SC observations on govt in RIL case worrying
In the case of a dispute between a government and an investor, you’d think the former would be keen to resolve the issue since unresolved issues could mean an investor walking away. Yet in the case of Reliance Industries’ dispute in the Panna-Mukta Tapti fields—sadly, this is not atypical of other arbitrations either—the government doesn’t seem to be in any hurry to resolve issues. Indeed, while dismissing the government’s latest appeal in this case, Supreme Court justices AK Sikri and RF Nariman observed “it is also an abuse of the process of the Court”. Such harsh words are unusual in judgments, but as the judges pointed out, “it is only after … getting an adverse judgment from the Permanent Court of Arbitration dated 10.06.2013 that the present application was filed … two days later i.e. on 12.6.2013”. In other words, the judges are accusing the government of forum shopping—the SC case itself was in appeal against the Delhi High Court judgment that dismissed the government’s appeal.
Indeed, it gets worse since, a week prior to this judgment, the same judges had to pass another order on a different aspect of the same case. And in that case where the SC had ruled the seat of arbitration would be London, the government had filed a review petition which was dismissed; so was a curative petition later, and in the meantime the government-owned ONGC also filed a case on a technical ground—in this case, the SC judgment speaks of the two petitions being dismissed while dismissing the plea of ONGC which, it said, “was not even party to the impugned proceedings”. While the government has been trying to get Reliance’s arbitrator Peter Leaver removed from the case for over two years now—this is what the Permanent Court of Arbitration turned down in June 2013—fortunately it has not yet acted against the umpire arbitrator. Towards the beginning of this year, petroleum minister Dharmendra Pradhan had asked the RAW, India’s premier foreign intelligence agency, to investigate an alleged link between Reliance’s lawyers and the umpire arbitrator Christopher Lau—Pradhan had also ordered exploring the possibility of handing over the case to the Serious Fraud Investigation Office (SFIO).
If this is happening in a case before the arbitration award has been given—the final award is likely over the next few months—imagine what could happen once it has to be implemented. Indeed, in an earlier argument before the courts, the government’s argument was that since the issues in the case related to public policy in India, it was only fair that Part 1 of the Arbitration Act be applicable—this means that all arguments against the arbitration, such as the removal of Leaver or Lau, can be made in Indian courts. While it is true that the original case, and some of the arguments being made, go back to the UPA regime, but surely the NDA needed to approach the case differently? And that approach should have been to get the arbitration award delivered at the earliest, not to keep trying to derail it. It is unclear if issues like this are part of any Doing Business index, but it is certain investors—and not just those in the petroleum sector or foreigners—pay heed to them.