Delhi High Court Rejects Reliance Industries' Objections To Centre's Appeal In $3.86 Billion Dispute

The Delhi High Court on Monday ruled that the Centre's appeal against the refusal to enforce a foreign arbitral award in a $3.86 billion dispute with Reliance Industries can proceed. The court rejected RIL's objections to the Centre's appeal against a single judge order refusing to enforce the foreign arbitral award.

The dispute relates to production sharing contracts for the Tapti and Panna Mukta oil and gas fields and a claim of USD 3,856,734,582.

A Division Bench of Justice Navin Chawla and Justice Madhu Jain held that an order declining enforcement of a foreign arbitral award falls under Section 48 of the Act and is appealable under Section 50.

The Bench said, "The words of the legislature must be construed in their natural meaning, without adding or subtracting therefrom. Applying the above test, the words of Section 50(1)(b) of the A&C Act provide for an appeal against the order of a court refusing to enforce a Foreign Award under Section 48 of the A&C Act, which is the case in hand. Therefore, the present appeal is maintainable.”

The dispute concerns two production sharing contracts executed on December 22, 1994, for the Tapti and Panna Mukta oil and gas fields. The contracts were entered into by the Union of India, through ONGC, with Reliance Industries Limited and Enron Oil and Gas India Limited.

BG Exploration and Production India Limited later stepped into Enron's place, and the contracts were amended on January 10, 2005. Under the contracts, Reliance and BG together held a 60% participating interest, while ONGC held 40%.

Disputes later arose on issues including cost recovery limits and profit petroleum. The disputes went to arbitration under the contracts, which were governed by English law.

On October 12, 2016, the arbitral tribunal in England delivered a final partial award. The Union of India later moved the Delhi High Court to enforce the award and recover USD 3,856,734,582.

On June 2, 2023, a single judge of the High Court dismissed the execution petition. The judge said the award did not fix any amount payable to the Union of India. The cost recovery limit, which was needed to work out the claim, had not reached finality.

The execution petition was held to be premature, though liberty was reserved to the Union of India to seek execution at an appropriate stage.

The Union of India challenged that single judge order by filing an appeal. Reliance objected to the maintainability of the appeal. It argued that the single judge had not refused enforcement under Section 48 but had only held the execution petition to be premature and not maintainable.

Rejecting this objection, the Division Bench held that the Single Judge's order amounted to a refusal to enforce the award under Section 48. The court said, “The refusal to enforce the FPA 2016 by the learned Single Judge is under Section 48 of the Act, which is appealable under Section 50(1)(b).”

The bench accordingly dismissed the preliminary objections and held that the appeal against the enforcement refusal would proceed to be heard on its merits.

For the Union of India (Appellant): Attorney General of India R. Venkataramani; Senior Advocate Sanjay Jain; Advocates Shravan Tammanur, Mangesh Krishna, Prachi Kaushik and Harshita Sukhija.

For Reliance Industries (Respondents): Senior Advocates Harish Salve and Shyel Trehan; Advocates Sameer Parekh, Sonali Basu Parekh, Ishan Nagar, Abhishek Thakral and Ruchi Krishna Chauhan.