SC dismisses ONGC plea to reconsider arbitration venue

By: | Published: September 16, 2015 12:46 AM

Reserves judgment over removal of arbitrator Peter Leaver QC

In an arbitration row between RIL and the government over reimbursement of royalties and taxes on the Panna, Mukta and Tapti (PMT) gas fields, the Supreme Court on Tuesday dismissed ONGC’s plea asking it to relook at the arbitration venue, which was earlier decided to be held in London.

Seeking clarification of the May 2014 judgment with regard to change of juridical seat of the arbitration, ONGC argued that the apex court had allowed the RIL’s plea “on the erroneous basis that there had been an amendment to the Production Sharing Contracts (PSCs) entered into between the parties, and that the juridical seat was shifted to London by consent of the parties.”

“This is factually incorrect, the correct facts are that the venue was shifted to Paris by consent of all parties, for which the PSCs were amended. That there has been no further amendment to the PSC shifting the venue back from Paris to London, as has been erroneously recorded in the said judgment,” additional solicitor general Tushar Mehta told the court.

The PSU claimed that it would be affected as it was not a party to the gas dispute when the issue was decided by the Supreme Court. It further said that its rights were “vitally and crucially affected by the May 28, 2014 judgment which has far reaching implications for enforcement purposes particularly as London is not a neutral venue as one of the three parties is based in London.

According to ONGC, it had not consented to the juridical seat of the arbitration being at London. “In fact, London could not have been the venue, let alone, juridical seat of the arbitration, as BG Exploration and Production India Ltd is controlled by British Gas which is based in England.”

A bench consisting justices AK Sikri and Rohinton Fali Nariman dismissed ONGC’s plea saying that even if it was not a party to the proceedings, the court’s order cannot be altered. Taking note of the factual error that had crept in the judgment, the bench said, “It does not alter the result of appeal which remains the same.”

Meanwhile, the bench also reserved its judgment over removal of Peter Leaver QC, the arbitrator appointed by private explorers RIL and BG Exploration and Production India in the on-going row over reimbursement of royalties and taxes in the PMT gas fields. The government has cited “lack of impartiality and independence” as its argument to remove UK-based Leaver from the arbitration. At present, the arbitral tribunal consists of Christopher Lau SC (the chairman), Peter Leaver QC (nominee arbitrator for RIL and BG) and former SC judge S Sudershan Reddy (nominee arbitrator of the government).

Opposing removal of Leaver, senior counsel Abhishek Manu Singhvi and counsel Sameer Parekh, appearing for the companies, told the court that the government’s plea was a “gross abuse of process” as the apex court had already directed that the arbitration be held in London, and the government’s review and curative petition have already been dismissed by the SC.

The apex court in May last year while allowing a plea by RIL and its partner BG Exploration and Productionon had held that only British courts had the jurisdiction over the ongoing arbitration between the companies and the oil ministry over the former’s demand for reimbursement of royalties and taxes paid by them for the PMT gas fields, jointly operated by the three firms including ONGC. Besides, the top court ruled that any final arbitral award can be challenged only in the British courts, but substantive Indian arbitration laws will have to be applied by the foreign courts.

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