(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 application including orders for the refund of any costs paid to the arbitral tribunal by the applicant.
(5) The Court may refuse to make an order under sub-section (2) if the applicant is a party to an agreement to pay the costs demanded by the arbitral tribunal.
Legal Commentary & Landmark Judgments: Section 39
Section 39 of the Arbitration and Conciliation Act, 1996 establishes the arbitral tribunal's statutory lien on the arbitral award for any unpaid costs of arbitration, providing for an application to the Court to resolve fee disputes.
If an arbitrator withholds an award demanding exorbitant fees exceeding the Fourth Schedule limits, do not submit to pressure; file an application under Section 39(2) before the Court to deposit the fee and seek judicial taxation.