SC appoints Australian as third arbitrator in RIL gas dispute

The Supreme Court on Monday announced the appointment of retired Australian judge James Jacob Spigelman as the third member of a three-member arbitration panel to decide on Reliance Industry's dispute with the petroleum ministry over unproductive investments in the KG-D6 gas block off the east coast of India.

The other two members of the arbitration panel - S P Bharucha and V N Khare - are former chief justices of the Supreme Court of India.

The panel will decide whether RIL deliberately suppressed production from KG-D6 and whether the government is within its rights under the product sharing contract (PSC) to levy penalties on RIL for failure to meet output targets.

The Mukesh Ambani-led Reliance Industries seems to have won half the battle with the court upholding the company's view that a foreign judge would rule out bias against the company. At the same time, the global clout of its partner BP would give RIL an upper hand in the arbitration process.

A Supreme Court bench headed by Justice S S Nijjar agreed with RIL's view that a foreign arbitrator would avoid bias in this case.

"It is necessary to have a foreigner as the third arbitrator to eliminate the apprehension of any bias in the minds of the petitioner (RIL)," Justice SS Nijjar said.

The court also rejected government's argument that if a foreigner is appointed as the third arbitrator, the tribunal would be at a disadvantage as all applicable laws are Indian.

The petroleum ministry had disallowed investments of nearly $1.8 billion by RIL in the KG-D6 block over a period of three years, ie, 2010-11, 2011-12 and 2012-13 for failure to raise or even maintain production level.

Spigelman, co author of the book The Nuclear Barons, was the Chief Justice and Lieutenant Governor of New South Wales, Australia, till he resigned in 2011. On his tenure in office, The Sydney Morning Herald commentator David Marr, outlined his legacy: "The Chief Justice of NSW has blazed an incomparable trail."

Spigelman is co author of the book The Nuclear Barons, and the author of Secrecy  and Becket and Henry.

He is also the chairman of the Australian Broadcasting Corporation (ABC) since 1 April 2012. He will hold office for a five-year term as chairman of ABC.