NB ASSOCIATES

Are arbitration fees payable in MSME cases?

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Are arbitration fees payable in MSME cases?

Yes, arbitration fees are payable in MSME cases, but the manner in which they are paid may differ depending on the rules of the Facilitation Council or the arbitral institution.

1. Arbitration under the MSMED Act

When a dispute regarding delayed payment is filed under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006, the process is:

1. The Micro and Small Enterprises Facilitation Council (MSEFC) first conducts conciliation.

2. If conciliation fails, the matter is referred to arbitration.

3. The arbitration is then governed by the Arbitration and Conciliation Act, 1996.

2. Payment of Arbitration Fees

During arbitration:

• Arbitrator’s fees and arbitration costs are generally payable depending upon the rules of facilitation council.

3. Who Pays the Fees

• Usually, both parties are required to share the arbitration fees or cost.

• However, the arbitral tribunal or the Facilitation Council can decide the final allocation of costs in the arbitral award.

4. Important Practical Point

In MSME disputes, the Facilitation Council may initially require the buyer (respondent) to deposit the costs.

Conclusion:

Arbitration under the MSMED Act is not completely free. Arbitration fees are payable, though the council or tribunal may determine how the fees are shared between the parties.