Reliance v Union Of India: English Court Confirms That There Is No Serious Irregularity Under S68(2)(A) If An Issue Of Construction Decided By The Tribunal Is 'Squarely In Play'

In Reliance Industries Limited & Ors v The Union of India [2018] EWHC 822 (Comm) the English commercial court (the Court) considered a number of challenges to parts of an arbitration award brought under sections 67, 68 and 69 of the Arbitration Act 1996 (the Act).

The decision provides useful guidance regarding the requirements to be satisfied should a party wish to challenge an award due to a "serious irregularity" under the Act. In particular, the Court confirmed that the general duty under s33 of the Act to give each party a reasonable opportunity to present its case was satisfied if the "essential building blocks" of the tribunal's analysis and reasoning were in play in relation to an issue, even where the argument (in this case on a point of construction) was not articulated in the way adopted by the tribunal.

In addition to the issues discussed in this blog post, the Court considered the foreign act of state doctrine. This challenge is discussed in a post on our Public International Law Notes blog here.

Background

A dispute between Reliance Industries Limited and BG Exploration and Production India Limited (the Claimants) and Union of India (the Government or the Defendant) arose under two production sharing contracts (PSCs) by which the Defendant granted to the Claimants the exclusive right to exploit certain petroleum resources. The PSCs provided for the Claimants to recover their "development costs" from the volume of petroleum produced and provided a formula by which to calculate the profit. The petroleum was sold to two government nominees (the Nominees). The PSCs were governed by Indian law save that the arbitration agreement in each of them was governed by English Law. They provided for arbitration to be conducted in accordance with the UNCITRAL Arbitration Rules 1976 and the seat was agreed to be London.

Issues

The tribunal made five awards. The award being challenged was the "Final Partial Award" dated 12 October 2016 (the Award). Nine challenges to the Award were made in total. The most legally interesting challenges are discussed below and in our blog post here.

Challenge 1: Claim of serious irregularity under s68(2)(a) and s68(2)(c) in the way the tribunal reached its conclusion on the meaning of "development costs" in the PSCs

The Claimants argued that the tribunal reached its conclusion on the appropriate meaning of "development costs" on the basis of a new point that had never been advanced by the Defendant or explored...