SC appoints Australian arbitrator in RIL gas case

The SC bench headed by judge S S Nijjar suggested Spigelman's name, saying a foreign arbitrator would avoid bias

In a major victory for the Mukesh Ambani-led Reliance Industries (RIL) over the government in the KG-D6 case, the Supreme Court on Monday appointed former Australian judge James Jacob Spigelman as the foreign arbitrator who would head the three-member arbitration panel.

The bench headed by judge S S Nijjar suggested the name, saying a foreign arbitrator would avoid bias in this case. RIL was batting for the appointment of a foreigner.

The process was stuck over the appointment of the third member in the three-member panel of arbitrators.

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

The arbitration process is related to a fine imposed by the government amounting to $1.797 billion in 2010-11, 2011-12 and 2012-13 for production shortfall.

Who is Spigelman?

Spigelman was the Chief Justice and Lieutenant Governor of New South Wales, Australia. He is also chairman of the Australian Broadcasting Corporation (ABC). According to the ABC website, he took charge for his five-year term as chairman on April 1, 2012.

He also served as a senior adviser and principal private secretary to the Prime Minister of Australia and as permanent secretary of the government’s department of the media between 1972 to 1976. He also served on the boards and as chair of a number of cultural and educational institutions in Australia.

Where it all started

It was in November 2011 that RIL initiated an arbitration process, pre-empting that the petroleum ministry would penalise it for a fall in output. The ministry had called to withdraw the arbitration notice in January 2012. Following this, the government slapped a fine of $1.005 billion in May for the drop in targets for FY11 and FY12.

In November 2013, the government slapped another notice on the company, disallowing a cost recovery of another $792 million.

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). While the production shortfall in 2010-11 stood at around 5 mscmd, it rose over the following years to 28 mscmd (2011-12), 55 mscmd (2012-13) and 66 mscmd (2013-14).