Contractual arbitral mechanism may be departed from when delays and vacancies make it non-functional, ensuring effective dispute resolution.

A contractual arbitral mechanism should ordinarily be respected and implemented as closely as possible, but Section 11 of the Arbitration and Conciliation Act, 1996 permits departure where the agreed procedure becomes non-functional because of repeated delays, vacancies, transfers of nominated officers, and failure to replace arbitrators. In such circumstances, an alternative appointment may be justified to secure independence, impartiality, and effective dispute resolution. On the stated facts, the dispute had remained pending for nearly ten years without meaningful progress under the contractual mechanism, so interference with the appointment of a retired High Court Judge as sole arbitrator was not warranted.

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Issues: Whether the appointment of a retired Judge of the High Court as sole arbitrator, in place of the arbitral mechanism stipulated in the contract, called for interference.

Analysis: The contractual clause contemplated a tribunal of serving railway officers, and ordinarily the arbitral procedure agreed by the parties should be given effect as closely as possible. However, where repeated delays, frequent vacancies, transfer of nominated officers, and failure to replace arbitrators render the contractual mechanism non-functional, the Court exercising power under Section 11 of the Arbitration and Conciliation Act, 1996 may adopt an alternative arrangement, while keeping in view the requirements of independence and impartiality and the need for effective dispute resolution. On the facts, the dispute had already remained pending for nearly ten years, with no meaningful progress under the contractual mechanism.

Conclusion: Interference with the appointment of the retired Judge as sole arbitrator was not warranted.

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