SC asks Australian firm to pay Rs 940 cr as damages to SAIL

The ICA had also asked the two firms to pay additionally 80% of the SAIL’s legal costs,including $320,000 as expenses and $160,000

as costs,paid by the Indian public sector company to the tribunal.

While senior counsel CA Sundaram for the Australian companies argued that arbitration cannot go beyond agreement,SAIL represented by senior counsel FS Nariman and counsel Sunil Jain said that the foreign firms had abandoned the contract and had also failed to clarify their positions with regard to supplies by saying that they were unable to participate in its meeting.

Rejecting all the objections by Vale and AMCI to the award with costs of R1 lakh each to be paid by them to SAIL,the single judge of the HC had said there is no “valid ground for a court to interfere (in a foreign award) under section 34 of the Arbitration and Conciliation Act….”

The dispute between the parties arose when Vale,which was later taken over by AMCI,failed to meet the SAIL demand of total one million metric tonnes (MT) of coking coal in 2007,under a long-term agreement (LTA) of April 23,2007 between them.

The two companies managed to supply only 246,539 MT and a balance of 753,461 MT of coking coal remained to be supplied.

AMCI had expressed inability to supply coal claiming that due to rainfalls the coal pits had been flooded with water and that the mining operations were at a standstill.

However,it had later refused SAIL’s request to attend the meeting of its Empowered Joint Committee so that the status of supply of coal could be discussed.

AMCI had responded saying that it would be useless for it to attend the meeting because it was just not in a position to supply the coal of the quality required.

The matter was then presented for dispute resolution in March 2009 before the ICA,which agreed with SAIL’s contention that there was a breach of the LTA by the two Australian companies.