‘RIL Must Not In­sist on Ar­bi­tra­tion to Sort Out KG Gas Price Row’

The Economic Times - - Companies - Sa­man­waya.Rau­tray @times­group.com

New Delhi: The gov­ern­ment on Mon­day told the Supreme Court that Re­liance In­dus­tries must stop in­sist­ing on ar­bi­tra­tion to sort out the dis­pute over the price of gas un­der the KG Basin pro­duc­tion-shar­ing con­tract, as the gov­ern­ment’s right to change pol­icy can­not be con­tested. “We have changed that pol­icy (on pric­ing). We have the right to change it ev­ery quar­ter,” So­lic­i­tor Gen­eral Ran­jit Ku­mar said. “Re­liance can­not in­sist that we stick to the old pol­icy and … Can a pol­icy be made a sub­ject of ar­bi­tra­tion pro­ceed­ings?”

Re­liance In­dus­tries’ coun­sel, Har­ish N Salve, con­tested this say­ing that the com­pany’s ar­bi­tra­tion no­tice had noth­ing to do with the pol­icy. “It is a con­trac­tual right,” he ar­gued. “Once an ar­bi­tral panel is set up, it can also de­cide if the is­sue can be ar­bi­trated. There is a con­tract and there is an ar­bi­tra­tion ac­ti­va­tion clause.”

The two sides had ear­lier agreed to ar­bi­trate the dis­pute over the is­sue, but couldn’t agree on a third ar­bi­tra­tor af­ter nam­ing their re­spec­tive nom­i­nees to the panel — the gov­ern­ment wanted an In­dian but Re­liance In­dus­tries and part­ner Niko Re­sources in­sisted on a per­son of neu­tral na­tion­al­ity. While the com­pany ap­proached the Supreme Court for its in­ter­ven­tion to name the third ar­bi­tra­tor, the gov­ern­ment took a stand that just be­cause it ap­pointed an ar­bi­tra­tor, it doesn’t have to pro­ceed with the ar­bi­tra­tion.

Re­liance In­dus­tries ini­ti­ated ar­bi­tra­tion pro­ceed­ings on May 9, 2014. The then UPA gov­ern­ment had brought in a no­ti­fi­ca­tion in Jan­uary 2014, months be­fore the Lok Sabha elec­tions, re­vis­ing the price of gas from $4.2 per mmbtu to $8.4 per mmbtu. That no­ti­fi­ca­tion was stayed by the Elec­tion Com­mis­sion and was never given ef­fect. The Modi gov­ern­ment, af­ter tak­ing over in May 2014, brought in a no­ti­fi­ca­tion in Oc­to­ber that year to re­vise the price to $5.61 per mmbtu. It was changed again to $5.18 per mmbtu.

Soon af­ter the new Ar­bi­tra­tion Act came into ef­fect, the two sides quib­bled over whether the third ar­bi­tra­tor should be ap­pointed un­der the new law or the old. The com­pany in­sisted that the old law ap­plies, in a bid down to cut down the de­lay and rush the ar­bi­tra­tion, whereas the gov­ern­ment said the new law would ap­ply. On Mon­day, the so­lic­i­tor gen­eral drew the court’s at­ten­tion to a pub­lic in­ter­est lit­i­ga­tion filed by for­mer Par­lia­men­tar­ian Gu­ru­das Das­gupta chal­leng­ing the pol­icy. “What will hap­pen if the pol­icy is struck down? Can ar­bi­tra­tion be al­lowed?”

Salve in­sisted that the two cases were not linked. In case, if the pol­icy were to be struck down, it would give the gov­ern­ment a good de­fence in the ar­bi­tra­tion pro­ceed­ings, he sug­gested.

The gov­ern­ment’s law of­fi­cer sug­gested that the com­pany is­sue a fresh ar­bi­tra­tion no­tice if it wasn’t chal­leng­ing pol­icy and only mak­ing out a case un­der the pro­duc­tion-shar­ing con­tract.

The court will hear the mat­ter on July 27.

Re­liance In­dus­tries ini­ti­ated ar­bi­tra­tion pro­ceed­ings on May 9, 2014

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.