Arbitrator's Death Does Not Terminate Arbitration Agreement; Parties Remain Bound: Orissa High Court

The Orissa High Court has held that the death of an arbitrator terminates the mandate of the Arbitral Tribunal but does not extinguish the arbitration agreement.

The arbitration clause continues to bind the parties, who cannot avoid arbitration merely because the arbitrators have died.

Chief Justice Harish Tandon appointed former Supreme Court Judge Justice Ananga Kumar Patnaik as the Presiding Arbitrator in the dispute between Core Minerals and Himanghini Singh concerning agreements for the raising and sale of iron ore. 

"By death of the Arbitrator, the mandate of the Arbitral Tribunal is terminated, but it does not terminate the arbitration clause. The said arbitration agreement/clause remains binding on the parties, and therefore, the parties cannot wriggle out of the same.", the Court observed. 

The case arose from two agreements dated May 15, 2002 between Core Minerals and the predecessor in interest of Himanghini Singh concerning the raising and sale of iron ore. After disputes arose, Core Minerals invoked arbitration on August 16, 2009. The Supreme Court appointed a Presiding Arbitrator on November 22, 2011.

However, during subsequent proceedings the arbitrator nominated by Core Minerals and the Presiding Arbitrator died. After the opposite party did not respond to notices issued in October and November 2023, Core Minerals approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996.

The Court observed that under Section 15(2) of the Act, the termination of an arbitrator's mandate does not prevent the appointment of a substitute arbitrator. Unless the arbitration agreement expressly or by necessary implication excludes substitution, a replacement must be appointed in accordance with the agreed procedure.

It further held that the death of an arbitrator affects the composition of the tribunal but does not bring the arbitration agreement to an end. The parties therefore remain bound by the arbitration clause and cannot avoid arbitration on this ground.

 The Court rejected the opposite party's reliance on Section 29A, holding that the provision was inapplicable once the tribunal had become defunct following termination of the arbitrator's mandate.

"The applicability of Section 29A of the Act is misplaced for the simple reason that once the mandate of the arbitrator is terminated and the Arbitral Tribunal becomes defunct, the question of applicability of the said Section does not arise. The expression “mandate of the Arbitrator terminates” has to be understood that the composition of the Arbitral Tribunal gets affected, and therefore, there is no fetter on the part of the Court in appointing a substituted Arbitrator."

The court also held that since the opposite party's nominated arbitrator was still alive and had not withdrawn, the party would be presumed to continue with that appointment. Core Minerals had duly communicated its fresh nomination.

Accordingly the court appointed former Supreme Court Judge Justice Ananga Kumar Patnaik as the Presiding Arbitrator, directing the reconstituted tribunal to resume proceedings from the stage at which the earlier tribunal became defunct under the aegis of the High Court of Orissa Arbitration Centre.

For Petitioner: Advocate Partha Mukherji

For Opposite Party: Advocate Lalitendu Mohapatra,