International arbitrator appointed by Supreme Court for Reliance-government dispute [Read Judgment]

 Clearing the levels for settlement of dispute between Reliance Industries Ltd and the Government over recovery of cost for developing the country's key natural gas field in KG basin, Justice SS Nijjar of Supreme Court appointed a former Chief Justice of New South Wales in Australia as the third and final Arbitrator for resolution of dispute as per the arbitration agreement between the two parties. The apex court allowed Mukesh Ambani-led Reliance Industries plea which filed a petition under Section 11(6) of the Arbitration Act, 1996, with a prayer for appointment of the third and the presiding Arbitrator, as the two arbitrators nominated by the parties have failed to reach a consensus on the appointment of the third arbitrator. In international commercial arbitration, the Supreme Court is vested with the power to appoint the Arbitrator, if the parties fail to arrive at a consensus.    

Appearing for the Reliance Mr. Harish N. Salve  submitted that the contention of the UOI that Supreme Court has no jurisdiction to entertain the petition in view of Section 11(2) of the Arbitration Act, 1996, was untenable. It was submitted that Sub-section (2) of Section 11 was subject, expressly, to subsection (6) thereof. Section 11(6) provides that in case the appointment procedure agreed upon by the parties was not complied with, a party may request the Chief Justice to take the necessary measures. The expression "Chief Justice" has been defined under sub- section (12)(a) of Section 11 as the Chief Justice of India, in the case of an international commercial arbitration. In other arbitrations under Section 11(12)(b), it would be the Chief Justice of the High Court.

Mr. Anil B. Divan and Mr. Dushyant A. Dave, learned senior counsel, appearing for the Respondents,inter alia pointed out that the arbitration petition has been filed under Sections 11(6) and 11(9) of the Arbitration Act, 1996, read with Article 33.6 of the PSC. According to them, the Article 33.6 of the PSC, unlike Article 33.5, does not require that the arbitrator to be appointed should be a foreign national. It was argued that submitted that the Petitioners, by choosing not to object to the appointment of Mr. Justice V.N. Khare, have waived of the requirement that the parties, under Article 33.5 of the PSC, appoint a foreign national as an arbitrator.

The apex court, while reserving the  judgement in January had asked RIL and the Centre to suggest names of persons, both Indian and foreign nationals, who could be considered by the Court for the appointment.

The Court considering the sharp difference of  opinion  between  the  two   arbitrators, who are two former Chief Justices of India,  decided to appoint the Arbitrator by itself, though it could have sent back the matter to the two arbitrators for appointing the Chairman of the Arbitral Tribunal.  In fact the Court, while in the earlier occasion had requested the parties to supply a list of Arbitrators to be appointed, later thought it fit to ignore  and proceeded to appoint a person outside the list.

According to the judgment " Although two lists have been duly supplied by the  learned counsel for the parties,  I  am  of  the  opinion,  in  the peculiar  facts  and  circumstances  of  this  case,  it  would  be appropriate if an individual not named by any  of  the  parties  is appointed as the third arbitrator. I have  discretely  conducted  a survey to find a suitable third arbitrator who is not a National of any of the parties involved in the dispute.

 81. Upon due consideration, I hereby appoint Honourable James Spigelman AC QC, former Chief Justice and Lieutenant Governor  of  New  South  Wales, Australia as the third  Arbitrator  who  shall  act  as  the  Chairman of the Arbitral Tribunal"

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