The Delhi High Court has clarified that costs awarded in an arbitral award, though not separately itemized, are enforceable in execution if the quantum was formally placed on record during arbitration and remained unchallenged. This decision reinforces the finality of arbitral awards and curtails attempts to re-litigate quantification in execution proceedings.
Background & Facts
The Dispute
The Decree Holder, M/s. Continental India Pvt. Ltd., sought enforcement of an arbitral award dated 01.05.2025 issued by the Delhi International Arbitration Centre (DIAC). While the principal sum of Rs. 9,72,103 and interest were paid, the costs awarded under Paragraph 15(iv) of the Award remained unpaid. The Award directed payment of "costs of the arbitration proceedings incurred by the Claimant" but did not specify a numerical amount.
Key Facts
- The Claimant submitted a detailed cost statement totaling Rs. 16,33,800 during arbitration, including expenses incurred before the DIAC, Allahabad High Court, and Supreme Court.
- On 15.01.2024, the Arbitral Tribunal formally took on record the Claimant’s cost calculation, stating: "The Claimant has also placed a calculation of the costs which have been incurred by the Claimant in filing of the Arbitration proceedings through DIAC. It is taken on record and would be considered at the appropriate stage."
- The Respondent did not contest the cost schedule or challenge its accuracy during arbitration.
- Post-award, the Decree Holder narrowed its claim to only those costs incurred before the DIAC, excluding litigation costs before higher courts, reducing the claim to Rs. 9,28,300.
- The cost invoices and memos forming the basis of this claim were part of the arbitral record and reproduced in the execution petition.
Procedural History
- 01.05.2025: Arbitral Award issued by DIAC, awarding costs without quantification.
- 21.04.2026: Execution Petition filed under Section 36 of the Arbitration and Conciliation Act, 1996, read with Order XXI Rule 10 CPC.
- 15.01.2024: Arbitral Tribunal took the cost statement on record.
- 03.11.2023: Judgment in H.P. Cotton Textile Mills Ltd. v. The Oriental Insurance Company Ltd. cited by the Judgment Debtor.
- 21.04.2026: Judgment delivered by the Delhi High Court.
Relief Sought
The Decree Holder sought enforcement of costs amounting to Rs. 9,28,300 incurred in the arbitral proceedings, as contemplated under Paragraph 15(iv) of the Award.
The Legal Issue
The central question was whether an arbitral award that directs payment of "costs incurred" without specifying a sum can be enforced in execution proceedings when the quantum of such costs was formally placed on record during arbitration and not contested.
Arguments Presented
For the Appellant/Petitioner
Learned counsel for the Decree Holder submitted that the cost schedule of Rs. 9,28,300 was duly submitted to the Arbitral Tribunal on 15.01.2024 and formally taken on record. The Respondent had ample opportunity to challenge the quantum during arbitration but remained silent. The award’s reference to "costs incurred" must therefore be read as incorporating the unchallenged schedule. Reliance was placed on the principle that execution courts cannot re-examine the merits of an award, and where the basis for costs is part of the record, enforcement is permissible.
For the Respondent/State
Learned counsel for the Judgment Debtors relied on H.P. Cotton Textile Mills Ltd. v. The Oriental Insurance Company Ltd., arguing that execution courts cannot go behind the award to quantify costs not expressly stated. They contended that since the Award did not specify a sum, the costs were unquantified and therefore unenforceable. They asserted that the mere placing of documents on record without explicit acceptance or calculation in the award rendered them inadmissible in execution.
The Court's Analysis
The Court distinguished the present case from H.P. Cotton Textile Mills Ltd., emphasizing that in that case, no cost schedule was formally taken on record by the Tribunal, and no proof of payment was submitted. Here, the Tribunal explicitly recorded the cost statement on 15.01.2024, indicating its intention to consider it in determining costs. The Court observed:
"The learned Arbitrator has, in fact, rendered a categorical award in respect of the costs incurred during the arbitral proceedings, the quantification and tabulation whereof were never subjected to contestation during the course of the arbitration."
The Court held that the Arbitral Tribunal’s act of taking the cost schedule on record constituted implicit acceptance of its relevance and accuracy. The Respondent’s failure to dispute the quantum during arbitration precluded it from raising objections in execution. The Court reiterated that execution proceedings are not a forum to re-litigate the award’s basis, especially where the underlying documents were part of the arbitral record and unchallenged. The Court further noted that the Decree Holder had voluntarily reduced its claim to exclude non-arbitral costs, demonstrating good faith and precision in enforcement.
The Verdict
The Decree Holder succeeded. The Court directed the Judgment Debtors to pay Rs. 9,28,300 as costs awarded under Paragraph 15(iv) of the arbitral award. Payment was to be made within four weeks from the date of judgment. The Execution Petition and all pending applications were disposed of accordingly.
What This Means For Similar Cases
Costs Taken on Record Are Deemed Awarded
- Practitioners must ensure cost schedules are formally submitted and recorded during arbitration, even if not separately quantified in the final award.
- Silence by the opposing party during arbitration on a cost schedule constitutes acquiescence, making enforcement in execution permissible.
Execution Courts Cannot Re-quantify, But Can Enforce Pre-Recorded Quantities
- An award stating "costs to be paid" is enforceable if the quantum was part of the arbitral record and unchallenged.
- Execution petitions must not introduce new evidence; reliance must be on documents already part of the arbitral record.
Strategic Takeaway for Arbitration Practitioners
- Always file and seek formal recording of cost schedules during arbitration.
- Do not assume that a general costs award is unenforceable - if the basis is on record and unchallenged, it is enforceable.
- Avoid including non-arbitral costs in the schedule to prevent dilution of the claim.
