Bombay High Court Orders Disclosure Of Bhutan Contract In Xcalibur–Oil Field Exclusivity Dispute

On 8 June, the Bombay High Court held that parties cannot shield alleged breaches of exclusivity obligations under a joint venture agreement from judicial scrutiny by withholding the very contract in question on the ground of confidentiality.

Justice Somasekhar Sundaresan allowed the appeal filed by Bengaluru-based Oil Field Instrumentation India Pvt. Ltd., set aside the arbitral tribunal's order under Section 17 of the Arbitration and Conciliation Act, 1996, and remanded the matter for fresh consideration while directing disclosure of the Government of Bhutan's airborne geophysical survey contract central to the dispute. He held:

“With the deepest respect to the Learned Arbitral Tribunal, for the reasons set out in this judgement, I have to disagree. Exclusivity obligations in joint venture agreements entail precious and vital commercial elements that sophisticated parties negotiate and contract with careful attention to detail. The need for strict construction of a non-compete obligation cannot justify withholding the material relevant to adjudicate whether such obligation has been breached.”

Oil Field Instrumentation India Pvt. Ltd. alleged that Xcalibur Multiphysics Group S.L.'s Australian affiliate secured an airborne geophysical survey contract in Bhutan in breach of Clause 18.3 of the Shareholders' Agreement, which created exclusivity for the joint venture, and Clause 18.3.5, which permitted limited external deployment of technology only where the joint venture had been offered the technology and had not accepted it.

It moved the Bombay High Court under Section 9 of the Arbitration and Conciliation Act, 1996 and sought interim reliefs against the alleged diversion of business. On 9 May 2025, the Court directed disclosure of the Bhutan contract to assess the alleged breach of exclusivity and non-compete obligations.

The arbitral tribunal later heard the dispute under Section 17 proceedings. On 1 April 2026, the tribunal rejected interim relief and accepted Xcalibur's contention that it could not disclose the Bhutan contract because the Government of Bhutan had refused permission under a confidentiality clause.

Oil Field Instrumentation challenged this order under Section 37 and argued that the tribunal prevented adjudication of the alleged breach by allowing Xcalibur to withhold the very contract said to violate the exclusivity arrangement. Xcalibur submitted that the Bhutan contract involved sovereign procurement and could not be disclosed without Bhutan's consent due to confidentiality obligations.

The Court rejected Xcalibur's contention and held that a government-awarded contract remains a commercial contract and does not lose its character merely because a sovereign entity awards it, noting that governments routinely act as commercial clients.

It held that confidentiality clauses cannot defeat disclosure when the adjudication of contractual breach depends on examining the underlying agreement. It observed that parties must manage confidentiality risks through contractual safeguards rather than use them to block production of relevant material.

Further, the Bench termed the basis for non-disclosure “quite weak” and noted that the tribunal relied only on two letters dated 9 June 2025 and 23 June 2025 without examining the contract, confidentiality clause, or supporting correspondence.

It held that the tribunal's approach risks making exclusivity and non-compete obligations unenforceable, since parties could avoid scrutiny simply by placing confidentiality restrictions in the very contract alleged to breach those obligations. It said:

“If the approach when adjudicating an alleged breach of a non-compete provision is to simply excuse the production of the very document that is vital to adjudicate the dispute, any alleged breach of such non-compete obligation would become immune from scrutiny merely by claiming that a confidentiality clause is contained in the very allegedly offensive agreement by which the non-compete obligation is said to have been breached.”

The Court further held that the tribunal failed to consider less restrictive alternatives, including redaction, confidentiality rings, and non-disclosure agreements, before refusing disclosure. It also held that the tribunal misinterpreted Clause 18.3.5 by treating a mere “offer” of technology to the joint venture as equivalent to acceptance and payment, thereby diluting the exclusivity arrangement and effectively rewriting the contract.

The Bench directed Xcalibur to disclose the Bhutan contract, including the confidentiality clause, notices clause, and all correspondence exchanged with the Government of Bhutan. It further directed Xcalibur to place an unredacted copy before the arbitral tribunal, which may impose confidentiality safeguards such as confidentiality rings and non-disclosure agreements before rehearing the Section 17 application.

Accordingly, the High Court allowed the appeal.

Appearances for Oil Field Instrumentation India Pvt. Ltd.: Senior Advocate J.P. Sen, instructed by Piyush Raheja, Pranav Narsaria, Vishesh Malviya, Anuja Bhansali and Dev Menghani, Advocates, instructed by Rashmikant & Partners.

Appearances for Xcalibur Multiphysics Group S.L. & Ors.: Advocates Ninad Deshpande, Aishwarya Darda and Shreyas Deshpande.