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Reliance Industries Limited and Others v. Union of India

Arbitration Petition · Neutral citation not assigned (Arbitration Petition No. 27 of 2013)Decided 31 Mar 2014
Arbitration Petition No. 27 of 2013
Justice S.S. Nijjar

Background

Reliance Industries, Niko Resources and BP were contractors under a production-sharing contract concerning the KG-D6 gas fields. A dispute over cost recovery led to arbitration, but the two party-appointed arbitrators could not agree on a third arbitrator. The Union argued that only Reliance had raised the dispute and that an Indian presiding arbitrator should be appointed.

Decision Breakdown

The Court held that Reliance had acted for the contractors collectively and that the dispute concerned rights and obligations shared by the Indian and foreign companies. The arbitration therefore qualified as international commercial arbitration. Indian governing law and an Indian seat did not prevent the appointment of a foreign presiding arbitrator, and the Court emphasised impartiality and independence in making the appointment. It appointed James Spigelman, former Chief Justice of New South Wales, as the third and presiding arbitrator and directed the tribunal to proceed promptly. This order did not decide the merits of the cost-recovery dispute.

Lesson Learnt

Where a contract and the parties' dealings show that foreign companies share the disputed rights, an arbitration can be international even if an Indian company communicates the claim. Failure to agree on the presiding arbitrator can be resolved through the court's appointment power; that appointment does not settle the underlying commercial dispute.

Official source (sci.gov.in)View Judgment (PDF)

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