Contractual Supersession and Priority Disputes Fall to the Arbitral Tribunal Under Section 16.

Larsen & Toubro engaged Radhe Krishna Infrastructure under a sub-contract and work order dated 21.12.2019, followed by subsequent amendments, for infrastructure works in Rajkot.

After L&T terminated the sub-contract in March 2024, the parties asserted substantial competing claims.

Radhe Krishna invoked arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, nominated an arbitrator, and sought appointment of L&T’s nominee under Section 11(6); L&T did not accept the proposed three-member procedure and later issued its own notice proposing a sole arbitrator under a different contractual clause.

The parties agreed that arbitrable disputes existed but disagreed over the applicable arbitration clause and tribunal composition.

1. Whether the Court should determine at the Section 11 stage which of the competing arbitration clauses governed the parties’ dispute

2. Whether a three-member tribunal should be constituted to adjudicate the parties’ claims and counterclaims

Under Section 11 of the Arbitration and Conciliation Act, 1996, the Court’s inquiry is primarily directed to the prima facie existence and validity of an arbitration agreement.

Detailed questions about contractual supersession or the priority of interrelated contractual documents fall within the arbitral tribunal’s jurisdiction under Section 16.

Section 12 requires arbitrators to provide disclosure declarations before entering upon the reference.

No judicial precedents were cited

The Court noted that the existence of arbitrable commercial disputes was undisputed, while the parties contested whether Clause 41 of the original agreement or Clause 17.3 of the amended work order governed the tribunal’s composition.

Applying the limited Section 11 inquiry, it left the question of contractual priority to the tribunal under Section 16.

Given the substantial claims and counterclaims, the Court constituted a three-member tribunal, comprising the arbitrators selected or proposed by the parties and a former Supreme Court Judge as Presiding Arbitrator.

It appointed Justice R. Banumathi as Presiding Arbitrator, with Justice M.G. Gaikwad as the petitioner’s nominee and M. Aravind Subramaniam as the respondent’s nominee.

The seat and venue were fixed at Chennai; the arbitration was directed to proceed under the aegis of the Madras High Court Arbitration Centre.

The arbitrators were directed to file Section 12 disclosures, and all merits contentions were left open.