Centre can pursue $3.8 bn arbitral award against Reliance Industries

Delhi HC allows govt to file appeal against single-judge Bench order

The Centre can pursue its appeal against the decision of a single-judge Bench of the Delhi High Court, which refused to enforce a $3.8 billion foreign arbitral award against Reliance Industries over the Panna-Mukta and Tapti oil and gas fields, the court ruled on Monday. 

 

A Division Bench of Justice Navin Chawla and Justice Madhu Jain ruled that the single judge’s decision dismissing the Union of India’s enforcement petition amounted to a refusal under Section 48 of the Arbitration and Conciliation Act, 1996, making it “appealable” under Section 50 of the Act.

 

Section 48 governs the conditions under which Indian courts may refuse to enforce foreign arbitral awards, and Section 50 governs appealable orders regarding foreign awards. 

 

The appeal arises from a long-running dispute between the Centre and RIL over production-sharing contracts (PSCs) for the Panna-Mukta and Tapti oil and gas fields.

 

The Centre had sought to enforce a 2016 final partial award (FPA) of an international arbitral tribunal, claiming that RIL owed it around $3.85 billion on account of excess cost recovery.

 

In July 2023, a single judge of the Delhi High Court dismissed the enforcement petition, holding that the 2016 award was purely declaratory and inchoate, and could not be executed as a money decree since key issues, including the final determination of the cost recovery limit (CRL), were still pending before the arbitral tribunal. The judge had also observed that enforcing the award at that stage would violate principles of natural justice and could be refused under the public-policy exception in Section 48.

 

RIL, represented by senior advocate Harish Salve, had raised a preliminary objection to the Centre’s appeal, arguing that the single judge had not “refused enforcement” under Section 48 but had merely held the execution petition to be premature and non-maintainable. On that basis, RIL contended that no appeal would lie under Section 50, which permits appeals only against orders expressly refusing the enforcement of a foreign award.

 

Rejecting this argument, the Division Bench held that the refusal to execute the award, after examining its enforceability and invoking Section 48, squarely fell within the statutory framework for appeals. The court noted that the single judge had explicitly relied on Section 48(2)(b), including the public-policy grounds, to deny enforcement.

 

“The refusal to enforce the 2016 FPA by the learned Single Judge is under Section 48 of the Act, which is appealable under Section 50(1)(b),” the Bench held.

 

The court relied on precedents of the Supreme Court to underline that questions of maintainability and enforceability of foreign awards were intrinsically linked and must be considered together, not in isolation. Having ruled on maintainability, the Bench did not examine the merits of whether the award is executable, leaving that question to be decided in subsequent proceedings. 

Case file

• In July 2023, a single-judge Bench dismissed the enforcement petition
• Reliance raised a preliminary objection to the appeal, arguing that the single judge had held the execution petition to be premature and non-maintainable
• A division Bench ruled that the decision dismissing the petition amounted to a refusal under Section 48 of the Arbitration and Conciliation Act, 1996
• It appealable under Section 50 of the Act
• Appeal arises from a long-running dispute between the Centre and RIL over production-sharing contracts for the Panna-Mukta and Tapti oil and gas fields