Section 31A of the Arbitration and Conciliation Act, 1996, introduced in 2015, gives the tribunal (and the court in related proceedings) discretion to decide whether costs are payable by one party to another, the amount, and when they are to be paid.
Costs include the fees and expenses of the arbitrators, courts and witnesses, legal fees and expenses, administration fees of the institution, and other expenses incurred in connection with the proceedings.
The general rule is that the unsuccessful party pays the costs of the successful party. However, the tribunal may make a different order for reasons recorded in writing. In deciding costs, it considers the conduct of the parties, whether a party succeeded partly, whether a party made a frivolous counterclaim that caused delay, and whether a reasonable settlement offer was refused.
This means conduct during the arbitration has financial consequences. Unnecessary adjournments, excessive document requests, late amendments and unreasonable refusal to settle can all be reflected in the costs order.
Parties should keep careful records of costs throughout the proceedings, including counsel fees and expert fees, because a costs claim must be properly substantiated. A well-supported costs claim can recover a significant proportion of what a party has spent.