Broken arbitral mechanism and undue delay can justify court appointment of an independent sole arbitrator

Where the agreed arbitral mechanism has broken down because the tribunal failed to act without undue delay, the arbitral mandate may be terminated under the Arbitration and Conciliation Act, 1996. Although substitution normally follows the contractual appointment procedure, party autonomy is not absolute and the Court may intervene where repeated adjournments and prolonged inaction defeat effective arbitration. In exceptional circumstances, the Court may appoint an independent sole arbitrator instead of remitting the parties to the same failed mechanism. The termination of the tribunal's mandate and the High Court's appointment of a sole arbitrator were upheld.

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Issues: Whether the mandate of the existing arbitral tribunal could be terminated for failure to act without undue delay, and whether the Court could appoint a sole arbitrator departing from the contractual appointment mechanism in the circumstances of prolonged and ineffective arbitration.

Analysis: The Arbitration and Conciliation Act, 1996 recognises termination of an arbitrator's mandate where the tribunal is unable to perform its function or fails to act without undue delay, and substitution is ordinarily to be made according to the original appointment procedure. At the same time, the governing scheme also gives effect to party autonomy only as a general rule, and the Court is not powerless where the agreed procedure has broken down and adherence to it would defeat the object of expeditious and effective arbitral resolution. Prolonged delay, repeated adjournments, and failure of the tribunal to conclude the proceedings justified judicial intervention. In such exceptional circumstances, the Court could appoint an independent arbitrator instead of remitting the parties to the same contractual mechanism.

Conclusion: The termination of the tribunal's mandate was justified, and the appointment of a sole arbitrator by the High Court was upheld.

Final Conclusion: The appeal failed because the Court treated persistent arbitral delay and inability of the nominated tribunal to function as sufficient grounds to depart from the contractual mechanism and secure an effective substitute arbitral forum.

Ratio Decidendi: Where the agreed arbitral mechanism has broken down because the tribunal has failed to act without undue delay, the Court may, in exceptional circumstances, appoint an independent arbitrator to preserve the efficacy of arbitration rather than insist on rigid adherence to the contractual appointment procedure.

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