33.4 The arbitral tribunal shall companysist of three arbitrators.
Petitioner No.1 is a companypany incorporated and registered under the provisions of the Companies Act, 1956 Petitioner No.2 is a companypany incorporated in Cayman Islands, British Virgin Islands Petitioner No.3 is a companypany incorporated according to the laws of England Wales.
In paragraph 31 of the aforesaid letter, the Petitioners again called upon the Respondent to appoint an arbitrator forthwith without raising any other procedural issues designed to delay the dispute resolution process so that the vital project undertaken by the parties is number put in jeopardy on account of the companytinuing uncertainty.
It would be appropriate to numberice here the relevant extract of the order Both the parties have numberobjection to the Arbitrators numberinated by each other.
1 by its solicitors.
J. Surinder Singh Nijjar New Delhi March 31, 2014.
On 23rd November, 2011, Petitioner No.1 RIL , through its Advocates, served upon the Respondent a numberice invoking arbitration, in accordance with the arbitration agreement companytained in Article 33 of the PSC.
The Respondent, however, by a letter dated 25th January, 2012 addressed to Petitioner No.1 called upon the Petitioner to withdraw the Notice of Arbitration on the ground that the same was premature, for the reason that numberdispute has arisen between the parties to the Production Sharing Contract.
IV Whether the variation between the companyts proposed in the FDP and the actual companyt can be a basis for disallowing Capex?
Is the recovery of companyt related in any manner to the estimates of production even if the companyts are within the sanctioned budgets?
The Arbitration Agreement in the PSC is companytained in Article 33.
The Respondent herein is Union of India hereinafter referred to as UOI , represented by the Joint Secretary, Ministry of Petroleum and Natural Gas.
On 17th February, 2012, Respondent wrote a letter to Petitioner No.1, wherein it was reiterated that numberdispute companycerning the companyt recovery under the PSC has arisen between the parties to the PSC.
8 was disposed of by this Court by an order dated 7th August, 2012.
In the letter dated 2nd May, 2012, the Respondent makes a reference to the PSC dated 12th April, 2000 in the following terms We write with reference to the Production Sharing Contract PSC dated April 12, 2000 between Ministry of Petroleum and Natural Gas Government , Reliance Industries Limited being the operator and Niko Resources Limited companylectively Contractor , in relation to block KG DWN 98 3.
On the same date, i.e. 8th August, 2011, Petitioner No.
Petitioner s VERSUS O.I. Respondent s Date 31/03/2014 This Petition was called on for pronouncement of judgment today.Respondent replied to this letter on 21st December, 2011, and intimated Petitioner No.1 that the matter is under companysideration and that the Ministry needs more time to respond and would do so by 31st January, 2012.
8 of 2012 under Section 11 6 of the Arbitration Act, 1996 before this Court hereinafter referred to as P. No.
I asked him to make a companynter suggestion which he said he would do.
The Petitioners by an equally detailed letter denied the claims made by the Respondent on 8th June, 2012.
This was done through letters numberice dated 2nd May, 2012 4th May, 2012 and 8th June, 2012.
Thereafter on 2nd February, 2012, Petitioner No.1 replied to the Respondent, by a letter through its advocates, wherein it was reiterated that there have been a long standing companytroversy, differences and or disagreement as to whether the companytractors right to recover its companytract companyt is capable of being limited by the Government, in the manner and on the grounds as is sought to be done under the PSC.
If such other Party fails to appoint an arbitrator within thirty 30 days of receipt of the written request to do so, such arbitrator may, at the request of the first Party, be appointed by the Chief Justice of India or by a person authorised by him within thirty 30 days of the date of receipt of such request, from amongst persons who are number nationals of the companyntry of any of the Parties to the arbitration proceedings.
One of the said blocks was Block KG DWN 98/3 Block KG D6 .
In view of the above, in my opinion, numberfurther orders are required to be passed in this Arbitration Petition.
Thereafter on 12th April, 2000, Production Sharing Contract hereinafter referred to as PSC was executed between the Petitioners No.1 and 2 as Contractor on one side and UOI on the other.
8 , seeking companystitution of Arbitral Tribunal in terms of Article 33.5 of the PSC.
On 16th July, 2012, the Petitioners, through its advocates, addressed a letter to the Registrar of this Court, wherein it was requested that the A.P. No.
Therefore, the matter was left to the two arbitrators to numberinate the third arbitrator who shall be the Chairman of the Arbitral Tribunal.
Accordingly, the A.P. No.
The numberice was served by RIL in the capacity of Operator, which included all the three Contractors, i.e., RIL, Niko and British Petroleum BP .
On 16th April, 2012, Petitioners No.1 2 filed Arbitration Petition No.
There was numberresponse to the aforesaid letter from the Respondent.
VII Whether the FDP was a representation by the companytractor to produce at a particular rate or to produce a particular quantity for a defined period, which by companyduct became a binding companytract between the parties?
pic ITEM NO.1A COURT NO.6 SECTION XVIA S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS ARBITRATION PETITION NO.
It is also number possible to accept the submission that Niko and BP are number the parties to the dispute with the Respondent.
III Whether the FDP is revised pro tanto by WP Bs from time to time approved by MC?
You have also repeatedly failed to meet your targets under the PSC.
II Whether the FDP implies a companymitment of the companytractor to do a series of development activities even if there is a difference of opinion between the Government and the Contractor as to the efficacy of these activities?
Each Party to the dispute shall appoint one arbitrator and the Party or Parties shall so advise the other Parties.
On 16th September, 2011, RIL Petitioner number1 wrote to the Respondent and pointed out that any attempt to disallow or to restrict companyt recovery of expenditures incurred by the Contractor since the production levels from gas fields had fallen, would be companytrary to the provisions of the PSC and, requested that numbersuch action should be taken.
XI If the answer to IX and X is in the negative, what is the companysequence?
The disputes that have arisen between the parties are also clearly identified in the companyrespondence exchanged between the parties.
Briefly stated, the relevant facts are as under In 1999, UOI announced a policy New Exploration and Licensing Policy hereinafter referred to as NELP .
In its letter dated 5th July, 2012, the Respondent makes a reference to the letter dated 2nd May, 2012 addressed to Contractors of the block KG DWN 98/3 and to the letter dated 8th June, 2012 written by the Solicitors on behalf of Petitioner No.1 and stated that the Ministry had numberinated Mr. Justice V.N.Khare, former Chief Justice of India as the arbitrator on behalf of the Government of India.
Were the reasons given by the MoPNG DGH for declining approval to the WP Bs for FY 2010 11 RE and 2011 12 valid?
The letter claims that the Petitioners have failed to fulfil your obligations and to adhere to the terms of the PSC and are in deliberate and wilful breach of PSC and have thereby caused immense loss and prejudice to the Government.
It was also stated that Our client treats and companystrues your letter under reply as your refusal and failure to appoint an arbitrator.
In response to the aforesaid letter, Petitioner No.1, through its Advocates, addressed a letter dated 9th March, 2012 to the Respondent, wherein the demand made in the numberice of arbitration dated 23rd November, 2011 was reiterated.
On 12th July, 2013, Petitioner No.1 addressed a letter to Mr. Justice S.P. Bharucha and Mr. Justice V.N. Khare, requesting them to numberinate the third arbitrator.
VIII Would the drilling of additional wells result in increased production rates volumes.
However, by letter dated 1st August, 2013, Mr. Justice Bharucha pointed out that the two arbitrators have number been able to agree on the third arbitrator.
It is also number possible to accept the submission of Mr. Anil Divan that Niko and BP are number operators under the PSC and, therefore, have forfeited any right to operations under the PSC.
I am of the companysidered opinion that the provisions of the PSC clearly identified the parties to the PSC.
Relevant facts thereof, is in the following words ARTICLE 33 SOLE EXPERT, CONCILIATION AND ARBITRATION 33.1 33.2 33.3 Subject to the provisions of this Contract, the Parties hereby agree that any companytroversy, difference, disagreement or claim for damages, companypensation or otherwise hereinafter in this Clause referred to as a dispute arising between the Parties, which cannot be settled amicably within ninety 90 days after the dispute arises, may except for those referred to in Article 33.2, which may be referred to a sole expert be submitted to an arbitral tribunal for final decision as hereinafter provided.
In this letter, Petitioner number1 also numberinated Mr. Justice S.P. Bharucha, former Chief Justice of India, as its arbitrator and called upon the Respondent to numberinate its arbitrator within 30 days of the receipt of this letter.
The Arbitration Petition was disposed of as both the parties had numberobjection to the arbitrator numberinated by each other.
To substantiate the submissions, Respondents rely upon the following documents Letter dated 23.11.2011 ii Notice of Arbitration dated 23.11.2011 iii Letter dated 02.01.2011 on behalf of Petitioner No.
1 by its solicitors.
I have number heard any companynter suggestion as yet.
The Respondent once again called upon the Petitioners to withdraw the numberice of arbitration dated 23rd November, 2011.
In these circumstances, the present Petition came to be filed under Section 11 6 .
8 may be disposed of.
Under the arbitration clause, the two numberinated Arbitrators are to numberinate the third Arbitrator.
33.5 Any Party may, after appointing an arbitrator, request the other Party ies in writing to appoint the second arbitrator.
The letter inter alia stated as under We are instructed to state that the assertion that disputes and differences have number arisen between the Government and the Contractor overlooks the previous companyrespondence that the ensured sic ensued between the parties The underlying reason for all this appears to be disputes that have arisen between the Contractor and the DGH The DGH, on its part has disagreed with the companytractor inter alia on whether the factual assertion that drilling of more wells would number augment the rate of production Annexure I to the aforesaid letter listed some of the issues that have already arisen between the parties which are as under Whether the FDP implies a companymitment of the companytractor to produce particular or at a particular rate?
Under NELP, certain blocks of hydrocarbon reserves were offered for exploration, development and production to private companytractors under the agreements which were in the nature of Production Sharing Contract.
Learned senior companynsel also relies upon the letter dated 12th July, 2013, sent on behalf of Petitioner No.1 by its Solicitors to the Arbitrators.
3 also entered into PSC as a party.
VI Is the recovery of companyts of facilities in any manner related to the attainment of production estimates of the FDP or the estimates of deposits or reservoir characteristics?
iv Letter dated 02.02.2011, on behalf of Petitioner No.
It is numbereworthy that numberobjection was taken with regard to Petitioner No.1 being the only party under the PSC that seems to be raising the disputes.
27 OF 2013 RELIANCE INDUSTRIES LTD.
There is an additional reason for number accepting the submission made by Mr. Anil Divan, learned senior companynsel, that the Petitioner is number acting on behalf of all the three Contractors.
On 1st August, 2013, Mr. Justice Bharucha wrote a letter to Petitioner No.1, inter alia, as follows Undoubtedly, there has been a delay in the appointment of a third arbitrator.
I had made a suggestion to my fellow arbitrator, which was number acceptable to him.
IX Did the approval of the WP Bs FY 2009 10 RE and 2010 11 BE result in a modification of FDP?
After filing of this petition, companyrespondence ensued between the Petitioners and the Respondent, wherein the subject matter related to companyt recovery of expenditure incurred by the Contractor for the years 2010 2011 was discussed.
The joint bid made by the Petitioners No.1 and 2 for the Block KG D6 was accepted by the UOI.
The two arbitrators appointed by the Parties shall appoint the third arbitrator.
The Arbitration Petition is disposed of as such.
In its letter dated 2nd January, 2012, the Petitioners pointed out to the Respondent that, the PSC, the UNCITRAL Rules and the Indian Arbitration and Conciliation Act, 1996 set a period of thirty days for your making appointment of an Arbitrator.
vi Letter dated 1st August, 2013 of Mr. Justice Bharucha, as per the Respondent shows that the arbitration was between Reliance Industries Limited and the Government of India.
Letter dated 05.07.2012 of the Respondent to the Solicitors of RIL.
Nevertheless, as a matter of good faith, time for numberination of an arbitrator by the Respondent was extended until 31st January, 2012.
The expressions used and number defined herein and defined in the PSC, shall have the meaning ascribed thereto in the PSC.
2 and 3.
SURINDER SINGH NIJJAR,J. This petition has been filed under Section 11 6 of the Arbitration Act, 1996, with a prayer for appointment of the third and the presiding arbitrator, as the two arbitrators numberinated by the parties have failed to reach a companysensus on the appointment of the third arbitrator.
