Arbitration and Conciliation Act, 1996
Section 14 of the Arbitration Act: Failure or Impossibility to Act
Section 14 of the Arbitration and Conciliation Act, 1996 deals with termination of an arbitrator's mandate where the arbitrator becomes de jure or de facto unable to perform the required functions, fails to act without undue delay, withdraws from office, or the parties agree to termination in the circumstances specified by the section.
Meaning and purpose of Section 14
Section 14 addresses situations in which an arbitrator can no longer continue to discharge the arbitral mandate. The section is concerned with an arbitrator's legal or practical inability to perform the arbitral function, as well as failure to act without undue delay.
- Section 14(1): provides for termination of the arbitrator's mandate and substitution where the statutory conditions are satisfied.
- Section 14(1)(a): applies where the arbitrator becomes de jure or de facto unable to perform functions or otherwise fails to act without undue delay.
- Section 14(1)(b): refers to withdrawal from office or agreement of the parties to termination of the mandate.
- Section 14(2): permits a party, unless otherwise agreed, to apply to the Court when a controversy remains concerning a ground under Section 14(1)(a).
- Section 14(3): makes clear that withdrawal or agreement to termination does not itself amount to acceptance that the alleged ground is valid.
Meaning of de jure inability, de facto inability and undue delay
| Expression | Practical meaning in Section 14 |
|---|---|
| De jure unable | Legally unable to continue performing the functions of arbitrator because a legal disability or disqualification prevents continuation of the mandate. |
| De facto unable | Factually or practically unable to perform the arbitral functions even though the problem may not arise from a legal prohibition. |
| Failure to act without undue delay | A failure to perform the arbitral function within a reasonable period in circumstances where the delay is not justified. |
The Act does not provide a single exhaustive factual definition for every circumstance that may amount to de jure inability, de facto inability or undue delay. Whether Section 14 applies depends on the nature of the alleged inability or delay and the facts of the arbitration.
Section 14 - Failure or impossibility to act
(1) The mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator, if,
(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and
(b) he withdraws from his office or the parties agree to the termination of his mandate.
(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate.
(3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12.
Amendment note: Section 9 of the Arbitration and Conciliation (Amendment) Act, 2015 substituted the opening words of Section 14(1) so that the provision expressly states that the arbitrator's mandate shall terminate and the arbitrator shall be substituted by another arbitrator. The amendment took effect from 23 October 2015.
When can a party approach the Court under Section 14(2)?
Where a controversy remains about whether the arbitrator has become de jure or de facto unable to perform the arbitral functions, or has failed to act without undue delay, Section 14(2) permits a party to apply to the Court for a decision on termination of the mandate, unless the parties have agreed otherwise.
This provision should be distinguished from the challenge procedure under Section 13, which deals with a challenge to an arbitrator on the grounds connected with Section 12.
Withdrawal does not amount to admission of the alleged ground
Section 14(3) protects against treating an arbitrator's withdrawal, or a party's agreement to termination of the mandate, as an admission that the asserted ground was legally or factually valid.
The same rule applies where an arbitrator withdraws under Section 13(3). A withdrawal may therefore end the particular mandate without conclusively deciding the merits of the allegation that led to the withdrawal.
Substitution of arbitrator after termination of mandate
Section 14(1), as amended, expressly refers to substitution by another arbitrator. The detailed statutory framework for substitution is found in Section 15 of the Arbitration and Conciliation Act, 1996.
Under Section 15(2), where an arbitrator's mandate terminates, the substitute arbitrator is appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.