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 is expected to bring clarity to the process.
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 comes to an end, they can no longer continue with the arbitration proceedings, and a new arbitrator must be appointed to take their place.
The Supreme Court’s ruling is based on the principles of fairness and impartiality that underlie the arbitration process. The Court recognized that the arbitrator’s mandate is a critical component of the arbitration process, and once it ceases to exist, the arbitrator can no longer function as a neutral and impartial adjudicator. The substitution of a sole arbitrator is therefore necessary to ensure that the arbitration proceedings are conducted in a fair and impartial manner.
The Court’s judgment 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 arbitrator’s mandate shall terminate if the arbitrator fails to deliver the award within the specified period or extended period. The Court’s ruling is a logical extension of this provision, as it recognizes that the arbitrator’s mandate is no longer valid once the specified period has expired.
The implications of the Supreme Court’s ruling are significant. It means that parties to an arbitration agreement must be aware of the arbitrator’s mandate and the circumstances in which it may cease to exist. If the arbitrator’s mandate terminates, the parties must take steps to substitute the arbitrator with a new one, failing which the arbitration proceedings may be rendered invalid.
The ruling also highlights the importance of carefully drafting arbitration agreements to provide for the substitution of an arbitrator in the event of the termination of their mandate. Parties must ensure that the arbitration agreement includes provisions for the appointment of a new arbitrator in the event of the termination of the original arbitrator’s mandate.
In addition, the ruling emphasizes the need for arbitrators to be aware of the limitations of their mandate and to ensure that they do not overstep their authority. Arbitrators must be mindful of the fact that their mandate is limited in time and scope, and they must ensure that they deliver their award within the specified period or extended period.
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 ruling provides clarity on the circumstances in which the substitution of a sole arbitrator is warranted and highlights the importance of ensuring that arbitration proceedings are conducted in a fair and impartial manner. Parties to arbitration agreements must be aware of the implications of the ruling and take steps to ensure that their arbitration agreements provide for the substitution of an arbitrator in the event of the termination of their mandate.
The ruling is a testament to the Supreme Court’s commitment to upholding the principles of fairness and impartiality in arbitration proceedings. It is expected to have a positive impact on the arbitration landscape in India, promoting confidence in the arbitration process and encouraging parties to opt for arbitration as a means of resolving their disputes.
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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