2010 (6) TMI 864 - HC - Indian Laws

Summary

Issues involved:
The issues involved in the judgment are the validity of an arbitration agreement following the death of the named Arbitrator, the interpretation of Sections 14 and 15 of the Arbitration and Conciliation Act, 1996, and the procedure for reconstitution of the Arbitral Tribunal in case of a vacancy.

Validity of Arbitration Agreement:
The application under Section 9 of the Arbitration and Conciliation Act, 1996 was moved after the named Arbitrator passed away. The question was whether the arbitration clause became invalid upon the death of the Arbitrator. The Court held that the arbitration agreement remained valid, and the procedure under Section 11(6) of the Act should be followed to fill the vacancy left by the deceased Arbitrator.

Interpretation of Sections 14 and 15:
Sections 14 and 15 of the Act deal with the termination of an Arbitrator's mandate and the substitution of a new Arbitrator. The Court clarified that the termination of an Arbitrator's mandate does not invalidate the arbitration agreement itself. Section 15(2) requires the appointment of a substitute Arbitrator according to the original agreement or provision applicable at the initial stage.

Reconstitution of Arbitral Tribunal:
The Act provides for the reconstitution of the Arbitral Tribunal in case of a vacancy, such as the death of a named Arbitrator. Section 11(2) allows parties to request the Chief Justice or his designate to fill in the vacancy if they do not agree on a new appointment. The Court emphasized that the Act contains provisions for reconstitution of the Tribunal even when the named Arbitrator expires.

Conclusion:
The Court set aside the previous order to enable the parties to argue the matter on its merits. The judgment highlighted the importance of following the correct procedure for reconstitution of the Arbitral Tribunal in case of a vacancy, ensuring the validity of the arbitration agreement even after the death of the named Arbitrator. The decision aligned with previous interpretations by other High Courts and emphasized the judicial power under Section 11 of the Act.