Arbitration, Mediation and Conciliation · Preparation and Execution of Arbitral Award

Lien on Arbitral Award and Deposits as to Costs (Section 39)

Updated 11 October 2026 · Fact-checked

Under Section 39, an arbitral tribunal has a lien on the award for unpaid costs, unless the arbitration agreement says otherwise. If it withholds the award, a party can apply to the Court, pay the demanded costs into Court, and get the award. The Court then fixes reasonable costs and refunds the balance.

Understand Lien on Arbitral Award and Deposits as to Costs (Section 39)

Start with a simple idea. An arbitrator does work and expects to be paid. A lien is the right to hold on to something until a debt is paid. Section 39(1) gives the tribunal a lien on the arbitral award for any unpaid costs of the arbitration. So the tribunal can refuse to hand over the award until costs are paid.

This right is not absolute. It is subject to any provision to the contrary in the arbitration agreement. If the parties agreed that the tribunal has no lien, or agreed a different arrangement, that agreement prevails. It is also subject to sub-section (2).

The risk is that a tribunal could demand an unreasonable sum and keep the award hostage. Section 39(2) is the safeguard. If the tribunal refuses to deliver the award except on payment of the costs it demands, the Court may, on application, order delivery to the applicant on payment into Court of the costs demanded. The Court then holds an inquiry if it thinks fit. Out of the money paid in, it pays the tribunal such sum as it considers reasonable. The balance is refunded to the applicant.

Section 39(3) says who can apply. Any party may apply, unless the fees demanded were fixed by written agreement between that party and the tribunal. The tribunal is entitled to appear and be heard. So a fee fixed in writing with you cannot be reopened under this route.

Section 39(4) covers a gap. If a question arises about the costs of the arbitration and the award has no sufficient provision on costs, the Court may make such orders on costs as it thinks fit. Note the link to Section 31A, which governs how the tribunal or Court decides costs. Section 39 is about holding the award and challenging demands, not about who ultimately bears costs.

Key rules to remember

Lien of the tribunal (Section 39(1)): Tribunal has a lien on the award for unpaid costs, subject to sub-section (2) and any contrary provision in the arbitration agreement; The agreement can exclude or change the lien.
Court order on refusal to deliver (Section 39(2)): Tribunal refuses award except on payment → Court may order delivery on payment of demanded costs into Court → reasonable sum paid to tribunal → balance refunded to applicant; The Court may hold such inquiry as it thinks fit.
Who may apply (Section 39(3)): Any party may apply, unless the fees demanded were fixed by written agreement between that party and the tribunal; The tribunal is entitled to appear and be heard.
Costs where award is silent (Section 39(4)): Question on costs + award has no sufficient provision on costs → Court may make such orders on costs as it thinks fit; Read with Section 31A on the regime for costs.

How to solve Lien on Arbitral Award and Deposits as to Costs (Section 39) questions

Use this order for any fact-based question on withheld awards or costs.

1Identify the facts: has the tribunal made the award, and is it refusing to deliver it for unpaid costs?
2State the general rule: Section 39(1) gives the tribunal a lien on the award for unpaid costs, subject to sub-section (2) and any contrary term in the arbitration agreement.
3Check the agreement: does it exclude the lien or provide a different arrangement for fees?
4Check whether the fees were fixed by written agreement between the applicant and the tribunal. If yes, Section 39(3) bars that party's application.
5If the party can apply, explain the remedy: apply to the Court, pay the demanded costs into Court, and receive the award under Section 39(2).
6Explain what the Court does next: inquiry if needed, reasonable sum to the tribunal, balance refunded to the applicant. Mention that the tribunal may appear and be heard.
7If the award is silent on costs, add Section 39(4) and Section 31A.
8Conclude clearly with the party's position and the practical step.

Quickest way: Four-check method for lien questions

When to use it: Use when time is short and the question asks whether a party can get a withheld award.

Lien exists? Yes under Section 39(1), unless the agreement says otherwise.
Fees fixed in writing with the tribunal? If yes, no application under Section 39(2).
If no, apply to Court and deposit the demanded costs.
Court pays a reasonable sum to the tribunal and refunds the balance.

Common mistakes in Lien on Arbitral Award and Deposits as to Costs (Section 39)

Saying the tribunal's lien is absolute.
Students remember only sub-section (1).
Fix: Always add: subject to sub-section (2) and any contrary provision in the arbitration agreement.
Thinking the Court simply orders the party to pay the tribunal's demand.
Confusing the remedy with a recovery suit.
Fix: The party pays the demanded sum into Court. The Court pays the tribunal a reasonable sum and refunds the balance.
Ignoring the written fee agreement exception.
Sub-section (3) is short and easily skipped.
Fix: Check whether fees were fixed by written agreement between the applicant and the tribunal. If so, that party cannot apply.
Mixing Section 39 with Section 31A.
Both deal with costs.
Fix: Section 31A decides who pays costs and how much. Section 39 deals with the lien, delivery of the award and Court orders on costs where the award is silent.
Saying only the losing party can apply.
Assuming costs follow the result.
Fix: Section 39(3) says any party may apply, subject to the written fee agreement exception.

Worked examples

Example 1

An arbitral tribunal in a dispute between Sharma Textiles Ltd and Kaveri Exports Ltd has made its award. It refuses to deliver it unless ₹4,00,000 is paid as costs. There is no written agreement fixing its fees with Sharma Textiles. The arbitration agreement is silent on lien. Advise Sharma Textiles.

Show the solution

Rule: Section 39(1) gives the tribunal a lien on the award for unpaid costs, subject to sub-section (2) and any contrary provision in the agreement.
The agreement is silent, so the lien applies.
The tribunal has refused to deliver the award except on payment of the costs it demands. Section 39(2) is attracted.
Section 39(3) lets any party apply unless fees were fixed by written agreement with the tribunal. There is no such agreement, so Sharma Textiles can apply.
Sharma Textiles should apply to the Court and pay ₹4,00,000 into Court. The Court may order delivery of the award to it.

Answer: Sharma Textiles can apply to the Court, deposit the demanded ₹4,00,000 and obtain the award. The Court will, after any inquiry it thinks fit, pay the tribunal a reasonable sum and refund the balance to Sharma Textiles. The tribunal may appear and be heard.

Example 2

A sole arbitrator and Mehta Pharma Ltd agreed in writing that his fees would be ₹6,00,000. After the award, he refuses to deliver it as the fees are unpaid. Mehta Pharma considers the fees high and wants to apply to Court under Section 39(2). Can it?

Show the solution

Rule: Section 39(1) gives the tribunal a lien for unpaid costs.
Refusal to deliver the award brings in Section 39(2).
Section 39(3) allows any party to apply unless the fees demanded have been fixed by written agreement between that party and the tribunal.
Here the fees of ₹6,00,000 were fixed by written agreement between Mehta Pharma and the arbitrator.
So the exception applies and Mehta Pharma cannot use the Section 39(2) application.

Answer: No. Because the fees were fixed by written agreement between Mehta Pharma and the arbitrator, Section 39(3) bars its application. The lien stands, and Mehta Pharma must pay the agreed fees to obtain the award.

Exam tips

Quote the sub-sections: (1) lien, (2) Court order, (3) who may apply, (4) costs where the award is silent.
In case questions, check the written fee agreement first. It decides whether the party can apply.
Describe the money flow: deposit into Court, reasonable sum to tribunal, balance refunded.
Link to Section 31A when a question asks who bears the costs, and keep Section 39 for the lien.

Practice questions from Preparation and Execution of Arbitral Award

Lien on Arbitral Award and Deposits as to Costs (Section 39): frequently asked questions

What is a lien on an arbitral award?

It is the tribunal's right under Section 39(1) to hold the award until its unpaid costs are paid. It is subject to Section 39(2) and to any contrary provision in the arbitration agreement.

How can a party get the award if the arbitrator withholds it for fees?

The party applies to the Court under Section 39(2) and pays the costs demanded into Court. The Court may then order delivery of the award to the party. It pays the tribunal a reasonable sum and refunds the balance.

Can any party apply to the Court under Section 39?

Yes, any party may apply. The exception is a party whose fees were fixed by written agreement between it and the tribunal. The tribunal can appear and be heard on the application.

What if the award does not deal with costs properly?

Under Section 39(4), where a question arises about costs and the award has no sufficient provision on them, the Court may make such orders on costs as it thinks fit.