Substitution of sole arbitrator warranted once mandate ends: SC
The Supreme Court of India has recently made a significant ruling regarding the substitution of a sole arbitrator in arbitration proceedings. The Court has held that the substitution of a sole arbitrator is warranted when their mandate ceases to exist. This judgment has far-reaching implications for arbitration proceedings in India and provides clarity on the role of the arbitrator and the circumstances under which their mandate can be terminated.
The Court explained that on the expiry of the initial or extended period, the arbitrator cannot proceed, and their mandate terminates, subject to a court order passed in a proceeding under Section 29A(4) of the Arbitration and Conciliation Act. This means that once the arbitrator’s mandate has ended, they can no longer continue with the arbitration proceedings, and a new arbitrator must be appointed to take their place.
The Court’s ruling is based on the principle that an arbitrator’s mandate is limited to a specific period, and once that period has expired, they can no longer exercise their powers. This is to ensure that arbitration proceedings are conducted in a fair and efficient manner, and that the parties involved are not unduly delayed or prejudiced by the arbitrator’s inability to complete the proceedings within the allotted time.
The Court’s decision is also consistent with the provisions of the Arbitration and Conciliation Act, which provides for the termination of an arbitrator’s mandate in certain circumstances. Section 29A(4) of the Act states that the mandate of an arbitrator shall terminate if the arbitrator fails to deliver an award within the specified period, unless the parties agree to extend the period or the court orders an extension.
The implications of the Court’s ruling are significant, as it provides clarity on the circumstances under which an arbitrator’s mandate can be terminated. It also highlights the importance of ensuring that arbitration proceedings are conducted in a timely and efficient manner, and that the parties involved are not unduly delayed or prejudiced by the arbitrator’s actions.
In recent years, there has been an increasing trend towards arbitration as a means of resolving disputes, particularly in the context of commercial transactions. The Court’s ruling is likely to have a significant impact on the conduct of arbitration proceedings in India, and will provide guidance to parties, arbitrators, and courts on the role of the arbitrator and the circumstances under which their mandate can be terminated.
The Court’s decision also underscores the importance of ensuring that arbitration proceedings are conducted in accordance with the law and the terms of the arbitration agreement. The Court’s ruling is a reminder that the arbitrator’s mandate is limited, and that they must exercise their powers in a fair and impartial manner, and within the timeframe specified in the arbitration agreement or the law.
In conclusion, the Supreme Court’s ruling on the substitution of a sole arbitrator is a significant development in the field of arbitration law in India. The Court’s decision provides clarity on the circumstances under which an arbitrator’s mandate can be terminated, and highlights the importance of ensuring that arbitration proceedings are conducted in a fair, efficient, and timely manner. The ruling is likely to have far-reaching implications for arbitration proceedings in India, and will provide guidance to parties, arbitrators, and courts on the role of the arbitrator and the circumstances under which their mandate can be terminated.
The case of Mohan Lal Fatehpuria v. MS Bharat Textiles & Ors. (2025 INSC 1409) is a landmark judgment that will shape the future of arbitration law in India. The Court’s decision is a testament to the importance of ensuring that arbitration proceedings are conducted in accordance with the law and the terms of the arbitration agreement.
Read the full judgment here: https://www.verdictum.in/court-updates/supreme-court/mohan-lal-fatehpuria-v-ms-bharat-textiles-ors-2025-insc-1409-substitution-sole-arbitrator-mandate-ceases-exist-1600780
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