The referee panel does not find RIL at fault in the CGSB row

NEW DELHI: An Arbitration Panel awarded a prize in favor of the consortium led by Reliance in the so-called Gas Migration Challenge Case, RIL said at a late filing in the evening on the stock exchange.

The panel rejected the government's claim that Reliance and its partners would have earned unfairly by producing gas from CGSB fields in the KG Basin and must make the gains by paying $ 1.55. billion dollars to the government.

"All the consortium's claims were confirmed by the majority with the conclusion that the consortium was entitled to produce all gas from its contract area and all claims made by the Government of India were The consortium is not required to pay any amount to the Government of India, "the company said. The court also ordered the government to pay $ 8.3 million, or Rs 56 crore, as the cost of arbitration for the consortium that includes BP Plc and Niko Resources.

The arbitration tribunal was split in two with GS Singhvi, the former Supreme Court justice and the government representative in the group, writing a long dissenting note. Bernard Eder, a Reliance-appointed former High Court judge in the United Kingdom, and Singapore-based Lawrence Boo, were the other two arbitrators.

According to the majority's verdict, Reliance and its partners were well within their rights under the contract to produce the gas that had migrated from the CGSB fields in the KG Basin, and had not unfairly enriched it, according to the majority. people familiar with the Award of Arbitration.

The majority of panelists agreed with RIL's view that the production sharing agreement does not prohibit the contractor from producing gas – regardless of whether its source – as long as producing wells are located in the contract area. I said. The panel rejected the government's plea that RIL unfairly enriched it on the grounds that the company had made the necessary investments for the extraction of gas and paid the royalties and the oil profits due to the government over all the gas produced on the ground.

In his note on dissent, Singhvi cited two previous decisions on the doctrine of public trust and unjust enrichment. It also relies on the reports of the D & M consultant and the Shah panel, the people mentioned above.

This is the second legal setback for the oil ministry in two months – the Delhi High Court on May 31 ordered the government to extend the Vedanta contract for the prolific Barmer bloc under the same conditions only in the original contract. The government has appealed this order.

GOVT REACTION

The government is considering the gas arbitration award and could challenge it in court in the near future, although no decision has yet been taken, added the above-mentioned people, adding that Singhvi's dissent will help appeal to the courts. . Any appeal from a court means that the case can last for several more months.

An email sent to the Ministry of Petroleum received no response until it went to press.

The court's decision contradicts the findings of an official panel headed by retired judge AP Shah. The panel's recommendations, released in 2016, provided the basis for the $ 1.55 billion government request from Reliance and its partners. Reliance then called on the government to demand an arbitrary and alleged arbitration procedure.

The dispute began in 2014 when the State CGSB went to the Delhi High Court, complaining that the gas from its blocks was being produced by Reliance. Both companies have appointed D & M, an American consultant, to examine the issue.

The government, which was instructed by the court to resolve the problem, instructed the Shah study group to study the D & M report and recommend ways to prevent such incidents in the future. # 39; future.

The panel stated that RIL had unjustly earned by producing gas that does not belong to the company and that it must return the profits to the government, which owns the gas that it has. CGSB state still had to extract from the two fields that it operated. Reliance had produced gas that had migrated to its field in the KG basin from the ONGC and Godavari PML block KG-DWN-98/2, which share borders with the RIL block.

The government accepted all the recommendations of the Shah panel, which stated that RIL must compensate the government, not CGSB, the original petitioner in the case. With this, the government has replaced ONGC in the dispute with Reliance.

The claim of $ 1.55 billion included the alleged benefit received by RIL by firing gas from CGSB until March 2016, the interest accrued on the amount, and $ 175 million dollars in additional oil with cumulative profit.