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Demise of arbitrator does not affect arbitration

26th June, 2012

The Supreme Court of India has held that the death of a named arbitrator in an arbitration agreement would not result in the termination of an arbitration agreement.

In the case before the Apex Court, the agreement stated that if there was any dispute between the parties ‘at any time’ the dispute shall be referred to the arbitrators who were respectively former Chairman and Director of the appellant-company. Since both the named arbitrators had passed away it was argued that the arbitration agreement had no life.

The Court held that in such a case the parties can take recourse to Section 11 of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator unless the parties had intended not to supply the vacancy of the arbitrator and which intention should be clearly spelt out in the arbitration agreement.

The Court, in its judgment dated 11-6-2012, further held that the expression ‘at any time’ manifested the intention of the parties to arbitrate whenever there was a dispute at any time under the agreement without reference to the life time of the named arbitrators. It was held that the arbitration agreement did not prohibit or debar the parties in appointing a substitute arbitrator.
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