RIL names former UK judge as its arbitrator in gas dispute

Reliance Industries has named former UK judge Sir Bernard Rix as its arbitrator in the Krishna-Godavari D6 cost recovery dispute with the government, in place of former Chief Justice of India S P Bharucha, who quit last week.

RIL gave Rix’s name, who recently retired as Lord Justice of Appeal with 20 years experience in the Commercial Court and the Court of Appeal, earlier this week, sources privy to the development said.

He will sit on a three-member arbitration panel headed by Supreme Court-appointed neutral arbitrator Michael Kirby, a former Judge of an Australian High Court, to decide if the government was right in disallowing over $2.3 billion of K-G D6 cost as output lagged targets.

The government has named former Chief Justice of India V N Khare as its arbitrator on the panel.

Sources said Bharucha recused himself from the arbitration after the government challenged his nomination saying that he had not disclosed all previous associations with RIL and that his arbitration could create doubts about his independence and impartiality.

The arbitration which dates back to November 2011 is yet to start as procedural issues were raised.

RIL had challenged the government notice to disallow cost through a Notice of Arbitration on November 23, 2011 saying the signed contract does not provide for output targets and there was no provision for disallowing any part of cost because of production not being in line with output guidance.

The government initially did not join the arbitration within the stipulated 30 days as provided under the Production Sharing Contract (PSC) but relented after RIL moved Supreme Court for appointment of the second arbitrator.

However, Justice (rtd) Bharucha and Justice (rtd) Khare failed to agree on the name of the third presiding arbitrator for 13 months and RIL again moved the Supreme Court on August 8, 2013.

Earlier this year, former Australian judge Michael Hudson McHugh was named as the presiding arbitrator but he withdrew after government counsel objected to his remaining on the panel after initially refusing to accept the appointment.

The Supreme Court in September appointed retired judge Michael Kirby of Australia as chairman of arbitral tribunal.

Sources said the government raised objection to Justice Bharucha after two and half years after his appointment.

RIL says it had made full disclosure of all previous dealings with its Arbitrator.

The company had filed a separate arbitration notice on May 9 over delays in approving revision in KG-D6 gas price. For this arbitration, RIL named Sir David Steel and the government named Justice GS Singhvi as their arbitrators.

The two have failed to agree on a third arbitrator and RIL has filed a petition in the Supreme Court seeking such appointment.