In a move that may lift overall business sentiment, especially in the oil and gas sector, and will help the sector get rid of disputes choking investment in it, the government has constituted an expert committee for time-bound resolution of exploration and production disputes without having to resort to tardy judicial process.
According to a government notification dated December 16, the three member ‘Committee of External Eminent Persons/Experts’ for dispute resolution will comprise of former Secretary of Ministry of Petroleum and Natural Gas G C Chaturvedi, former Chairman and Managing Director of OIL and ONGC Bikash C Bora, and former MD of Hindalco Industries Satish Pai.
The notification further stated that the panel will have a tenure of three years and the resolution will be attempted to be arrived at within three months.
“The Committee shall exercise all powers and discharge all functions necessary for carrying out conciliation and mediation proceedings for resolution of the disputes between the parties as per the provisions of the Arbitration and Conciliation Act, 1996 and endeavour that the parties arrive at a Settlement Agreement within three (3) months from the date of the first meeting of the Committee,” the notification read.
It added that the members and the parties may, for reasons to be recorded in writing, extend the time for arriving at such Settlement Agreement by mutual agreement
The country’s oil and gas sector has been plagued by disputes from cost recovery to production targets, and companies as well as the government have resorted to lengthy and costly arbitration followed by judicial review — a process that takes years to resolve differences.
The December 16 notification said that the panel will arbitrate on a dispute between partners in a contract or with the government over commercial or production issues for oil and gas.
“Any dispute or difference arising out of a contract relating to exploration blocks/fields of India can be referred to the committee, if both parties to the contract agree in writing for conciliation or mediation and further agree to not invoke arbitration proceedings thereafter,” it said.
Panel gets 3-year term; 3 months to arrive at resolution
The decision may lift overall business sentiment, especially in the oil and gas sector, which, in return, will help the sector get rid of disputes choking investment in it. The expert committee will help companies get their issues resolved quickly without going through the tardy judicial process. The notification further stated that the panel will have a tenure of three years and the resolution will be attempted to be arrived at within 3 months.
Once a resolution has been referred to panel, the parties cannot resort to arbitration or court case to resolve it.
As per the notification, for procedural aspect, the committee will be guided by the Arbitration and Conciliation Act, 1996, and the venue of the conciliation or mediation proceedings shall be New Delhi.
Stating that the parties will represent their case before the committee acting as conciliators or mediators only through their employees or executives, the notification said that “Advocates or Consultants shall not participate in the conciliation proceedings, unless the committee on application filed by a party to the proceedings finds that some issue of legal nature or an issue requiring highly specialised knowledge is in dispute requiring clarification/interpretation by an Advocate or Consultant and takes a view that in absence of such assistance or participation the party’s interests shall not be adequately represented in the conciliation or mediation proceedings.”
It further said that if the concerned parties are unable to arrive at a settlement, “no interest shall be claimed in any further proceedings for the period from the date of notice till date of completion of the proceedings pending before the committee or date of the receipt of the final recommendations from the committee or date of execution of the settlement agreement whichever is later.”
While the notification stated that the conciliation or mediation proceedings should be kept confidential, it also pointed out that the pendency of arbitral or judicial proceedings shall not constitute any bar on commencement of conciliation or mediation proceedings before the committee, even if the conciliation or mediation proceedings are on the same subject matter/issue as the arbitral or judicial proceeding.
It also said that the parties shall not initiate or take any step to initiate any arbitral or judicial proceedings in respect of a dispute, which is a subject matter of the conciliation or mediation proceedings pending before the committee.
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