Substitution of sole arbitrator warranted once mandate ends: SC
The Supreme Court of India has made a significant ruling in the realm of arbitration, holding that the substitution of a sole arbitrator is warranted when their mandate ceases to exist. This judgment has far-reaching implications for the arbitration process in India, and it is essential to understand the context and reasoning behind this decision.
The Arbitration and Conciliation Act, 1996, is the primary legislation governing arbitration in India. The Act provides for the appointment of arbitrators, the conduct of arbitration proceedings, and the enforcement of arbitral awards. One of the critical aspects of arbitration is the role of the arbitrator, who is responsible for resolving disputes between parties. In cases where a sole arbitrator is appointed, their mandate is typically defined by the agreement between the parties or by the provisions of the Arbitration and Conciliation Act.
The Supreme Court’s recent judgment emphasizes that when the mandate of a sole arbitrator ceases to exist, their authority to proceed with the arbitration also comes to an end. This can occur when the initial or extended period of the arbitrator’s mandate expires. In such cases, the arbitrator cannot continue with the arbitration, and their mandate is deemed to have terminated, subject to a court order passed in a proceeding under Section 29A(4) of the Arbitration and Conciliation Act.
The Court’s reasoning is based on the principle that an arbitrator’s authority is derived from the agreement between the parties or the provisions of the Arbitration and Conciliation Act. When the arbitrator’s mandate expires, their authority to act as an arbitrator also expires, and they cannot continue to proceed with the arbitration. This is because the arbitrator’s mandate is not perpetual, and it is limited to the period specified in the agreement or by the provisions of the Act.
The implications of this judgment are significant. It means that when a sole arbitrator’s mandate ceases to exist, the arbitration process comes to a halt, and the parties must take steps to appoint a new arbitrator or seek a court order to extend the mandate of the existing arbitrator. This can lead to delays and additional costs, but it is essential to ensure that the arbitration process is fair, impartial, and conducted in accordance with the law.
The Supreme Court’s judgment also highlights the importance of carefully drafting arbitration agreements and ensuring that the terms of the agreement are clear and unambiguous. Parties must be aware of the provisions of the Arbitration and Conciliation Act and the implications of the arbitrator’s mandate ceasing to exist. This can help prevent disputes and ensure that the arbitration process is conducted smoothly and efficiently.
In conclusion, the Supreme Court’s ruling that the substitution of a sole arbitrator is warranted when their mandate ceases to exist is a significant development in the field of arbitration in India. The judgment emphasizes the importance of carefully drafting arbitration agreements and ensuring that the terms of the agreement are clear and unambiguous. It also highlights the need for parties to be aware of the provisions of the Arbitration and Conciliation Act and the implications of the arbitrator’s mandate ceasing to exist.
The full details of the case can be found at the following URL: 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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