A dispute arose between Reliance Industries Limited & BG Exploration and Production India Limited and the Union of India because of two Production Sharing Contracts by which Defendant granted to the Contractor (Claimants and a third party) the exclusive right to exploit petroleum resources discovered in two areas off the west coast of India for a period of 25 years.
Claimants commenced arbitration proceedings where many disputes were at stake. Indeed, the tribunal divided proceedings into a number of phases and rendered five awards. In the present case, Claimants challenged an award dated 12 October 2016 through nine separate challenges before the High Court; all were made under the provisions of sections 67, 68 and 69 of the Arbitration Act of 1996.
Out of nine challenges, the Court dismisses eight. The only challenge, which the Court upholds, concerns the “Agreements Case”. The Agreements Case gathers some particular categories of development costs which fell outside the scope of the contracts on the basis that Defendant had specifically agreed that the parties should do so and that the costs should be recoverable in any event.
Claimants argues that their Agreements Case “fell for determination”. They accuse the tribunal of failing to address and determine it which constitutes “a serious irregularity”.
Defendant argues that Claimants’ Agreement case relies on their interpretation of particular documentation which was inconsistent with findings that the tribunal had already made on that documentation in relation to challenge 3 on estoppel.
The Court proceeds to the analysis of the phrase “fell for determination” used by the Tribunal. It concludes that it is an issue that was not addressed and decided.
The Court rules that the Agreements Case fell for determination and the arbitral tribunal failed to address it and, thus, committed a serious irregularity.