RELIANCE INDUSTRIES .LIMITED & ANR. versus UNION OF INDIA

Citation: [2014] 6 S.C.R. 456 · Decided: 28-05-2014 · Supreme Court of India · Bench: S.S. NIJJAR · Disposal: Appeal(s) allowed

Cited by 8 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
[2014] 6 S.C.R. 456 
RELIANCE INDUSTRIES .LIMITED & ANR. 
V. 
UNION OF INDIA 
(Civil Appeal No.5765 of 2014) 
MAY 28, 2014 
[SURINDER SINGH NIJJAR AND A.K. SIKRI, JJ.) 
Arbitration and Conciliation Act, 1996 - ss. 16 and 34 -
Applicability of the Act - Arbitration petition u/s. 34 -
C Maintainability of - Parties-appellants entering into two 
Product Sharing Contracts (PSCs) with the Government of 
India, providing for exploration and production of petroleum 
- Disputes between parties regarding payments of royalties, 
cess, service tax and GAG audit report- Notice of arbitration 
D - Constitution of arbitral tribunal - Under Article 33. 12 of 
PSCs, the venue of arbitration would be London -
Amendment in the PSC, by agreement of the parties, Final 
Partial Consent Award by arbitral tribunal that juridical seat 
for arbitration would be London, England - 'Final Partial Award 
E that appellants' claims are arbitrable - Petition uls. 34 by 
respondent challenging Final Partial Award -Allowed by High 
Court holding that the arbitration petition was maintainable -
On appeal, held: Petition uls. 34 is riot maintainable -
Applicability of Arbitration Act, 1996 to the arbitration 
F agreement has been excluded - It cannot be said that even 
though the arbitration agreement would be governed by the 
laws of England and that juridical seat of arbitration would be 
in London, Part I of the Arbitration Act would stiff be applicable 
as the laws governing the substantive contract are Indian 
Laws - Upon a meaningful reading of the said Articles of the 
G PSC, that the proper law of the contract is Indian Law; proper 
law of the arbitration agreement is the law of England -
Applicability of Arbitration Act, 1996 has been ruled out by a 
H 
456 
RELIANCE INDUSTRIES LIMITED v. U.0.1. 
457 
conscious decision and agreement of the parties - In the 
A 
event, final award is made against the respondent, the 
. enforceability of the same in India, can be resisted on the 
ground of Public Policy- Remedy against the award will have 
to be sought in England, where the juridical seat is located -
International Commercial Arbitration. 
s 
Doctrines/Principles - Principle of separability - Held: 
Permits the parties to agree that law of one coµntry would 
govern to the substantive contract and laws of another country 
would apply to the arbitration agreement. 
The appellant and one 'BG' Exploration and 
Production India Ltd. entered into two Production 
Sharing Contracts (PSCs) with the Government of India 
for the exploration and prod:uction of petroleum from 
certain oil fields. Disputes arose between the parties with 
. regard to payment of royalties, cess, service tax and CAG 
audit report. The appellant issued a notice of arbitration. 
The arbitral tribunal was duly constituted. Under Article 
33.12, the venue of arbitration is in London. Thereafter, 
on the basis of the amendment in the PSC, by agreement 
of the parties, the arbitral tribunal made the 'Final Partial 
Consent Award' that the juridical seat (or legal place) for 
the purposes of the arbitration shall be London, England. 
The respondent raised objections relating to the 
arbitrability of the claims made by the petitioner. By the 
Final Partial Award, it was held that the petitioners' claims 
c 
D 
E 
F 
are arbitrable. The respondent filed a petition under 
Section 34 of the Arbitration and Conciliation Act, 1996 
challenging the Final Partial Award. The High Court 
allowed the petition .holding that the governing law of the 
G 
contract, is the law of India; and that the English law 
would be applicable only with regard to curial law matters, 
conduct of the arbitral proceedings; that the question of 
arbitrability of the claim is a larger question effecting 
public policy of State and it should be determined by 
H 
458 
SUPREME COURT REPORTS 
[2014] 6 ·s.C.R. 
A applying laws of India; that the intention of the parties 
~mder the agreement was always to remain subject to 
Indian laws and not to contravene them; that an award 
which is said to be against public policy can be permitted 
to be challenged in India even though the seat of 
8 arbitration is outside India; and that since the appellants 
are seeking refund of amount of cess, royalties, service 
tax, all matters of public money in India, the jurisdiction 
of the Indian courts cannot be excluded. Hence, the 
instant appeal. 
C 
Allowing the appeal, the Court 
HELD: 1. The conclusion arrived at by the High Cou

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