Substitution of Sole Arbitator 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 decision has important implications for arbitration proceedings in India and provides clarity on the role of the Court in such situations.
The Arbitration and Conciliation Act, 1996, governs arbitration proceedings in India. The Act provides for the appointment of arbitrators, the conduct of arbitration proceedings, and the enforcement of arbitration awards. Section 29A of the Act deals with the time limit for making an arbitral award. According to Section 29A(1), the arbitral proceedings shall be completed within a period of twelve months from the date the arbitrator enters upon his reference. The parties can extend this period by a further six months. If the award is not made within the extended period, the mandate of the arbitrator terminates, unless the parties agree to a further extension.
The Supreme Court’s decision in the case of Mohan Lal Fatehpuria v. MS Bharat Textiles & Ors. (2025 INSC 1409) has clarified the position on the substitution of a sole arbitrator when their mandate ceases to exist. 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.
The Court’s decision is based on the principle that an arbitrator’s mandate is limited to the time period specified in the agreement or the Act. Once the mandate ceases to exist, the arbitrator cannot continue with the proceedings. The substitution of a sole arbitrator is therefore warranted in such situations to ensure that the arbitration proceedings can continue and reach a conclusion.
The Supreme Court’s decision has significant implications for arbitration proceedings in India. It provides clarity on the role of the Court in substituting a sole arbitrator when their mandate ceases to exist. The decision also emphasizes the importance of adhering to the time limits specified in the Act and the agreement between the parties.
The Court’s decision is also consistent with the principles of fairness and justice. The substitution of a sole arbitrator when their mandate ceases to exist ensures that the arbitration proceedings are conducted in a fair and efficient manner. It also prevents the arbitrator from continuing with the proceedings beyond their mandate, which could lead to a breach of the principles of natural justice.
In conclusion, the Supreme Court’s decision in the case of Mohan Lal Fatehpuria v. MS Bharat Textiles & Ors. (2025 INSC 1409) is a significant ruling on the substitution of a sole arbitrator in arbitration proceedings. The decision provides clarity on the role of the Court in such situations and emphasizes the importance of adhering to the time limits specified in the Act and the agreement between the parties. The decision is consistent with the principles of fairness and justice and ensures that arbitration proceedings are conducted in a fair and efficient manner.
The decision is also a reminder of the importance of careful planning and management of arbitration proceedings. Parties to an arbitration agreement should ensure that they agree on a clear and realistic timeline for the completion of the arbitration proceedings. They should also be aware of the provisions of the Arbitration and Conciliation Act and the implications of the expiry of the initial or extended period.
Overall, the Supreme Court’s decision is a welcome clarification on the substitution of a sole arbitrator in arbitration proceedings. It provides a clear and authoritative statement of the law on this issue and will help to ensure that arbitration proceedings are conducted in a fair, efficient, and timely manner.
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