Panna-Mukta basin: SC okays RIL's plea for London arbitration

The apex court sets aside Delhi HC order on the oilfield

The Supreme Court today set aside the judgment of the Delhi high court and allowed the appeal of Reliance Industries holding that the disputes between it and the Union Government over the Panna-Mukta and Tapti gasfields will be arbitrated in London.

The apex court also stated that the arbitration will be according to substantive laws of India. However, the appeals, if any, will also be heard in English courts.

Mukesh Ambani’s Reliance Industries had argued that the parties had agreed that the venue for arbitration would be London and Uncitral Rules 1976 will be followed. The central government had objected to arbitration in London and insisted that it should be in India. The high court accepted the view of the Ministry of Petroleum and Natural Gas in its decision last year, which has now been overruled.

There are some eight disputes over the production sharing contract relating to the gas fields on the western coast, discovered in 1992. They involve royalty and taxes, cost recovery limit and removal of arbitrator. Some awards have already been passed by the arbitrator in England.

The judgment delivered by a bench consisting of Justice S S Nijjar and Justice A K Sikri ruled that the high court had no jurisdiction to entertain the petition of the government and it was not maintainable there according to the Arbitration and Conciliation Act. Thus they have accepted most of the important contentions of Reliance Industries.  

The oil ministry had entered into two production sharing contracts with Reliance, BG Exploration & Production India and ONGC. The contracts were to be operative for 25 years.

An international arbitrator had directed the government in 2012 to reimburse Reliance and BG Exploration to the tune of $11,413,172 apart from additional cess recovered from them.