Technical Difficulties Shouldn't Thwart Objectives Of Arbitral Proceeding: Bombay High Court Allows Petition For Replacement Of Arbitrator

Brief Facts:

The Petitioner approached the Bombay High Court for replacement of the arbitrator since he expressed incapacity to continue due to time constraints, citing an inability to dedicate adequate time and an inability to conclude proceedings within 12 months.

Following a court order on 12.04.2018, the Arbitral Tribunal was constituted. Subsequently, the statement of claim was submitted on 30.06.2018, and the reply to the claim was filed on 23.08.2018. Considering the one-year time limit for issuing the arbitral Award, the 12-month period would have concluded on 23.08.2019.

Regarding the extension of the Arbitrator's mandate, there was no mutual agreement among the parties, as required by Sub-Section (3) of Section 29A of the Act of 1996. Consequently, the Respondent argued that since the one-year period has expired, the Arbitrator's mandate was terminated, rendering the substitution application inconsequential. Conversely, the Petitioner contended that Sub-Section (4) of Section 29A of the Arbitration and Conciliation Act (“Arbitration Act”) allows for an application to be filed either before or after the specified period, thus justifying the petition.

Observations by the High Court:

The High Court noted communication issued by the Sole Arbitrator on 01.10.2022, wherein he recused himself. Notably, the communication referenced the Petitioner's repeated requests for a meeting of the arbitral tribunal, which were made on 16.05.2022, 10.06.2022, and 20.07.2022. The High Court noted that there was no indication in the Arbitrator's communication that the proceedings have concluded. Therefore, the impression that the proceedings were ongoing until the Arbitrator's recusal on 01.10.2022 was understandable.

In response to the petitioner's requests for the arbitral proceedings, the High Court noted that the Arbitrator expressed his inability to continue and opted to recuse himself. Given these circumstances, it held that even though legally the termination of the Arbitrator's mandate upon the expiration of one year from the reference entry might seem to present a technical difficulty, it should not impede the essence of the proceedings. As the proceedings have been ongoing before the Arbitral Tribunal since 2018, initiated by the High Court's reference, it deemed it appropriate to grant the petition.

Consequently, considering the expressed consensus and to ensure the continuity of the arbitration process, Advocate Rohan Savant was appointed as the substituted Arbitrator.

Case Title: M/s.Paresh Construction & Foundation Ltd. vs Hindustan Petroleum Corp. Ltd.

Case Number: ARBITRATION APPLICATION (L) NO.18473 OF 2023 WITH ARBITRATION PETITION NO.13 OF 2023

Advocate for the Petitioner: Mr.Aliabbas Delhiwala a/w Usha Singh and Anirudh for the Petitioner/ Applicant

Advocate for the Respondent: Mr.Nikhil Sakhardande, Senior Counsel a/w Pralhad Paranjape, Shubhra Paranjape and Manish Kelkar for Respondent.

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