Section 38 Arbitration Act 1996 (DEPOSITS) requires parties to:
Ano deposit (cf. Arbitration and Conciliation Act 1996, Section 38) (cf. Arbitration and Conciliation Act 1996, Section 38) (cf. Arbitration and Conciliation Act 1996, Section 38)
Bpay later (cf. Arbitration and Conciliation Act 1996, Section 38) (cf. Arbitration and Conciliation Act 1996, Section 38) (cf. Arbitration and Conciliation Act 1996, Section 38)
CDEPOSIT advance for arbitrator's COSTS — the tribunal may FIX advance amounts; parties may be required to deposit equally or as tribunal decides; if a party fails to deposit, the other party may pay and recover later
Dby court only (cf. Arbitration and Conciliation Act 1996, Section 38) (cf. Arbitration and Conciliation Act 1996, Section 38) (cf. Arbitration and Conciliation Act 1996, Section 38)
Answer & Solution
Correct answer: C. DEPOSIT advance for arbitrator's COSTS — the tribunal may FIX advance amounts; parties may be required to deposit equally or as tribunal decides; if a party fails to deposit, the other party may pay and recover later
1. Section 38 Arbitration and Conciliation Act 1996:
2. (1) The arbitral tribunal may FIX the amount of the DEPOSIT or supplementary deposit, as the case may be, as an ADVANCE for the COSTS referred to in sub-section (8) of Section 31, which it expects will be incurred in respect of the claim submitted to it.
3. (2) The deposit referred to in sub-section (1) shall be PAYABLE IN EQUAL SHARES by the parties — UNLESS THE TRIBUNAL OTHERWISE DECIDES.
4. (3) If a party FAILS TO PAY the share of the deposit, the OTHER PARTY may pay that share.
5. ENFORCEMENT: under Section 38(4), if a party fails to pay despite request, the tribunal may suspend or terminate the proceedings.
6. The provision ensures FINANCIAL VIABILITY of arbitration.
7. Hence option B is correct.
_Source: Arbitration and Conciliation Act 1996 (Bare Act) + Mediation Act 2023 — Arbitration and Conciliation Act 1996, Section 38_
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