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The Arbitration Clause Supersession Must Not Be Inferred Lightly: Delhi High Court

The Delhi High Court has ruled that if there is an arbitration agreement between the parties, which is sought to be negated by a party by citing other provisions of a contract, which requires interpretation of the contract, the Court must lean towards referring the matter to arbitration. This was seen the case of SHRISTI INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. VERSUS IRCON INTERNATIONAL LIMITED  (ARB.P. 797/2020 & I.A.12516/2020) and the judgement was presided over by the Coram of Justice ANUP JAIRAM BHAMBHANI.

Facts of the case-

The petitioner Shristi Infrastructure Development Corporation Ltd. entered into an agreement with the respondent Ircon International Limited. After certain disputes arose between the parties, the petitioner invoked the arbitration clause contained in the General Conditions of Contract and filed a petition before the Delhi High Court under Section 11 of the Arbitration & Conciliation Act, 1996 (A&C Act) seeking appointment of an arbitrator.

The respondent Ircon International submitted before the High Court that the parties had signed the Special Conditions of Contract (SCCs), and that as per the relevant clause contained in the SCCs, if any of the conditions contained in the SCCs conflict with or are inconsistent with any of the General Conditions of Contract (GCCs), the special conditions shall prevail. The respondent averred that the SCCs contain a dispute settlement clause providing for amicable settlement of disputes between the parties through mutual discussions, negotiations and deliberations.

Judgement-

The Court observed that though the Special Conditions of Contract (SCCs) gave an overriding effect to the Special Conditions of Contract over the General Conditions of Contract (GCCs), such an effect was only restricted to the extent there was a conflict or inconsistency between the two provisions. The Court added that there was no evident conflict or inconsistency between the arbitration clause comprised in the General Conditions of Contract and any other provision contained in the Special Conditions of Contract.

The High Court added that even after the matter has been referred to arbitration, the arbitrator must be free to decide on his or her own jurisdiction including the existence of the arbitration agreement, under Section 16 of the A&C Act. It said- “Accordingly, while leaving it to the arbitrator to consider whether the provisions of the SCCs override and efface the arbitration agreement between the parties as contained in the GCCs, this court is prima-facie satisfied that there is a valid and subsisting arbitration agreement between the parties;”

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Judgement reviewed by Utkarsh Sahu

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