Refusal to act by a sole arbitrator can exhaust the arbitration clause and justify court appointment of a fresh arbitrator.

An arbitrator's refusal to extend time and insistence on ending proceedings can amount to refusal to act, whether expressed directly or inferred from conduct. On that basis, the arbitration clause is treated as exhausted where a sole named arbitrator or nominee refuses to proceed, unless the agreement clearly shows that any vacancy is not to be filled. In such circumstances, the Court acquires power to appoint a fresh arbitrator under Section 8(1)(b) of the Arbitration Act. The substitute appointment was therefore upheld and the resulting award proceedings were left undisturbed.

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Issues: (i) Whether an arbitrator's refusal to extend time and leaving the parties to decide their future course of action amounted to refusal to act within the meaning of Section 8(1)(b) of the Arbitration Act. (ii) Whether, on such refusal, the power to appoint a fresh arbitrator vested in the Court or had to be exercised again under the arbitration clause.

Issue (i): Whether an arbitrator's refusal to extend time and leaving the parties to decide their future course of action amounted to refusal to act within the meaning of Section 8(1)(b) of the Arbitration Act.

Analysis: Refusal to act may be express or implied. An arbitrator cannot be compelled to continue where his conduct shows an unwillingness to proceed. The relevant inquiry is whether the circumstances justify an inference that the arbitrator has declined to discharge the obligations undertaken by him. The arbitrator's order showed that he would not permit further extension of time and would not continue once confidence had been lost.

Conclusion: The circumstances constituted refusal to act within Section 8(1)(b) of the Arbitration Act.

Issue (ii): Whether, on such refusal, the power to appoint a fresh arbitrator vested in the Court or had to be exercised again under the arbitration clause.

Analysis: Where a sole named arbitrator or nominee refuses to act, the arbitration clause is exhausted unless it clearly shows that the vacancy is not to be supplied. In the absence of such a contrary indication, the Court acquires jurisdiction to fill the vacancy under Section 8(1)(b). A nominee of the arbitrator stands in the same position as the named arbitrator and his refusal equally brings the clause to an end.

Conclusion: The Court was competent to appoint another arbitrator under Section 8(1)(b) of the Arbitration Act.

Final Conclusion: The appeal was rejected and the appointment of the substitute arbitrator was upheld, leaving the award proceedings consequent upon that appointment undisturbed.

Ratio Decidendi: When a sole named arbitrator, or a nominee appointed under the arbitration clause, refuses to act and the agreement does not clearly indicate that the vacancy is not to be supplied, the arbitration clause is exhausted and the Court may appoint a fresh arbitrator under Section 8(1)(b) of the Arbitration Act.

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