Deposits to be made by the parties before start of Arbitration proceedings

It was usual for the arbitrator to order the party to make deposits towards costs and expenses of the arbitration involved on various matters during the course of the arbitration proceedings. Arbitral organizations have also made rules containing detailed provisions for making of deposits by the parties which are adjusted when the final decision is made at the time of the making of the award. If one of the parties refused to make the deposit, the arbitrator might order that the other party should also pay the portion of the deposit payable by the defaulting party and in the award, he might make a suitable order for the recovery of the deposit so made. Usually, each party was asked to make a deposit of one half of the estimated costs and expenses of arbitration. This was the past practice. The Act itself is silent on the point.

Section 38 deals with deposits to be made by the parties in relation to arbitral proceedings. The arbitral tribunal is empowered to fix the amount of deposit or supplementary deposits as an advance for the costs of arbitration. Section 39 provides for arbitral tribunals' lien on the award for any unpaid cost of arbitration.