In short. When the other side won't pay its half of the DIAC fee, the Centre can't make it pay. But your case doesn't have to stall. You can pay their share yourself and claim it back as costs, or ask DIAC to assess the claim and counter claim separately so each side funds its own. If nobody pays a deposit within 30 days of the due date, the claim it covers can be terminated. This is for claimants and respondents stuck with a fee default at the Delhi International Arbitration Centre. Pull out the DIAC demand letter today and check the due date.
Is this your situation?
- DIAC sent the deposit demand to both sides. Yours went out the same week. Theirs has been sitting unanswered for a month.
- The respondent's lawyer wrote that his client will gladly pay for its own counter claim, just not a rupee towards yours.
- A letter from DIAC landed on your desk saying the arbitration may be terminated because the deposit is short.
- You'd pay the other side's half if you had to. What you really want to know is whether that money ever comes back.
- The other party is a PSU, and its officer keeps telling you the file is "with finance for approval".
- It's your side that can't pay right now, and you're worried what that does to your claim or your defence.
- The tribunal is in place but hasn't fixed a single hearing, because the deposits aren't complete.
The short answer: what happens when the other side won't pay its DIAC fees
Nobody can force them. A DIAC arbitration runs on deposits that the parties usually split down the middle, and the Centre has no power to recover one party's share from it. What the rules do is move the consequence onto whichever claim or counter claim is left without funding. If neither side pays the deposit for a claim within 30 days of its due date, the Centre or the tribunal can terminate the arbitration as to that claim. That's the whole mechanism.
So the party that wants a decision has three real choices. It can pay the defaulting party's share itself, which Rule 33.2 of the DIAC (Arbitration Proceedings) Rules, 2023 openly permits, and ask for that money back as costs. It can ask DIAC to assess the claim and counter claim separately, so each side pays for what it brings. Or, rarely, it can let the claim go and fight the dispute somewhere else. That last one is usually the worst.
The Delhi High Court dealt with exactly this in March 2026, in Samsung India Electronics Pvt. Ltd. v. Delhi International Arbitration Centre. It upheld DIAC's decision to assess the claim and counter claim separately after the respondent refused to pay its share on the main claim. Below, we explain what that means for you and what to do next.
What the rules say about deposits and default
Section 38, Arbitration and Conciliation Act, 1996
The tribunal can fix a deposit as an advance towards the costs of the arbitration. Where there's a counter claim, it can fix separate deposits for the claim and the counter claim (Section 38(1)). Each party pays an equal share. If one party doesn't pay, the other may pay for it. And if the other party won't pay that share either, the tribunal can suspend or terminate the proceedings for that claim or counter claim (Section 38(2)). Once proceedings end, the tribunal gives an account of the deposits and returns whatever wasn't spent (Section 38(3)).
Rule 33, DIAC (Arbitration Proceedings) Rules, 2023
Under Rule 33.1, unless the Centre says otherwise, the claimant pays 50 percent of the deposits and the respondent pays 50 percent, and the Centre can fix separate deposits for claims and counter claims. Rule 33.2 makes the parties jointly and severally liable for the deposits, and lets any party pay the whole deposit for a claim or counter claim if the other side doesn't pay its part. Rule 33.4 lets the Centre ask for more deposits later. Then the sharp one. Under Rule 33.5, if a party doesn't make a deposit within 30 days of the due date, the Centre may terminate the arbitration, or tell the tribunal to do it, as to the unpaid claim or counter claim. That's without prejudice to bringing the claim again in other proceedings, as far as the law allows.
Rule 3, DIAC (Administrative Costs and Arbitrators' Fees) Rules, 2018
Rule 3(i) says arbitrators' fees follow the scales in the Schedules. Rule 3(ii) says fees are worked out on the total of the claims and counter claims put together. The first proviso is the one that matters here: if a party doesn't pay its share, the Centre may assess the claims and counter claims separately and demand the amounts from the parties concerned. Another proviso lets the Co-ordinator reassess and ask for a revised fee where a claim has been undervalued or can't be measured in money.
Section 31A, Arbitration and Conciliation Act, 1996, and Rule 32, DIAC Rules, 2023
The tribunal decides who bears the costs of the arbitration. That includes the tribunal's fees and DIAC's charges. The usual rule is that the losing party pays the winner's costs, unless the tribunal gives reasons for ordering something else. It also looks at how the parties behaved, including frivolous claims and a refusal to accept a reasonable settlement offer.
Why won't the other side pay?
Usually it's tactics. A respondent that owes money has every reason to slow things down, and refusing to fund the arbitration costs it nothing. It may also be betting that a claimant short of cash will drop the case, or settle cheap, rather than pay both halves. We see this often enough in recovery arbitrations that we tell clients to budget for it on the day they file.
Not always, though. A government department or a public sector undertaking may genuinely need sanction from its finance wing before releasing a payment, and that can take weeks. A small business may really be out of money. Some respondents honestly think the tribunal has no jurisdiction and don't want to be seen accepting it by paying. None of this changes the rules. It does change how you reply, and how much time you're willing to give.
Then there's the selective payer. It offers to pay the fee on its own counter claim but not its share on your claim. Or it suggests splitting the total fee in proportion to the value of each claim. That's what happened in Samsung. DIAC's Co-ordinator turned down the pro rata split as contrary to the 2018 Fee Rules, and assessed the claim and counter claim separately instead.
Can DIAC make the other party pay its share?
No. In the order the High Court upheld in Samsung, DIAC's own Co-ordinator recorded that the Centre can't enforce a deposit demand against a party, and that the claimant was free to deposit the respondent's share itself. DIAC administers cases. It isn't a court, and its fee demand isn't a decree.
Rule 33.2 makes the parties jointly and severally liable for the deposits the Centre directs. In practice, that means DIAC can look to either party for the full deposit, and the arbitration on a claim goes ahead once someone pays. It doesn't mean DIAC can freeze the defaulter's bank account. Clients often assume it does.
The real question, then, isn't how to make them pay today. It's how you keep your claim alive and make their refusal cost them later. That's where the tribunal's power over costs, and the award itself, come in.
Your options when the other party won't pay the DIAC fee
Option one: pay their share and claim it back. Most claimants with a strong case go this way, and we think rightly. Rule 33.2 and the first proviso to Section 38(2) of the Act both allow it. Pay within the time DIAC gives you. Write to DIAC and the tribunal saying you've paid the respondent's share under protest, and ask that the amount be added to the costs you'll be awarded. Your claim then moves without any delay.
Option two: ask for separate assessment. Where the respondent has a counter claim, the first proviso to Rule 3(ii) of the 2018 Fee Rules lets DIAC assess the claim and counter claim separately once someone fails to pay. Each side then funds its own claim. The respondent can't use your claim to bring down the cost of its counter claim any more. And if it doesn't pay for its counter claim, that counter claim faces termination under Rule 33.5 while yours carries on. One catch. Separate assessment usually costs the parties more in total than aggregate assessment, so work out both figures on the current schedule before you ask.
Option three: let the claim be terminated and go elsewhere. Rule 33.5 says termination doesn't stop you bringing the claim again in other proceedings, as permitted by law. Sounds like a safety net. It isn't much of one. Limitation keeps running, and a claim that was in time when the arbitration started may be time-barred by the time you restart. You also have to ask which forum is even open: the arbitration clause still binds you, so a civil suit will usually be met with a Section 8 application. Don't pick this option without specific advice.
There's a middle path too, where the respondent is a public body stuck in a real approval delay. Write to the Co-ordinator asking for a short, fixed extension for the respondent, and request that the tribunal record why it was given. Both the tribunal and the Centre would rather have a funded case than a terminated one. And a documented extension protects you if the respondent later says it was shut out.
You've paid the other side's share. How do you get it back?
Through the award. Section 31A of the Act and Rule 32 of the DIAC Rules let the tribunal fix the costs of the arbitration, including the fees of the tribunal and the Centre, and decide who pays them. Normally the losing party does. If you win, ask the tribunal to direct the respondent to repay the share you paid on its behalf, with interest, as a separate line from the rest of your costs. If you lose, that share is generally part of the costs you'd have carried anyway.
The tribunal can also treat the refusal as conduct. Rule 32.3 lets it consider how the parties behaved when it splits costs, and a respondent that made the claimant fund the entire arbitration has handed the tribunal a clear reason to order costs against it. In Samsung, the High Court specifically left the consequences of the respondent's non-payment to be dealt with during the arbitration or in the final award.
Some claimants ask for an interim order directing the defaulter to repay its share straight away. Tribunals differ on this. Plenty of them prefer to deal with all costs at the end. We'd still ask where the amount is large and the respondent's finances look shaky. Just plan on it being decided in the final award.
Once the award is out, the costs part is enforced like the rest, as a court decree under Section 36. If the other side still won't pay, our guide to enforcing a DIAC award covers execution.
Separate assessment of claim and counter claim: the Samsung ruling
At DIAC, the starting rule is that arbitrators' fees are worked out on the claims and counter claims added together. That's Rule 3(ii) of the 2018 Fee Rules, and the Delhi High Court applied it in Jivanlal Joitaram Patel v. National Highways Authority of India. Because the fee scale climbs more slowly than the amount in dispute, assessing the total is usually cheaper.
In Samsung India Electronics Pvt. Ltd. v. Delhi International Arbitration Centre (W.P.(C) 3440/2026, decided on 18 March 2026), the respondent in a DIAC arbitration refused to pay its share of the fee on the main claim but agreed to pay the fee on its own counter claim. DIAC's Co-ordinator ordered separate assessment under the proviso to Rule 3(ii). The claimant went to the High Court in writ, relying on Jivanlal. The petition was dismissed. The aggregate rule is the general rule, the court said, but the proviso kicks in once a party refuses to pay its share, and Jivanlal hadn't looked at that situation at all.
Two things follow. A claimant can't insist on aggregate assessment once the respondent has defaulted, because the Centre has the discretion to switch. And separate assessment cuts both ways. It stops you subsidising the counter claim, yes, but you also pay the full fee on your own claim. Our guide on how DIAC fees are worked out explains the schedule and the aggregate rule. Check the current DIAC schedule before deciding which result you actually want.
What if the claimant stops paying, or you're the one who can't?
The rules work the same way in reverse. Say you're the respondent with a counter claim and the claimant stops funding its claim. The claimant's claim can be terminated under Rule 33.5 while your counter claim carries on, provided its deposit is paid. You can also choose to pay the claimant's share to keep the whole dispute in one proceeding. That's sometimes sensible, where your defence and your counter claim rest on the same facts. Our guide on defending a DIAC claim and filing a counter claim covers the pleadings.
If you're the one who can't pay, say so early. And in writing. Write to the Co-ordinator before the due date, give the reason, and offer a date by which you can pay. Don't just ignore the demand. Non-payment doesn't on its own take away a respondent's right to defend the claim, but it does put any counter claim at risk. A party that stayed silent for weeks won't get much sympathy when it finally asks for time.
A respondent holding back because it disputes jurisdiction should still take the objection under Section 16 in its statement of defence. Not paying isn't a jurisdiction objection. If the claimant funds the claim, the tribunal will simply go ahead and decide it.
Termination under Rule 33.5 and the limitation trap
Termination for non-payment isn't a ruling on the merits, and Rule 33.5 says the claim can be brought again in other proceedings as the law allows. But the Limitation Act, 1963 applies to arbitrations (Section 43 of the Act). An arbitration starts on the date the respondent receives the notice invoking it (Section 21), and that date stops limitation running for that arbitration. After termination, whether the time spent in the failed arbitration can be left out of the count in a fresh one is arguable. Don't count on it.
That's why you should never answer the other side's default by holding back your own payment too. Take a claim for unpaid invoices from 2023. The arbitration started in 2025. If the claim is terminated in late 2026 because nobody paid the deposit, a fresh notice may already fall beyond three years from those invoices. Gone. The safer course, almost every time, is to keep the original proceeding alive by paying. Our guide on limitation for money recovery explains the three-year rule and how written acknowledgments and part payments affect it.
Termination also throws away the work done so far: the tribunal, the pleadings, any evidence. Unspent deposits come back under Section 38(3) once accounts are given. Fees the tribunal has already earned for work done don't.
Timing and costs when a deposit is in default
| Stage | When it usually happens | What it costs (lawyer fees not shown) |
|---|---|---|
| You file the request for arbitration | Right at the start | DIAC administrative charges under the current schedule, paid by the claimant |
| DIAC asks for deposits | After the request, usually around the time the tribunal is constituted | Arbitrators' fee and administrative cost on the amount in dispute, split 50:50 unless the Centre says otherwise. Check the current DIAC schedule |
| Due date in the DIAC demand | Whatever date the demand letter fixes | Your 50 percent share, plus the defaulter's share if you decide to pay it |
| Default period under Rule 33.5 | 30 days after the due date | The unfunded claim or counter claim can be terminated |
| Separate assessment under the Rule 3(ii) proviso | After a default, if the Centre chooses | Each side pays the full fee on its own claim, and total fees usually go up |
| Further deposits (Rule 33.4) | During the case, say after an amendment raises the claim | Extra deposits, shared the same way |
| Final award on costs (Section 31A, Rule 32) | Award due within 12 months of pleadings closing, extendable by six months if both sides agree | Tribunal fixes total costs and who pays, and can order the share you paid to be repaid |
| Enforcement (Section 36) | After the Section 34 challenge period, unless the court stays the award | Execution costs and court fee under the executing court's schedule |
What to do, step by step, when the other side won't pay
Read the demand letter properly
See what each side has been asked for, the due date, and whether the fee is assessed on claim and counter claim together or separately. Put two dates in the diary: the due date, and 30 days after it.
Write to the other side, once
A short letter or email is enough. Ask them to pay their share by the due date and say that if they don't, you'll pay it under protest and claim it as costs. That gives you a clean record of the default.
Decide whether you'll pay their share
Weigh the amount against what your claim is worth, how strong your case is, and whether the respondent could actually pay an award. In most recovery claims of real value, paying is cheaper than losing the forum.
Think about asking for separate assessment
If the respondent has a counter claim and won't pay towards yours, ask the Co-ordinator to apply the proviso to Rule 3(ii). Work out the fee both ways on the current schedule first.
Pay well before the 30 days run out
Pay DIAC within the time fixed and keep the receipt. Don't leave it to the last day. A bank glitch or a slow internal approval can push you over.
Get it on the tribunal's record
Tell the tribunal and the Centre in writing that you've paid the respondent's share under protest. Ask that it be weighed when costs are decided, and repeat it in your written submissions.
Ask for it in the award
In your final costs statement, show the share you paid for the respondent as its own item, with the payment date, and ask for interest on it.
Papers to keep within reach
- Every fee demand from DIAC, with the date it was issued and the date it's due
- Any Co-ordinator's order on fees, especially one directing separate assessment
- The letters and emails where you asked the other side to pay its share
- Their replies. Keep the refusals and the "we'll pay if" offers in particular
- Bank proof and DIAC receipts for each deposit you made, marked with whose share it was
- The tribunal's procedural orders that record where the deposits stand
- Any request for more time from either side, and what the Centre said
- A running list of every cost paid, so the final costs statement takes an hour, not a week
Who decides fee disputes: DIAC, the tribunal or the court
Fee assessment and deposits are first handled by DIAC itself, through its Co-ordinator, under the 2018 Fee Rules and Rule 33 of the 2023 Rules. DIAC sits in the Delhi High Court premises in New Delhi. Check its website for the current address and how to send letters. The question of who finally bears the fees is for the tribunal, in the award.
A party unhappy with an administrative fee decision of the Centre has, in practice, gone to the Delhi High Court in writ, as Samsung did. It's a narrow remedy. In Samsung the court refused to interfere with a decision taken within the rules, and you should expect the same unless the Centre has stepped outside them. A complaint about the costs part of a final award goes into a Section 34 challenge with everything else. Our guide on challenging a DIAC award under Section 34 explains how.
A word on the courts. In Delhi, Section 34 petitions and execution in commercial arbitrations go to the Commercial Division of the Delhi High Court where the value is above Rs 2 crore, and to the district commercial court below that (Section 10 of the Commercial Courts Act, 2015; check the current limit). The Fourth Schedule to the Act, with its model fees for court-appointed arbitrators, doesn't apply where the parties have agreed to fees under an institution's rules, as they have at DIAC (Explanation to Section 11(14)).
Mistakes we see with DIAC fee defaults
- Sitting back and waiting for them to pay. The 30 days under Rule 33.5 run against the claim, not against the defaulter. If it's your claim at risk, you're the one who has to move.
- Paying without saying why. If your payment doesn't come with a written note that it covers the other side's share, under protest, it's harder to recover later as a separate item of costs.
- Thinking termination doesn't hurt. It can. Limitation may expire before a fresh proceeding gets going.
- Lowering the claim value to save on fees. The Co-ordinator can reassess an undervalued claim. And the tribunal won't award you more than you asked for.
- Forgetting the counter claim deposit. We've seen respondents refuse to pay on the claim and then forget to pay on their own counter claim too. They can lose it.
- Running to court first. In the fee matters Advocate B.K. Singh has handled, parties that rushed into a writ against a routine fee order usually lost time and got nothing for it. Write to the Co-ordinator first.
How this plays out for suppliers, service firms, MSMEs, startups and large companies
A supplier or contractor chasing unpaid bills is the one most exposed to a fee default. It wants a decision. The buyer doesn't. For a claim of real value against a buyer that can pay an award, paying both shares and claiming them as costs is usually the sensible business call. For a small claim, put the total fee on the current DIAC schedule next to the claim amount before you commit.
Micro and small enterprises registered under the MSMED Act, 2006 should check whether they can go to the MSME Facilitation Council under Section 18 for delayed payments. The Council route costs differently. And if the buyer challenges the award, Section 19 makes it deposit 75 percent of the awarded amount first. Our page on choosing between DIAC and the MSME Council compares the two.
Service firms and startups are often up against a bigger client with deeper pockets. If the fee is more than you can manage, open settlement talks before the deposit falls due. A funded arbitration puts you in a much stronger seat at the table than a terminated one. DIAC also runs mediation. See our guide on settling while a DIAC arbitration is on.
Large companies and PSUs can usually pay but take ages to approve. If you're up against one, give a reasonable, fixed extension in writing and ask the Centre to record it. If you are one, start the internal approval the day the demand arrives. Tell the Centre in writing if you need more time. Don't let the 30 days slip by in silence.
A made-up example: a Faridabad manufacturer pays both shares
This one's invented, to show how the pieces fit. A Faridabad maker of auto components claims Rs 2.1 crore from a Delhi distributor for unpaid supplies, in a DIAC arbitration. The distributor counter claims Rs 3 crore, saying late deliveries cost it business. DIAC assesses the fee on the combined Rs 5.1 crore and asks each side for half.
The distributor replies offering to pay only the part of the fee linked to its own counter claim. The manufacturer asks the Co-ordinator to assess the claim and counter claim separately under the proviso to Rule 3(ii). The Co-ordinator agrees. Still, the distributor doesn't pay its share on the manufacturer's claim. So the manufacturer pays it within the time fixed, writes to the tribunal that it's paid under protest, and asks for it to be considered at the costs stage. The distributor does pay for its counter claim. Both claims go ahead.
At the end, the manufacturer's costs statement shows the share it paid for the distributor as a separate item, with the date. Whatever happens on merits, the record is clean. The claim stayed alive, the distributor's refusal is on paper, and the tribunal has what it needs to decide who should carry that cost.
What to do this week
Find the latest DIAC fee demand. Diary two dates: the due date, and 30 days after it. Write once to the other side asking it to pay and saying what you'll do if it doesn't. Then sit down with the figures and decide whether to pay its share or ask for separate assessment.
If the arbitration hasn't started and this is already worrying you, our guides on how to start a DIAC arbitration and how long a DIAC case takes will help you budget for deposits and time. Our DIAC arbitration lawyer page sets out how the firm handles claims and defences at the Centre. When someone brings Advocate B.K. Singh a fee default, his first question is always the same. If this claim gets terminated, how close is it to the end of limitation? The answer usually tells you what to do.
If you'd like the fee demand, the Co-ordinator's order and your options looked at before the 30 days run out, send them to Advocate B.K. Singh's team through the contact page.
Frequently asked questions
What happens if the other party doesn't pay DIAC fees?
DIAC can't make it pay. You can pay its share yourself and claim it back as costs. If nobody pays a deposit within 30 days of its due date, Rule 33.5 of the DIAC Rules lets the Centre or the tribunal terminate the arbitration as to that claim or counter claim. Any claim that's funded carries on.
Can I pay the respondent's share of DIAC fees?
Yes. Rule 33.2 of the DIAC (Arbitration Proceedings) Rules, 2023 and Section 38(2) of the Arbitration Act both let one party pay the other's share. Put it in writing that you're paying under protest, and ask the tribunal to include it in the costs award.
Will I get back the fee share I paid for the other side?
If you win, the tribunal can order the other side to repay it as part of the costs of the arbitration under Section 31A and Rule 32. The loser usually pays costs, and refusing to fund the arbitration is conduct the tribunal can hold against it. The costs part of the award is then enforced like a decree.
What is separate assessment of claim and counter claim at DIAC?
Normally DIAC works out fees on the claim and counter claim added together. If a party doesn't pay its share, the proviso to Rule 3(ii) of the 2018 Fee Rules lets DIAC assess each one separately, so each side pays for its own. The Delhi High Court upheld an order like this in Samsung India Electronics v. DIAC in March 2026.
Can DIAC terminate my arbitration if the respondent doesn't pay?
Only the claim or counter claim left without funding can be terminated, and only after 30 days from the due date. Pay the respondent's share and your claim is funded and goes on. Termination doesn't bar you from bringing the claim again, but limitation may have run out by then.
Can the respondent defend if it hasn't paid its share?
Yes, usually. Not paying fees doesn't by itself take away the respondent's right to defend once the claim is funded. But its own counter claim is at risk if that deposit is unpaid, and the tribunal can weigh the non-payment when it decides costs.
Can I challenge DIAC's fee order in the High Court?
Parties have filed writ petitions in the Delhi High Court, as in Samsung, but the court steps in only where the Centre has acted outside its rules. In Samsung the petition was dismissed. Write to the Co-ordinator first. A dispute over the final costs award goes in a Section 34 challenge.
Does the Fourth Schedule fee limit apply to DIAC arbitrations?
No. The Fourth Schedule model fees under Section 11(14) of the Act don't apply where the parties have agreed to fees under an arbitral institution's rules. DIAC cases follow DIAC's own schedule under its 2018 Fee Rules. Check the current one.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.