Answer ... Section 31(8) of the Arbitration Act provides that the costs of arbitration shall be fixed by the tribunal in accordance with Section 31A.

As per Section 31A, a court or tribunal has discretion to determine:

• whether costs are payable by one party to another;
• the amount of such costs; and
• when such costs are to be paid.

In addition, Section 31A defines ‘costs’ to mean reasonable costs relating to the following:

• the fees and expenses of the arbitrators, courts and witnesses;
• legal fees and expenses;
• any administration fees of the institution supervising the arbitration; and
• any other expenses incurred in connection with the arbitration or court proceedings and the award.

Further, as per Section 31A (2) of the Arbitration Act, if the court or the tribunal decides to make an order as to payment of costs, the general rule is that the unsuccessful party shall be ordered to pay the costs of the successful party; or the court or tribunal may make a different order for reasons to be recorded in writing.

Additionally, Section 31A(3) provides that in determining costs, the court or tribunal shall have regard to all circumstances, including:

• the conduct of the parties;
• whether a party has succeeded in the case;
• whether the party had made a frivolous counterclaim leading to delay in the disposal of the proceedings; and
• whether any reasonable offer to settle the dispute has been made by one party and refused by the other party.

Answer ... As per Section 31A(5) of the Arbitration Act, an agreement which has the effect that one party is to pay all or part of the costs of the arbitration in any event is valid only if it is made after the dispute in question has arisen.