Centre turns down Reliance Industries plea for foreign arbitrator in KG-D6 case

Written by fe Bureau | New Delhi | Updated: Nov 12 2013, 14:50pm hrs
Seeking appointment of a former Supreme Court judge as the umpire arbitrator to resolve disputes related to the recovery of costs for developing its KG-D6 gas field, the Centre on Monday rejected the Mukesh Ambani-led Reliance Industries (RIL)' plea for appointing a presiding arbitrator from a foreign country.

The government said the matter between itself and Reliance Industries is within the exclusive domain of the arbitral tribunal in India.

According to the ministry of petroleum and natural gas, Since the substantive law applicable to the contract is Indian law and the disputes pertain to a matter arising in India under an agreement which is required to be performed in India and not in any other jurisdiction and the venue of arbitration is also in India, the third arbitrator, therefore ought to be from India and has to be a person who is fully conversant with and trained in Indian law and procedures.

The government further added that the arbitrator has to be appointed in accordance with the Arbitration and Conciliation Act, 1996 alone and not in accordance with the United Nations Commission on International Trade Law (Uncitral) Rules. Uncitral rules have no application to the appointment of any arbitrator under the PSC, the reply filed by KK Sharma, under secretary in the ministry stated.

Reliance Industries wants the third presiding arbitrator be appointed from a country other than India, UK or Canada as its other contract partners Cayman Islands-based Niko (Neco) and BP Exploration (Alpha) are foreign companies.

Reliance Industries and Niko (Neco) have requested the Chief Justice to appoint the umpire arbitrator as the two arbitrators former chief justices SP Barucha, (nominated by RIL in November 2011) and VN Khare (nominated by the oil ministry in June 2012) have failed to agree on a third and presiding arbitrator.

Opposing Reliance Industries' plea for the appointment of a third arbitrator from a country other than India, UK or Canada, the government said that ... the disputes have arisen only between RIL and the Union of India. Under the contract Reliance Industries is the operator. The foreign parties (Neco/BP) are admittedly not operating the contract and therefore no disputes could have arisen between them and the Union of India.

Besides, BP and Neco have neither issued any arbitration notice to the Centre nor have asked arbitration, so the petition by the foreign companies is misconceived and not maintainable, senior counsel Anil Diwan, appearing for the government, said.