The Delhi High Court has rejected the Union government’s objections to the enforcement of two foreign arbitral awards worth nearly USD 99 million in favour of Vedanta Limited and Singapore-based Ravva Oil Company in a long-running dispute arising from the Production Sharing Contract (PSC) governing the Ravva oil field in the Krishna-Godavari Basin.
The single-judge Bench of Justice Jasmeet Singh allowed the enforcement petition filed by Vedanta and Ravva Oil under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996, and directed the release of the bank guarantees furnished by the companies within eight weeks.
The Court held on July 1 that the principal objections raised by the Union Government had already been conclusively decided by the Supreme Court in Union of India v. Vedanta Ltd. (2020) 10 SCC 1. Observing that the findings of the apex court were binding under Article 141 of the Constitution, Justice Singh held that the High Court could neither reopen nor revisit issues that had already attained finality.
The dispute pertains to a partial arbitral award rendered in 2004 and a final award delivered in 2016 by an international arbitral tribunal seated in Kuala Lumpur, Malaysia. The awards arose from disputes over the interpretation of a Production Sharing Contract executed in 1994 between the Government of India, Oil and Natural Gas Corporation (ONGC), Videocon Petroleum, Ravva Oil Company and Command Petroleum, which was subsequently renamed Cairn Energy India. Following the amalgamation of Cairn India with Vedanta Limited, Vedanta stepped into the contractual rights and obligations under the PSC.
The Production Sharing Contract was executed to facilitate private sector participation in the exploration and development of the Ravva oil field. The arbitration primarily centred on the “ONGC Carry Issue”—whether amounts paid by the private contractors to ONGC under Article 3.3 of the PSC could be taken into account while computing the Post Tax Rate of Return (PTRR), a key financial parameter for determining the Government’s entitlement to profit petroleum under the contract.
The arbitral tribunal delivered a partial award in 2004, deciding two issues in favour of the companies and four in favour of the Union Government, while leaving the issue of quantification for subsequent determination. Although the Kuala Lumpur High Court set aside the partial award in 2009, it was restored by the Malaysian Court of Appeal and subsequently affirmed by the Malaysian Federal Court in 2011, thereby attaining finality.
In 2014, the Union Government issued a show-cause notice claiming nearly USD 99 million from the companies. Vedanta and Ravva Oil thereafter approached the arbitral tribunal for quantification of the financial consequences arising from the partial award, culminating in the final arbitral award of 2016. The final award also withstood judicial scrutiny before the Malaysian courts.
Opposing enforcement before the Delhi High Court under Section 48 of the Arbitration and Conciliation Act, the Union Government contended that the foreign awards were contrary to the public policy of India. It argued that the arbitral tribunal had effectively rewritten the terms of the Production Sharing Contract, resulting in a reduction of the Government’s share of profit petroleum by approximately USD 99 million.
The Centre further argued that the enforcement petition was barred by limitation and that the arbitral tribunal had become functus officio before delivering the final award, thereby lacking jurisdiction to determine the issue of quantification.
Rejecting these submissions, Justice Singh observed that each of these objections had already been examined and rejected by the Supreme Court in Union of India v. Vedanta Ltd. The Court held that it was bound by the ratio of the Supreme Court’s decision and could not undertake a fresh examination of the same questions in enforcement proceedings.
On the issue of limitation, the High Court held that the enforcement petition had been instituted within the prescribed limitation period under Article 137 of the Limitation Act, 1963. Relying on the Supreme Court’s ruling, the Court observed that the limitation period commenced from July 10, 2014, the date on which the Union Government issued the show-cause notice, and not from any earlier correspondence, negotiations or meetings between the parties.
The Court also reiterated the limited scope of judicial intervention in proceedings for the recognition and enforcement of foreign arbitral awards under Part II of the Arbitration and Conciliation Act. It observed that Section 48 provides narrowly defined grounds for refusing enforcement and expressly excludes a review on the merits of the dispute. An enforcing court, it held, cannot act as an appellate forum to reassess the factual findings or contractual interpretation adopted by the arbitral tribunal.
The High Court found that the Union Government’s objections regarding the ONGC Carry Issue were, in substance, an attempt to secure a reappreciation of the arbitral tribunal’s interpretation of the Production Sharing Contract. Such an exercise, the Court held, falls outside the jurisdiction of an enforcement court under Section 48 of the Act.
The Court also rejected the Government’s contention that the arbitral tribunal had exceeded the scope of the arbitral reference while rendering the awards. Holding that none of the statutory grounds for refusing enforcement had been established, the High Court allowed the enforcement petition, thereby paving the way for the release of the USD 99 million foreign arbitral awards in favour of Vedanta Limited and Ravva Oil Company.
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