My Lord, Suppose a Family Dispute in which the Arbitration Clause clearly specifies a Grand Uncle of a Joint Family is the only person in whom all Members of the Family have confidence. In the case of resignation or death of such Grand Uncle, is it possible to say by necessary implication no other person was competent to Arbitrate disputes between Family Members and, therefore, on such resignation or death, the Arbitration Clause would spend its force?
“[However] Yashwith Constructions, (2006) 6 SCC 204 construed Section 15(2) liberally and held, 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 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].