'Only British courts can hear London gas arbitration award'

The Supreme Court Wednesday ruled that only British courts can hear a petition that challenges the decision of a London arbitration tribunal on Panna-Mukta and Tapti gas fields' contract between Reliance Industries and the Indian government.

A bench of Justice S.S. Nijjar and Justice A.K. Sikri said the British courts, while hearing the petition challenging the award by the arbitration tribunal, will rely on the substantive Indian laws relating to it.

The court said this while setting aside the Delhi High Court order that said it can hear such a challenge on an award made by the London arbitration tribunal. Reliance had moved the Supreme Court against this decision of the high court.

Pronouncing the judgment, Justice Nijjar said the high court's conclusion that in the event of the arbitration award was sought to be enforced outside India, it would render Indian entities remediless was without any basis as the parties have agreed that the arbitration agreement will be governed by English law.

The court said that in the event of arbitration award is challenged, the British courts will have to decide the same by applying the Indian laws.

The verdict came on an appeal filed by Reliance challenging the March 23, 2013, Delhi High Court verdict by which it allowed the central government's plea challenging the award of London arbitration tribunal against it.

The London arbitration tribunal had rejected the government objection to the arbitrariness of Reliance's claims in respect of royalties, cess, service tax and CAG audit arising from the production sharing contract.