SC appoints former Australian judge to head arbitration panel on KG-D6 case

RIL and govt had already nominated former chief justices S P Bharucha and V N Khare

The Supreme Court today appointed former Australian High Court judge Michael Hudson McHugh to head the three-member arbitration panel to solve KG-D6 dispute.

RIL and the government had already nominated former chief justices S P Bharucha and V N Khare, but the two sides were divided on whether or not the third arbitrator should be a foreigner.

The dispute was related to fines imposed by the government amounting to about $1.797 billion in 2010-11, 2011-12 and 2012-13 for production shortfall.

McHugh was appointed as a judge of the Australian High Court in 1989 and served there till 2005. Post retirement, he has been working as an independent mediator and arbitrator. 

Though the Apex Court had nominated James Spigelman, former chief justice and lieutenant governor of New South Wales as the foreign arbitrator earlier, the nomination was withdrawn after the government pointed out to judge S S Nijjar that Spigelman had also figured on the list of names suggested by RIL.

The battle between both the parties started in November 2011, when RIL initiated an arbitration process pre-empting that the petroleum ministry would penalize it for a drop in output from KG-D6.

Later in May 2012, the government slapped a fine of $1.005 billion for drop in targets for FY 11 and FY12. Later in Niovember 2013, government slapped disallowing a cost recovery of $792 million on the company.

Over the past four years, the total shortfall in production from the KG-D6 block has reached 154 million standard cubic metres a day (mscmd).