What Happens When a Sole Arbitrator Named in the Contract Declines the Appointment?
Parties sometimes agree in their contract that any future dispute will be referred to arbitration before a sole arbitrator specifically identified by name. While this may appear to provide certainty at the drafting stage, a practical difficulty arises when a dispute eventually occurs and the named arbitrator declines to accept the appointment.
Does the arbitration agreement fail altogether, or can another sole arbitrator be appointed?
In most cases, the inability or unwillingness of the named arbitrator to act does not automatically terminate the arbitration agreement. The critical question is whether the parties intended arbitration itself to depend exclusively on that particular individual, or whether naming the arbitrator was simply the agreed mechanism for constituting the tribunal.
The Named Arbitrator Declines to Act
Consider a contract providing that disputes shall be determined by a particular individual acting as sole arbitrator.
A dispute subsequently arises. The claimant approaches the named arbitrator and requests the commencement of the arbitration. The arbitrator, however, declines the appointment or states that they are unable to perform the mandate.
At that point, the agreed appointment mechanism can no longer operate exactly as contemplated by the contract.
That does not necessarily mean that the parties must abandon arbitration and proceed before the courts.
A distinction should be made between the arbitration agreement itself and the agreed method for appointing the arbitrator.
The appointment mechanism may fail while the underlying agreement to arbitrate remains effective.
The First Step: Agreement on a Substitute Arbitrator
Following the named arbitrator’s refusal or inability to act, the parties should ordinarily be given an opportunity to agree upon another sole arbitrator.
This approach reflects one of the fundamental principles of arbitration: party autonomy.
The parties who originally chose the tribunal’s composition should, where possible, retain the opportunity to select the replacement arbitrator themselves.
From a practical perspective, any agreement appointing the substitute arbitrator should be clearly recorded in writing. This can reduce the risk of later challenges concerning the constitution or jurisdiction of the tribunal.
What If the Parties Cannot Agree?
The more difficult situation arises where the parties fail to agree on the identity of the replacement arbitrator.
A party should not ordinarily be permitted to frustrate an otherwise valid arbitration agreement simply by refusing to cooperate in the appointment process.
Subject to the applicable arbitration law and the wording of the arbitration agreement, the party seeking to proceed with arbitration may then apply to the competent court or designated appointing authority for the appointment of a replacement sole arbitrator.
The court’s intervention in such circumstances does not involve deciding the merits of the underlying commercial dispute.
Rather, its function is to support the arbitration process by addressing the failure of the agreed appointment mechanism and enabling the tribunal to be properly constituted.
What Should the Applicant Prove?
A party seeking judicial assistance in appointing a substitute arbitrator should be able to establish the factual basis for the application.
Relevant evidence will commonly include:
the contract containing the arbitration agreement and the name of the original sole arbitrator;
evidence that a dispute has arisen within the scope of the arbitration agreement;
the named arbitrator’s written refusal, resignation, or confirmation that they are unable to act;
correspondence inviting the other party to agree on a replacement arbitrator; and
evidence demonstrating that the parties failed to reach agreement within the applicable period or procedure.
This evidentiary record can be important.
It demonstrates that the original appointment mechanism genuinely failed and that the applicant attempted to resolve the issue contractually before seeking judicial intervention.
Does the Arbitration Agreement Survive?
The answer may depend significantly on the wording of the clause and the parties’ intention.
There are two conceptually different situations.
In the first, the parties may have intended that only the specifically named individual could arbitrate the dispute. The identity of that person may therefore form an essential element of their consent to arbitration.
In the second—and often more common—situation, the parties intended to arbitrate their disputes and simply selected a named person as the mechanism for constituting a sole-member tribunal.
In that situation, the failure of the named arbitrator to act is more naturally treated as a failure of the appointment mechanism, rather than a failure of the agreement to arbitrate itself.
This distinction can determine whether a replacement arbitrator may validly be appointed.
A Drafting Problem That Can Be Avoided
The issue demonstrates the risk of naming an individual arbitrator in a contract without also providing a replacement mechanism.
A stronger arbitration clause should anticipate the possibility that the named arbitrator may later be unavailable, unwilling to act, conflicted, incapacitated, or otherwise unable to accept the appointment.
For example:
“The dispute shall be referred to a sole arbitrator. The parties appoint [Name] as the sole arbitrator. If the named arbitrator is unable or unwilling to act, the parties shall agree upon a substitute sole arbitrator. Failing such agreement, the substitute arbitrator shall be appointed by the competent court or appointing authority in accordance with the applicable arbitration law.”
Such wording preserves the parties’ original preference while reducing the possibility that the arbitration process will become paralysed if the named individual cannot act.
The Practical Sequence
Where a named sole arbitrator declines the appointment, the usual sequence should therefore be:
Obtain clear evidence of the arbitrator’s refusal or inability to act.
Invite the other party to agree upon a replacement sole arbitrator.
Document the negotiations and any failure to reach agreement.
If no agreement is reached, apply to the competent court or appointing authority where the applicable law permits it.
Request the appointment of a substitute sole arbitrator so that the arbitration may proceed.
Following this sequence also helps demonstrate that judicial intervention became necessary only after the parties’ contractual appointment mechanism had failed.
Conclusion
The refusal of a sole arbitrator specifically named in a contract does not necessarily bring the arbitration agreement to an end.
The key legal distinction is between the parties’ agreement to arbitrate and their chosen mechanism for appointing the arbitrator.
Where the named arbitrator declines the mandate, the parties should first attempt to agree on a substitute. If they cannot do so, the applicable arbitration law may permit either party to request the competent court or appointing authority to make the appointment.
The party seeking such assistance should retain clear evidence of both the named arbitrator’s refusal and the parties’ failure to agree on a replacement.
For contract drafters, however, the preferable solution is preventative: whenever an individual arbitrator is named in an arbitration clause, the clause should also contain an express replacement mechanism.
Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. The legal consequences of a named arbitrator’s refusal to act depend on the wording of the arbitration agreement, the applicable arbitration law, and any institutional rules governing the proceedings.
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