23. Costs of the proceedings. Sub-section (8) of Section 31 of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties.—(a) the costs of an arbitration shall be fixed by the arbitral tribunal; (b) the arbitral tribunal shall specify – (1) the party entitled to cost, (ii) party who shall pay the costs, (iii) the amount of costs or method of determining that amount, and (iv) the manner in which the costs shall be paid. Explanation – For the purpose of clause (a), “costs” means reasonable costs relating to – (1) the fees and expenses of the arbitrators and witnesses, (ii) the legal fees and expenses, (iii) any administration fees of the institution supervising the arbitration, and (iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award. The question of costs deserves careful consideration in view of nearly six years duration of the proceedings with high market rate of interest. The Claimant has shown an expenditure of around Rs.70,00,000 (Seventy lacs rupees). There is no doubt that the respondent must have also incurred about the same amount, if not more. However, in economic strength the respondent has enormously higher endurance than the claimant. The respondent may have elongated the proceedings with more renovative points for determination. Considering all the relevant aspects, the respondent is directed to pay as costs Rs.5,00,000 (five lac rupees) to the claimant as costs, over and above what is due as award, with interest at the same rate (12%) from the expiry of two weeks from the date of the award on costs.”
