SC issues notice to RIL, BG over Panna-Mukta arbitrator

The Supreme Court on Friday took up the centre's plea seeking removal of an arbitrator in its dispute over the Panna-Mukta and Tapti (PMT) oil basins with Reliance Industries Ltd (RIL) and issued notices to Reliance and its partner BG Group over the alleged bias in the appointment of the arbitrator appointed by them.

The government moved the apex court seeking to remove Peter Leaver QC, the arbitrator appointed by Reliance Industries (RIL) and BG Exploration and Production India, after the Delhi High Court rejected its appeal in its order of 3 July last year.

The centre and the private explorers are engaged in an ongoing row over reimbursement of royalties and taxes in the Panna, Mukta and Tapti (PMT) gas fields. The companies also dispute tax claims by the government and the recovery of costs in the light of a report by the Comptroller and Auditor General of India.

RIL and BG own 30 per cent each in PMT oil fields.

The government has also questioned the credentials of arbitrators appointed by Reliance in other disputes, leading to a change in arbitrators.

The arbitral panel initially consisted of Christopher Lau (chairman), Peter Leaver, appointed by RIL and BG, and Justice BP Jeevan Reddy as the government nominee. Reddy left the panel on 4 February 2014, and was replaced by former SC judge B Sudershan Reddy.

Reddy had resigned citing an adjournment of a year sought by RIL and BG and Leaver's continued confrontational interruption of the government lawyer.

"Unfortunately, Respondent 3 (Leaver) made it evident by his conduct from day one that he was not only the nominee of respondents 1 and 2 (RIL, BG), but his duty was to protect their interest in all circumstances," the government alleged.

The government claimed that it had acted with utmost restraint with the expectation that Leaver would "eventually realise the call of his duties as a member of the tribunal and mend his ways. However, the expectations were totally belied". He continued with his bias in favour of the claimants and his persistent efforts to harass and humiliate the counsel for the petitioner without any justification,'' the government said.

The government had moved the Arbitral Tribunal and the appointing authority detailing the biased stance of the arbitrary panel and later the Delhi High Court fearing that a biased arbitrator would act in prejudice.

The High Court on 3 July 2014 refused to pass any orders on the government's petition, saying it was not maintainable and left a decision on it on the Supreme Court.

RIL and BG opposed the petition, claiming that it was an abuse of the process of the court, a claim the government resisted.

The bench said it would hear the questions of law involved in the case.

A two-judge bench comprising Justices Dipak Misra and PC Pant issued notices to RIL, BG and Leaver and listed the case for further hearing on 13 April.

The government had signed production sharing contracts with RIL, Enron Oil and Gas India, later known as BG Exploration and Production India, and Oil & Natural Gas Corporation on 22 December 1994. RIL and BG invoked the arbitration clause on 16 December 2010. ONGC did not join the claim nor was a party to it.

The government and the two parties had earlier consented to have London as the venue in any arbitration proceedings.