From Statute to Dead Letter: Section 31A and the High-Court Culture of Zero-Cost Orders

Prashant Narang and Vishnu Suresh ()
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Vishnu Suresh: TrustBridge Rule of Law Foundation

No 15, Working Papers from Trustbridge Rule of Law Foundation

Abstract: Although Parliament rewrote Section 31A of the Arbitration and Conciliation Act in 2015 to make ''loser-pays'' the norm, the Bombay High Court almost never shifts costs. To understand why, this study assembled a complete corpus of the Court's 102 arbitration related orders issued in 2023-24 under Sections 11 (appointment) and 34 (set-aside) and read each decision against the statute's cost factors. Twenty-two confidential interviews with judges, arbitrators and counsel supplemented the doctrinal review. Costs were imposed in just four matters, and even those awards were framed as exceptional sanctions for egregious delay or illegality rather than routine reimbursement. Most judgments cited no reason beyond a formulaic ''no order as to costs,'' despite statutory findings of misconduct in many of them. Interviewees traced this pattern to a mix of factors, including appellate caution, an ingrained token-cost courtroom culture, the absence of clear benchmarks for quantifying real-world expenditure and awareness that generous cost orders may jeopardise post-retirement arbitration opportunities. By providing the first mixed-methods baseline for any Indian High Court, the article identifies targeted reforms such as presumptive cost scales, transparent disclosure of expense vouchers and brief, mandatory cost-reasons. These reforms are likely to align everyday practice with Parliament's indemnificatory intent and reduce the economic drag of avoidable litigation.

Pages: 43 pages
Date: 2025-11
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