SC Lets RIL to Hold Arbitration in London

Poor Lose Free Treatment in Many Delhi Hospitals
  • The Supreme Court allowed arbitration proceedings held in London on the issue of payment of royalties and taxes relating to Panna, Mukta and Tapti oil and gas fields(Reliance Industries).
  • A Bench of Justices cleared that arbitration proceedings would be held as per the Indian law and not as per United Nations Commission on International Trade Laws (UNCITRAL) as sought by Reliance.
  • Reliance Industries approached the Supreme Court for settlement of the dispute with the oil ministry over reimbursement of royalties through arbitration in London. 
  • The oil ministry had opposed arbitration in London and wanted the dispute to be settled by Indian courts.
  • The production sharing contract, RIL and the Ministry of Petroleum and Natural Gas had consciously agreed for arbitration held in London.
  • The High Court committed a jurisdictional error in agreeing to hear the government’s plea.Reliance Industries filed an appeal against a Delhi High Court verdict.
  • The oil ministry in 1994,entered into two production sharing contracts with Reliance and Enron Oil and Gas India (the predecessor to BG Exploration and Production India) and ONGC of petroleum from the Tapti and Panna-Mukta fields. The two contracts were to be operative for a period of 25 years and expire in 2019.
  • In 2010, differences arose on issues of payment and reimbursement of royalties, cess and service tax, and conduct of performance audit by the Comptroller and Auditor General of India, following which Reliance invoked foreign arbitration clause.
  • In 2009, the arbitral tribunal rejected the Centre's objection to arbitrability of the disputes. The government moved the Delhi High Court challenging the arbitral tribunal’s December 2012 order and got a favourable verdict. The present appeal is directed against this order.
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Exams Perspective:

  1. United Nations Commission on International Trade Laws (UNCITRAL)
  2. Arbitration
  3. ONGC