Section 15(2) of the Arbitration Act II

My Lord, Suppose a case of a family dispute in which the Arbitration Clause clearly specifies that a particular grand uncle of a joint family is the only person in whom all members of the family have confidence as a result of which he has been appointed Arbitrator to resolve their disputes. In the case of resignation or death of such grand uncle, is it possible to content that by necessary implication no other person was competent to arbitrate disputes between the family members and that, therefore, on such resignation or death, the Arbitration Clause would spend its force?

Yes.

“[However], in Yashwith Constructions this Court construed Section 15(2) liberally and held that the expression “the rules” that were applicable to the appointment of the Arbitrator would include the Arbitration Clause or Agreement itself, apart from any Institutional rules or other rules which may apply.

Under Section 15(2), where the mandate of an Arbitrator terminates, a Substitute Arbitrator ‘shall’ be appointed…unless it is clear that an Arbitration Agreement on the facts of a particular case excludes either expressly or by necessary implication the Substitution of an Arbitrator, whether named or otherwise, such a Substitution must take place.

In the present case [as opposed to the instance cited in the question] we do not have any such factual scenario nor do we have expressions such as ‘only’ which would indicate that the confidence of the parties was in only the Named Arbitrator and in nobody else.”

Hon’ble Justice R.F. Nariman, Shailesh Dhairyawan v. Mohan Lulla, [Civil Appeal No. 8731 of 2015].

 

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