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RIL, BP, Niko move SC to restore ₹12,800 cr gas arbitration award
Reliance Industries Limited (RIL), along with its partners British Petroleum (BP) and Niko, has approached the Supreme Court to challenge a Delhi High Court order that cancelled an arbitration award worth ₹12,800 crore in their favour.
According to Bar and Bench, the petitions were filed on May 14, with RIL submitting the main plea and BP and Niko filing separate but related ones.
What is the case about?
The dispute stems from a gas migration issue in the Krishna-Godavari (KG) Basin. In 2013, the Oil and Natural Gas Corporation (ONGC) alleged that gas from its block had migrated into the RIL-led block and was being commercially exploited without authorisation.
A 2015 government-commissioned study confirmed connectivity between the fields, following which the government demanded nearly $1.55 billion (around ₹12,800 crore) from RIL.
RIL denied the claim, stating that there were no contractual restrictions against utilising the gas, and initiated arbitration. The arbitration tribunal largely ruled in RIL's favour, though one member issued a dissenting opinion.
A single-judge bench upheld the award, but in February 2024, a Division Bench of the Delhi High Court overturned it.
Why Delhi High Court cancelled the award
The Division Bench declared the award 'patently illegal' and contrary to public policy. It also ruled that the arbitration was domestic in nature, not international, since RIL — the lead party — is an Indian company.
'In our considered opinion, since the lead member, like RIL in the present case, in an arbitration proceeding is an Indian entity, the arbitration has to be treated as a domestic arbitration and not an International Commercial Arbitration,' the court said.
The court listed four key grounds for cancelling the award:
Patent illegality: RIL allegedly failed to disclose a 2003 report on gas movement, breaching its contractual obligations.
Domestic arbitration: The case didn't qualify as an international commercial arbitration.
Violation of public policy: The gas, a natural resource, is held in trust by the state and cannot be commercially used without explicit approval.
Unjust enrichment: RIL and its partners were seen to have profited from gas that belonged to ONGC or the government.
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