English Court Agrees With Tribunal: Relying On A Submission Later That Could Have Been Raised Earlier In The Arbitration Would Be An Abuse Of Process

• Published date: 05 July 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Herbert Smith Freehills
• Author: Mr Andrew Cannon and Hannah Ambrose

In Union of India v Reliance Industries Ltd and another [2022] EWHC 1407 (Comm), the Union of India (the "Government") challenged an award under ss.68 and 69 of the Arbitration Act 1996 ("Act"). In the award, the Tribunal had found that, as a matter of English law, the Government was precluded from relying on matters that could have been raised earlier in the proceedings (namely certain principles of Indian constitutional law) on the basis that they were res judicata. In appealing the award under s69, the Government argued that the Tribunal erred as a matter of law by applying English law to decide the issue of res judicata. In challenging the award under s68, the Government argued there had been "serious irregularity" in this case creating "substantial injustice" by virtue of the Tribunal failing to apply principles of Indian constitutional law.

The English Commercial Court (the "Court") held that the Tribunal was correct to apply English law to the question of whether India was permitted to raise a matter that could, and should, have been brought in previous proceedings. More specifically, the Court confirmed that the principle from Henderson v Henderson - that a matter that could and should have been raised in previous proceedings, cannot later be relied on in court - was one of procedure, rather than substantive law, applied to arbitration, and could apply to defences as well as claims. The s68 challenge also failed.

Background

Reliance Industries Limited ("Reliance") and BG Exploration and Production India Limited ("BG") were participants in two production sharing contracts (the "PSCs") with the Government, relating to two gas fields off the Indian west coast. The PSCs were subject to Indian law, with arbitration agreements governed by English law and the seat of arbitration in each case was agreed to be London. The 1976 UNCITRAL Arbitration Rules applied. The PSCs have been the subject of various arbitration proceedings between the parties, and the "Final Partial Award" issued in 2021 ("2021 Award") was the subject of the Government's application in this case. You can read more on the background of the parties' disputes and decisions made in previous rulings here and here.

The 2021 Award determined the question of the balance of certain costs owed to Reliance after a previous award in the case. The Government had raised certain threshold objections, including under Indian substantive law. The Tribunal held that it could not consider these objections...