SC pulls up ONGC for not paying fees to arbitrators

While the apex court’s had directed that the arbitrators will themselves fix their fees, to be borne equally by both the parties, ONGC had insisted on paying the fees as per the clause in its contract.

Even as SC judge Justice Anil Dave was appointed as the presiding arbitrator, he opted out of the panel due to a dispute over arbitration fees, followed by exit of Justice Patel over the same issue.
Even as SC judge Justice Anil Dave was appointed as the presiding arbitrator, he opted out of the panel due to a dispute over arbitration fees, followed by exit of Justice Patel over the same issue.

The Supreme Court on Wednesday stopped short of issuing a contempt notice to state-run hydrocarbon producer ONGC for ‘insulting’ the arbitrators appointed by it to resolve a dispute with Hong Kong-based Schlumberger Asia Services, by refusing to make fee payments and over the meeting schedule for the arbitral tribunal.

Terming it as “very unfortunate,” a Bench led by Chief Justice NV Ramana asked Attorney General KK Venugopal to take up the ‘payment issue’ with the PSU and sort it out. Three former high court judges had recused from the arbitral tribunal proceedings due to payment issues with the oil PSU.

While the apex court’s had directed that the arbitrators will themselves fix their fees, to be borne equally by both the parties, ONGC had insisted on paying the fees as per the clause in its contract.

“What do you think of yourself? This is very unfortunate that you are insulting former judges by not paying the fees as decided by them as per our order.
“You have a lot of egos. Is this the way you treat judges,?” a visibly irked the CJI said.

“Because (ONGC) you have a lot of money, you keep filing frivolous proceedings. We will issue suo motu contempt notice against you,” he said. The court then requested the AG to intervene and resolve the issue and fixed the case for hearing after a week.

The apex court had in January appointed Calcutta High Court’s former Chief Justice Jai Narayan Patel and Punjab & Haryana High Court’s former Chief Justice Shivax Jal Vazifdar as the arbitrators.

Later, former Bombay HC judge Justice SC Dharmadhikari was appointed after Justice Vazifdar recused himself.

Even as SC judge Justice Anil Dave was appointed as the presiding arbitrator, he opted out of the panel due to a dispute over arbitration fees, followed by exit of Justice Patel over the same issue.

Soon Justice Dharmadhikari also recused and wrote a letter to the SC highlighting ONGC’s reluctance to pay the arbitration fees and agree on a fee schedule which was putting the arbitrators in an embarrassing situation.

Schlumberger Asia has entered into a charter hiring agreement with ONGC in August 2014 for stimulation vessels used for exploration purposes. ONGC had made some deductions in the payments made to the Hong Kong-based firm, which moved the SC in December 2020 for appointment of arbitrators. The foreign firm is seeking recovery of $4.26 millionfrom the PSU.

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