Bombay High Court Appoints Substitute Arbitrator for S.S. Trading Company Arbitration

Arbitrator's mandate terminated due to time lapse; Presolv360 to oversee new online proceedings

In a significant decision, the Bombay High Court has intervened in the arbitration proceedings between S.S. Trading Company Limited and S.N.C. Trading Company, appointing Presolv360, an independent online dispute resolution institution, to select a substitute arbitrator. The move comes after the original arbitrator's mandate expired due to prolonged delays and disputes over fees, culminating in the suspension of the arbitration process.

The legal battle, rooted in a business agreement dated April 22, 2019, saw the petitioner, S.S. Trading Company Limited, seeking redress under Sections 11 and 15 of the Arbitration and Conciliation Act, 1996. The company alleged that the arbitrator abandoned proceedings since June 2, 2023, following a series of adjournments and disagreements over fees, which the arbitrator attempted to unilaterally revise.

Justice Somasekhar Sundaresan of the Bombay High Court, presiding over the matter, noted the arbitrator's failure to act without undue delay, as well as the suspension of proceedings despite the submission of a belated Statement of Defence by the respondent, S.N.C. Trading Company. The court highlighted the statutory provision under Section 29A of the Act, where the mandate of the arbitrator expires after twelve months if proceedings are not completed, unless extended by mutual consent or court intervention.

The judgment cited the Supreme Court's ruling in the case of Oil and Natural Gas Corporation Ltd. v. Afcons Gunanusa JV, reinforcing that arbitrators cannot unilaterally determine their own fees without party consent. The court emphasized that the arbitrator's actions, including the suspension of proceedings pending fee payment, effectively constituted a withdrawal from office under Section 15 of the Act.

Justice Sundaresan's order directs Presolv360 to appoint a sole arbitrator within two weeks to resume the arbitration proceedings online, ensuring efficiency and adherence to statutory requirements. The parties are instructed to equally bear the initial costs of arbitration, with the option for the arbitrator to decide on final costs in the award. The proceedings will continue from the stage they were left, maintaining the arbitration agreement's integrity.

This development underscores the judiciary's role in upholding arbitration processes and ensuring fair and timely resolutions in commercial disputes.

Bottom Line:

Arbitration - Mandate of arbitrator terminated due to efflux of time under Section 29A of the Arbitration and Conciliation Act, 1996 - Directions issued for appointment of substitute arbitrator by an independent online dispute resolution institution.

Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 11, 14, 15, 25, 29A, 39

S.S. Trading Company Limited v. S.N.C. Trading Company, (Bombay) : Law Finder Doc Id # 2809275