Vacancy in named arbitrator's office may be filled unless the arbitration agreement clearly excludes substitution

A vacancy in the office of a named arbitrator may be filled under Section 8(1)(b) of the Indian Arbitration Act, 1940 unless the arbitration agreement itself shows an intention that the vacancy should not be supplied. Mere silence in the clause does not exclude the statutory power, and designation of the arbitrator by office alone was treated as insufficient to show an intention against substitution, particularly where the disputes were not of a special or technical character. The court therefore accepted that a substitute arbitrator could be appointed and rejected the lower courts' contrary reading of the statutory test.

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Issues: Whether, on refusal of the named arbitrator to act, a court could appoint another arbitrator under Section 8(1)(b) of the Indian Arbitration Act, 1940, when the arbitration clause did not show that the parties intended that the vacancy should not be supplied.

Analysis: Section 20 of the Indian Arbitration Act, 1940 was treated as a machinery provision, while the substantive power to fill a vacancy arose under Section 8(1)(b). The provision operates unless the arbitration agreement shows an intention that a vacancy should not be supplied. Silence in the agreement does not exclude the statutory power; rather, the law presumes that the vacancy may be filled. The designation of the arbitrator by office alone did not indicate an intention to exclude substitution, especially when the disputes were not of a special or technical character and an independent arbitrator could perform the same function. The contrary views of the lower courts proceeded on an erroneous reading of the statutory test.

Conclusion: The court held that a substitute arbitrator could be appointed and that the agreement did not show an intention that the vacancy should not be supplied.

Final Conclusion: The appeals succeeded, the refusals to appoint a new arbitrator were set aside, and the matters were sent back for appointment of another arbitrator in place of the named office-holder.

Ratio Decidendi: Under Section 8(1)(b) of the Indian Arbitration Act, 1940, a vacancy in the office of a named arbitrator may be filled unless the arbitration agreement itself shows an intention that the vacancy should not be supplied.

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