Parties to an agreement appointed a specific person to serve as arbitrator, should a dispute arise between them, when its decision will be binding on both parties. However, the designated arbitrator announced that due to his advanced age and medical condition he is unable to serve as arbitrator.
The Court held that all proceedings will be suspended until another arbitrator is appointed. If the term of an arbitrator becomes vacant, whether due to its resignation or death or due to its transfer from office, the Court may order the appointment of another arbitrator, when no other intention is implied by the arbitration agreement. An agreement will be interpreted according to the parties' understanding, as it is implied from the agreement and the circumstances of the case, however, if the parties' understanding is expressly implied from the wording of the agreement, the agreement will be interpreted in accordance with its wording. The intention to appoint an exclusive arbitrator whose identity is conclusive must be learned, first and foremost, from the wording of the arbitration agreement itself. Here, the arbitration clause does not expressly state, nor does it imply, that the parties intended to appoint the agreed arbitrator and only him or that their consent to arbitration is conditional and dependent on the identity of the agreed arbitrator. In addition, the parties did not bother to contact the agreed arbitrator prior to the agreement on his appointment, to obtain his position regarding the appointment and, therefore, voluntarily took upon themselves a risk that the agreed arbitrator would be unable or would refuse to serve as arbitrator, a risk that is quite likely to materialize. In light of this, and as the parties did not expressly or implicitly rule out the appointment of another arbitrator when the need arises, the proceedings between the parties will be suspended until another alternate arbitrator is appointed.