RIL-BGEPIL dispute: Govt mulls appeal against English Court order
Earlier, the government lost its appeal in the High Court against a $111 million arbitration award in favour of Reliance Industries Ltd and Shell.
- Jun 13, 2022,
- Updated Jun 13, 2022 8:19 PM IST
The Government of India on Monday stated that it will mull to appeal agains English Commercial Court arbitration award in favour of Reliance Industries and Shell-owned BG Exploration & Production India (BGEPIL) in a cost recovery dispute in the western offshore Panna-Mukta and Tapti oil and gas fields.
On Sunday, the government lost its appeal in the High Court against a $111 million arbitration award in favour of Reliance Industries Ltd and Shell.
Disputes arose between the parties which were referred to arbitration for resolution in 2010. So far, the Arbitral Tribunal has passed eight substantial partial awards. 66 of the 69 issues were decided in favour of the Government of India in the final partial award passed by the Tribunal in 2016, the Centre said in an official statement.
High Court judge Ross Cranston on June 9, 2022 ruled that the government should have brought its objections over the arbitration tribunal not meeting the required thresholds, when issuing the 2021 award earlier.
Rejecting the government's arguments, the court said the objections are barred by an English law principle whereby a party cannot raise matters in new proceedings that could have been raised in earlier proceedings.
"...the Government of India issued a demand letter to the contractors calling upon them to pay an amount of $3.85 billion (excluding interest). The Contractor failed to make the payment as per the Award. Therefore, the Government has filed an application for execution of final partial award 2016 before the Delhi High Court, the Ministry of Petroleum & Natural Gas said in the statement.
"The Government of India has the right to seek leave of the English Commercial Court to challenge this judgment passed by it," it added.
The government had used the 2016 partial award not just to raise a USD 3.85 billion demand on Reliance and Shell but also sought to block Reliance's proposed $15 billion deal with Saudi Aramco on grounds that the company owed money to it.
Following this, the court asked company directors to file affidavits listing assets.
Reliance and Shell had countered the government petition in the Delhi High Court saying the petition is an abuse of process as no arbitration award has fixed any final liability of dues on the company.
''GoI has also filed an execution petition before the Delhi High Court... seeking enforcement and execution of the 2016 FPA,'' the annual report had said. ''The Claimants contend that GoI's Execution Petition is not maintainable.'' The government's Execution Petition is currently sub judice.
''Claimants have also filed an application for recall /modification, challenging the Orders of Delhi High Court wherein directors were directed to file affidavits of assets. The matter is listed on July 13, 2021, for hearing,'' it had said.
The Panna-Mukta (primarily an oil field) and Mid & South Tapti (gas field) are shallow-water fields located in the offshore Bombay basin. Discovered by state-owned Oil and Natural Gas Corp (ONGC), they were bid out in 1994 to a consortium of ONGC (40 per cent), Reliance (30 per cent) and Enron Oil & Gas India Ltd (30 per cent).
In February 2002, BGEPIL acquired Enron's 30 per cent stake in the joint venture. BGEPIL was subsequently taken over by Shell.
The production sharing contract (PSC) for the fields stipulated deducting costs incurred on field operations from oil and gas sold before sharing profit with the government. Disallowing certain items in the cost would result in higher profit petroleum for the government.
Reliance and BGEPIL sought raising of cost recovery limit through arbitration.
(With PTI inputs)
The Government of India on Monday stated that it will mull to appeal agains English Commercial Court arbitration award in favour of Reliance Industries and Shell-owned BG Exploration & Production India (BGEPIL) in a cost recovery dispute in the western offshore Panna-Mukta and Tapti oil and gas fields.
On Sunday, the government lost its appeal in the High Court against a $111 million arbitration award in favour of Reliance Industries Ltd and Shell.
Disputes arose between the parties which were referred to arbitration for resolution in 2010. So far, the Arbitral Tribunal has passed eight substantial partial awards. 66 of the 69 issues were decided in favour of the Government of India in the final partial award passed by the Tribunal in 2016, the Centre said in an official statement.
High Court judge Ross Cranston on June 9, 2022 ruled that the government should have brought its objections over the arbitration tribunal not meeting the required thresholds, when issuing the 2021 award earlier.
Rejecting the government's arguments, the court said the objections are barred by an English law principle whereby a party cannot raise matters in new proceedings that could have been raised in earlier proceedings.
"...the Government of India issued a demand letter to the contractors calling upon them to pay an amount of $3.85 billion (excluding interest). The Contractor failed to make the payment as per the Award. Therefore, the Government has filed an application for execution of final partial award 2016 before the Delhi High Court, the Ministry of Petroleum & Natural Gas said in the statement.
"The Government of India has the right to seek leave of the English Commercial Court to challenge this judgment passed by it," it added.
The government had used the 2016 partial award not just to raise a USD 3.85 billion demand on Reliance and Shell but also sought to block Reliance's proposed $15 billion deal with Saudi Aramco on grounds that the company owed money to it.
Following this, the court asked company directors to file affidavits listing assets.
Reliance and Shell had countered the government petition in the Delhi High Court saying the petition is an abuse of process as no arbitration award has fixed any final liability of dues on the company.
''GoI has also filed an execution petition before the Delhi High Court... seeking enforcement and execution of the 2016 FPA,'' the annual report had said. ''The Claimants contend that GoI's Execution Petition is not maintainable.'' The government's Execution Petition is currently sub judice.
''Claimants have also filed an application for recall /modification, challenging the Orders of Delhi High Court wherein directors were directed to file affidavits of assets. The matter is listed on July 13, 2021, for hearing,'' it had said.
The Panna-Mukta (primarily an oil field) and Mid & South Tapti (gas field) are shallow-water fields located in the offshore Bombay basin. Discovered by state-owned Oil and Natural Gas Corp (ONGC), they were bid out in 1994 to a consortium of ONGC (40 per cent), Reliance (30 per cent) and Enron Oil & Gas India Ltd (30 per cent).
In February 2002, BGEPIL acquired Enron's 30 per cent stake in the joint venture. BGEPIL was subsequently taken over by Shell.
The production sharing contract (PSC) for the fields stipulated deducting costs incurred on field operations from oil and gas sold before sharing profit with the government. Disallowing certain items in the cost would result in higher profit petroleum for the government.
Reliance and BGEPIL sought raising of cost recovery limit through arbitration.
(With PTI inputs)