Deposits, Lien, Death, Insolvency, Jurisdiction, Confidentiality and Limitation

In one line

The tail of Part I covers who pays the tribunal in advance, what happens if a party dies or goes insolvent, which court keeps the case, whether an arbitration is confidential, and how limitation applies.

In exam wording: sections 38 to 43 of the Arbitration and Conciliation Act 1996 are the miscellaneous provisions of Part I, dealing with deposits, the tribunal's lien, the effect of death and insolvency, the jurisdiction of a single court, confidentiality, protection of the arbitrator, and the application of the Limitation Act 1963.

Section 38: deposits

Section 38(1): the tribunal may fix the amount of the deposit or supplementary deposit as an advance for the costs under section 31(8) which it expects to be incurred in respect of the claim. A proviso allows separate deposits for the claim and the counterclaim.

Section 38(2): the deposit is payable in equal shares by the parties. First proviso: where one party fails to pay his share, the other party may pay it. Second proviso: where the other party also does not pay, the tribunal may suspend or terminate the proceedings in respect of that claim or counterclaim.

Notice the structure. The claimant who wants its claim heard can carry the respondent's share, and if nobody pays, the claim or counterclaim concerned can be suspended or terminated. The sanction is targeted: a respondent who refuses to fund the counterclaim loses the counterclaim, not the defence.

Section 38(3): on termination, the tribunal shall render an accounting of deposits received and return any unexpended balance.

Section 39: the tribunal's lien

Section 39(1): subject to sub-section (2) and to any contrary provision in the arbitration agreement, the tribunal shall have a lien on the arbitral award for any unpaid costs of the arbitration.

A lien is a right to retain something until a debt is paid. So the tribunal may hold back the award until its costs are paid, which is a powerful practical tool and the only real security an arbitrator has.

Section 39(2): if the tribunal refuses to deliver the award except on payment of the costs it demands, the Court may order that it deliver the award to the applicant on payment into Court of the costs demanded, and may then, after such inquiry as it thinks fit, order that only such sum as the Court considers reasonable be paid out to the tribunal, with the balance refunded to the applicant.

That is the safeguard against an excessive demand: the party gets the award, and the Court decides what the arbitrator is actually worth.

Section 39(3): such an application may be made by any party unless the fees demanded have been fixed by written agreement between him and the tribunal, and the tribunal is entitled to appear and be heard.