How Much Does Arbitration Cost in India?

Arbitration has no court fee on the amount claimed, but it is not free. The parties pay the arbitrators, any institution that administers the case, their own lawyers, and the running costs of hearings. For a small claim, these costs can be out of proportion. For a large claim, they are often lower than the court fee alone would be.

This guide explains each part of the cost, gives worked examples using the Fourth Schedule fee scale, and explains how costs are shared during the case and recovered at the end. In short: for an ad hoc domestic arbitration, the Fourth Schedule gives a useful benchmark, about ₹1.87 lakh per arbitrator for a ₹50 lakh claim and about ₹7.37 lakh for a ₹5 crore claim, but parties often agree different fees. Institutions publish their own schedules. Lawyers' fees vary widely. The tribunal can order the losing party to pay the winner's costs.

For a quick estimate of arbitrators' fees for your claim, use the arbitration fee calculator.

The short answer

There are four main heads of cost. First, the arbitrators' fees, which depend on the amount in dispute, the number of arbitrators, and whether the fee is fixed by agreement, an institution's schedule, or the Fourth Schedule. Second, administrative fees if an institution is involved. Third, your own lawyers' fees, which depend on the complexity of the case and the lawyers you choose. Fourth, incidental costs: venue hire, stenographers or transcription, travel, expert witnesses, translation and photocopying.

During the case, the arbitrators' fees and institutional fees are usually shared equally by the parties. Each side pays its own lawyers. At the end, the tribunal decides who bears the costs. Under Section 31A, the general rule is that the unsuccessful party pays the successful party's costs, but the tribunal can depart from it.

The Fourth Schedule fee scale

A sole arbitrator is entitled to an additional 25% of the amount calculated above. The schedule applies to ad hoc arbitrations where courts have framed rules adopting it, and is often used as a benchmark. It does not apply to international arbitrations or institutional arbitrations with their own rules.

Worked examples

These are model fees for the whole arbitration, not including institution fees, lawyers' fees or other costs. Actual fees may be agreed differently.

What the Supreme Court said about fees in 2024

Disputes between parties and arbitrators about fees were common, and in ONGC v Afcons Gunanusa (2024), a three-judge bench of the Supreme Court addressed them. It held that arbitrators cannot unilaterally fix their fees, or revise them midway, in a way that binds the parties; fees must be agreed, either in the arbitration agreement, at the start of proceedings, or by reference to a schedule. The Fourth Schedule is not mandatory where the parties agree otherwise.

The Court also clarified that the ₹30 lakh ceiling in the Fourth Schedule applies to the total fee payable to each arbitrator, covering both the base amount and the variable amount, and is not the ceiling for the base amount only. It noted that arbitrators can ask for fees to be fixed separately for claims and counter-claims where the parties agree.

The practical lesson is to settle fees in writing at the first procedural meeting, including what happens if the claim is amended or the case settles early. Courts appointing arbitrators under Section 11 often fix fees in the appointment order, by reference to the Fourth Schedule or an institution's schedule.

Other costs to budget for

How to keep arbitration costs under control

Who pays at the end: costs orders

Section 31A gives the tribunal wide discretion over costs. Costs include the fees and expenses of the arbitrators, courts and witnesses; legal fees and expenses; administration fees of the institution; and any other expenses incurred in connection with the arbitration. The general rule is that the unsuccessful party pays the successful party's costs, but the tribunal may make a different order for reasons recorded in writing.

In deciding costs, the tribunal considers the conduct of the parties, whether a party succeeded partly, whether a party made a frivolous counter-claim that delayed the case, and whether a reasonable offer to settle was made and refused. It can order a party to pay a proportion of the other's costs, a stated amount, costs from or until a certain date, or costs relating to particular steps.

To recover costs, keep a running record of fees paid, with invoices, and file a statement of costs before the award. Awards that do not deal with costs leave money on the table.

Arbitration versus court: the cost comparison

In court, the court fee in most states is value-based, a percentage of the amount claimed, sometimes with a ceiling. For a claim of ₹5 crore, the court fee in some states can be several lakh rupees, paid upfront. Arbitration avoids this, but the parties pay arbitrators, who in a three-member tribunal for a ₹5 crore claim might charge about ₹22 lakh in total under the Fourth Schedule.

For claims below about ₹20 lakh, arbitration's fixed costs often make court, especially a summary suit, cheaper. For claims of several crores, the comparison depends on the state's court fee and the tribunal's size and fees. For registered micro and small suppliers, the MSME Facilitation Council is usually the cheapest of all, with nominal fees. See arbitration vs court case.

Institutional fees: what to expect

Arbitration institutions publish their own fee schedules, usually on their websites. These typically include a non-refundable registration or filing fee, an administrative fee linked to the sum in dispute, and arbitrators' fees, also linked to the sum in dispute, with the institution collecting deposits from the parties and paying the arbitrators.

The advantage is predictability: you know at the start roughly what the arbitration will cost, and the arbitrators cannot renegotiate their fees midway. The institution also handles fee collection, so the parties do not deal with arbitrators on money. Counter-claims are usually added to the sum in dispute for fee purposes, which can significantly increase the deposit.

Indian institutions such as DIAC, IIAC and MCIA generally cost less than international institutions such as SIAC and the ICC, whose fees are usually quoted in foreign currency and are higher, especially for large claims. For international disputes, the institution's fees should be compared with the likely legal and travel costs, which are often larger.

Lawyers' fees: the largest variable

In most arbitrations, the parties' own legal fees are the largest single cost. They depend on the complexity of the case, the number of hearings, the volume of documents, whether senior counsel are briefed, and whether experts are needed. A documents-only claim for unpaid invoices costs far less to run than a construction dispute with delay experts and weeks of cross-examination.

Fee structures vary: fixed fees for each stage, fees per hearing, hourly rates, or a combination. Bar Council of India rules do not permit lawyers to charge fees contingent on the result, so arrangements based on a share of the amount recovered are not allowed. Ask for a written estimate for each stage at the start, covering pleadings, evidence, arguments and any likely court applications, and review it as the case develops.

Third-party funding, where a funder pays costs in return for a share of the recovery, exists in India but is not yet widely used in domestic arbitration, and is not regulated by a specific statute.

Costs before and after the arbitration

Remember to budget for court work around the arbitration. A Section 11 petition for appointment, a Section 9 petition for urgent relief, a Section 29A application for extension, a Section 34 challenge to the award and a Section 37 appeal each involve court fees and lawyers' fees. A losing party who challenges the award may also have to deposit a substantial part of the award as a condition of stay, which is not a cost but ties up money.

For award holders, enforcement may involve the costs of asset searches, execution petitions and repeated hearings. Post-award interest under Section 31(7)(b) continues to run until payment, which compensates for delay, and the costs of enforcement can be claimed in the execution proceedings.

Fees for claims and counter-claims

The arbitrators' fee is usually linked to the "sum in dispute". If the respondent files a counter-claim, is the fee calculated on the claim alone, the counter-claim alone, or both together? Practice varies. Institutions generally add the claim and counter-claim together for fee purposes. In ad hoc arbitrations, arbitrators often fix separate fees for the claim and the counter-claim, each on the Fourth Schedule scale. The Supreme Court in ONGC v Afcons (2024) said that, where the Fourth Schedule applies, fees may be calculated separately for claims and counter-claims, and the ceiling applies separately to each.

A large but weak counter-claim can therefore increase costs significantly for both sides. If you face one, raise the fee question at the first meeting, and consider asking the tribunal to order the counter-claimant to bear the fees attributable to its counter-claim. At the end, a dismissed counter-claim is a strong ground for a costs order in your favour.

What happens if a party will not pay its share

Arbitrators expect fee deposits from both parties, usually in equal shares and in instalments. Some respondents simply do not pay, hoping to stall the case. Section 38 deals with deposits. The tribunal can direct separate deposits for the claim and the counter-claim. If one party fails to pay its share, the other may pay it. If neither pays, the tribunal can suspend or terminate the proceedings.

So if you are the claimant and the respondent does not pay, you will often have to pay its share to keep the arbitration moving, and then ask for it back in the award. Keep a record of every payment. For a respondent with a counter-claim, failure to deposit for the counter-claim can lead to the counter-claim being suspended or terminated, while the claim proceeds.

Costs in MSME council and loan arbitrations

For registered micro and small suppliers, the MSME Facilitation Council route costs very little in fees: filing is through the online portal with little or no government fee, and council arbitration does not involve the arbitrators' fees of a private arbitration. Legal fees remain, but the overall cost is usually much lower. This is a major reason why eligible suppliers prefer the council.

In loan arbitrations, the lender usually pays the arbitrator or the ODR platform at the start and seeks to recover the cost from the borrower in the award. If the arbitrator was appointed unilaterally, the borrower can object to the appointment altogether. Even where the process is neutral, borrowers should check whether the award has added the lender's legal and arbitration costs to the claim, and whether that is permitted under the loan agreement and reasonable in amount.