The Supreme Court on Tuesday dismissed Centre’s plea to remove a foreign arbitrator appointed by Reliance Industries Ltd (RIL) in connection with its dispute with the government over Panna, Mukta and Tapti (PMT) oil and gas fields.
The government had moved the court to remove Peter Leaver, who was appointed by RIL and British Gas, alleging he was biased in RIL’s favour. The arbitration was initiated in 2010.
While turning down the Centre’s request, a bench of Justices A K Sikri and Rohinton F Nariman also outlined certain situations where domestic arbitration law would apply to international commercial arbitration, like the one between RIL and the government.
In May last year, the apex court had allowed the PMT arbitration over disputes related to cost recovery, royalty and tax to take place in London. It had set aside the Delhi High Court order over entertaining the government’s objection against the arbitration in London.
The top court had said that the High Court committed jurisdictional error in agreeing to hear the government’s plea. It added that in the production-sharing contract, RIL and the Petroleum Ministry had “consciously agreed” for arbitration in London in case of any dispute.
In December 2010, differences had arisen on issues of payment and reimbursement of royalties, cess and service tax, and conduct of performance audit by the Comptroller and Auditor General, following which Reliance invoked foreign arbitration clause. At the start of the arbitration itself, the government had challenged the arbitrability of the disputes.