truncated arbitrator passed award is valid

Originally posted by : Ra.Senthur Murugan
	truncated arbitrator passed award is valid

Please read the following carefully

Legal framework

Briefly, an arbitrator's mandate will be terminated if:

• the arbitrator becomes de jure or de facto unable to perform their functions or fails to act without delay for another reason and withdraws from their office; or
• the parties to the arbitration agree to terminate the arbitrator's mandate.

Unless otherwise agreed by the parties, the legislative intent behind the 1996 act is to preserve arbitral proceedings even if an arbitrator's mandate has been terminated. A harmonious reading of Sections 14 and 15 of the 1996 act prescribes that an arbitrator's mandate can be terminated:

• by the arbitrator (by recusing themselves from the arbitral tribunal);
• by the parties;
• by the arbitral tribunal;
• by a court order;
• on the death of the arbitrator; or
• because of the arbitrator's physical incapacity to proceed with the mandate.

As such, Section 15(2) of the 1996 act allows for arbitrators to be substituted if their mandate has been terminated.

The appointment or substitution of an arbitrator must be made in accordance with the rules and criteria that apply to the arbitrator being replaced, as agreed by the parties to the arbitration.

Based on the above, under existing general practice:

• a party to an arbitration which has been stalled on such account may prefer to apply to have its nominee arbitrator reviewed and subsequently appointed with the ascent of the other members of the arbitral tribunal; or
• the parties' two nominee arbitrators may appoint a substitute presiding arbitrator as per the terms of the agreement, as the case may be.

In such a scenario, the newly constituted arbitral tribunal can reopen the proceedings from any stage considered appropriate in the interest of speedy resolution of the dispute in order to pass an appropriate award.

Proceeding with truncated tribunal

An alternative proposition that arises for consideration at this stage is whether there is a need to appoint a substitute arbitrator at all where one arbitrator's mandate has been terminated but the original arbitral tribunal comprised three or more arbitrators. Assuming that the proceedings may have been stalled immediately before the passing of the final award, on balance once the entire proceedings have been concluded, it may be beneficial both economically and in the interest of time to proceed with the surviving two-member arbitral tribunal, subject to the agreement of both the truncated tribunal and the parties to the dispute.

In this context, as per Section 31(2) of the 1996 act, in arbitral proceedings with more than one arbitrator, the signatures of the majority of the tribunal will suffice for the award to constitute a valid award under the 1996 act, provided that the reason for any omitted signature is provided and recorded in the award passed by the truncated arbitral tribunal. Therefore, where the majority has signed the award, this will constitute, in both fact and law, an award from the tribunal as a whole. The omission of one of the arbitrators' signatures, or any failure on the part of an arbitrator to deliver their award, does not affect the legitimacy or validity of the majority's award.

In fact, in the case of Government of India, BSNL v Acome, the Delhi High Court observed that the 1996 act does not seek to restrict the reasons for omitting a signature to those found within the act itself – particularly in Section 14 thereof – given that Section 31(2) does not deal with the reasons for which the minority of arbitrators may fail to sign the award. In other words, it appears that the reasons for omitting the minority are not limited to the grounds stipulated in Section 14 of the 1996 act and the circumstances highlighted therein are not exhaustive.

Taking this one step further, in Narayan Prasad Lohia v Nukunj Kumar Lohia,the Supreme Court observed that if the two arbitrators agree and give a common award, there is no frustration of the proceedings, as their common opinion would have prevailed even if the third arbitrator (presuming that there were one) had differed in their opinion. Similarly, in CIMMCO Limited v Union of India, when one of the arbitrators withdrew from further participation in the proceedings for health reasons after oral arguments had been concluded and the parties had submitted their final written submissions, the majority of the tribunal passed the award without the third arbitrator's signature.