written settlement offer you made, with its date and what the other side said.
• A signed costs statement, filed before the award is reserved.

Can you cut costs once the arbitration is under way?

Yes, more than most people expect. Even halfway through, the parties can agree to switch to fast track under Section 29B, to have the case decided on documents and written submissions, or to cap cross-examination at a fixed number of hours per witness. Video hearings save on venue and travel. Most Indian tribunals now accept them for procedural sittings, and often for evidence as well. We cover how they run in how online arbitration works in India.

Settling saves the most. You can settle at any stage and ask the tribunal to record it as an award on agreed terms under Section 30. That award has the same force as any other. A consent award settles costs too, so get the cost terms down in writing.

If the tribunal is slow and the case goes to court under Section 29A for more time, ask the court to look at reducing fees where the delay is the tribunal's. After hearing the arbitrators, the court can cut fees by up to five percent for every month of delay. And if a tribunal won't release the award until a disputed fee is paid, Section 39 lets you deposit the amount in court and have a reasonable fee fixed there.

Before you sign the terms of reference

Write down the sum in dispute for the claim and any counter claim, separately, and run each through the Fourth Schedule or the institution's schedule. Ask whether a sole arbitrator is possible. Get your lawyers' stage-wise estimate in writing, then add lines for an expert, the venue, GST and stamp duty on the award. If you think the other side won't pay its share, set that money aside too.

At the first sitting, have the fee basis, the deposit stages and any cap recorded in the procedural order. From that day on, keep every receipt. If you've received a notice of arbitration rather than sent one, start with what arbitration is and how it works in India. And if the award goes against you, the cost of a challenge is covered in how to challenge an arbitral award under Section 34.

Want your arbitration clause, the tribunal's fee proposal or a deposit demand looked at before you pay? Send your papers to Advocate B.K. Singh's team through the contact page.