RELIANCE INDUSTRIES LTD. & ORS. versus UNION OF INDIA

Citation: [2014] 14 S.C.R. 187 · Decided: 31-03-2014 · Supreme Court of India · Bench: S.S. NIJJAR · Disposal: Case Allowed

Judgment (excerpt)

[2014] 14 S.C.R. 187. 
RELIANCE INDUSTRIES LTD. & ORS. 
v. 
UNION OF INDIA 
(Arbitration Petition No. 27 of2013) 
MARCH 31, 2014 
[SURINDER SINGH NIJJAR, J.] 
Arbitration and Conciliation Act, 1996: 
A 
B 
s. 11(6) - Petition under - For appointment of third 
arbitrator- Maintainability of- Contract between one Indian 
and two foreign companies on one side and Government of c 
India on the other side - The Indian company acted as 
· 'Operator' on behalf of the two foreign companies - Initiation 
of arbitral proceedings by the Indian Company - Whether 
the arbitration would amount to an arbitration between two 
Indian parties or whether it was an International Commercial . D 
Arbitration - Held: The arbitration was an International 
Commercial Arbitration because two of the four parties to the 
arbitration were not based in India and the initiation of arbitral 
proceedings by the Indian company was also on behalf of 
the foreign companies. 
E 
ss. 11(1), 11(6) and 11(9) - Appointment of third 
Arbitrator - Criteria for - Held: The appointment of the third 
arbitrator has to be guide'1 by the provisions contained u/s. 
11(9) - The concern of the Court is to ensure neutrality 
impartiality and independence - It is entirely upto the Chief F . 
Justice of India or his nominee to accept any of the 
preferences of the parties for appointment of third arbitrator 
- In making such choice, the Chief Justice shall be guided 
by the relevant provisions of the Act, UNCITRAL Model Laws 
and UNCITRAL Rules - *In the peculiar facts of the case, G 
*By order dated 2.4.2014, the Court observed that the third arbitrator i.e. 
Hon'ble James Spingcharan ACQC. former Chief Justice and Lieutenant 
General of New South Wales, Australia happened to be on the list of 
arbitrators submitted by the petitioner. Thereafter, by order dated 
29.4.2014, Hon'ble Michael Hudson McHugh, ACQC, former Judge of the 
High Court of Australia and former non-permanent Justice of the Court of H 
Final Appeal, in Hong Kong was appointed as third arbitrator. 
187 
188 
SUPREME COURT REPORTS 
[2014] 14 S.C.R. 
A 
such an individual is appointed as third arbitrator; whose 
name has not been proposed by either of the parties. 
Petitioner No. 1 (an Indian Company) and petitioner 
Nos. 2 and 3 (the foreign companies), on one side, 
entered into an agreement with the respondent (Union 
B of India), which was in the nature of Production Sharing 
Contract (PSC). Article 33 of the Contract was the 
Arbitration Agreement. .After some differences relating 
to the scope and interpretation of the provisions of the 
contract arose between ,the petitioners and the 
C respondent, Petitioner No. 1 sent a notice to the 
respondent Invoking arbitration. In the cou.rse of 
correspondence with the respondent, petitioner No.1 . 
also informed the respondent th~t it has nominated Mr .. 
Justice S.P. Bharucha, former Chief Justice of India as 
D · their arbitrator. Despite the request of the petitioners, . 
when the respondent did not appoint any arbitrator, 
petitioner Nos. 1 and 2 filed Arbitration Petition No. 8 of 
2012 u/s. 11(6) of Arbitration Act, for app_ointment of 
second arbitrator in terms of Article 33.5 of the contract. 
' 
I; 
: 
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• 
E Subsequent thereto, the respondent nominated .Mr. 
Justice V.N. Khare, the former Chief Justice of India as 
second arbitrator. In view thereof, the arbitration petition 
was disposed of. Thereafter, when the two arqitrators 
nominated on behalf of both the parties, Were not able 
F to reach a consensus as regards the name of the third 
arbitrator, the present arbitration petition u/s. 11 (6) and · 
11(9) of the Act was filed seeking appointment of third 
arbitrator. 
' .. 
The petitioner took the plea that the arbitral 
G proceedings related to an International Commercial 
Arbitration, as two of the four parties to the arbitration 
were based outside India; that petitioner No.1 as 
'operator' as stated in the Joint Operating Agreement was 
entitled to initiate the arbitration proceedings on.behalf 
H 
RELIANCE INDUSTRIES LTD. v. UNION OF INDIA 
189 
of all the constituents of the contract; that the Supreme A 
Court has jurisdiction to entertain the petition; and that 
the third arbitrator should be from the neutral nationality. 
·Allowing the Arbitration Petition, the Court 
HELD: 1.1. Initially, Arbitration Petition for B 
appointment of second arbitrator was filed by Petitioner 
Nos.1 and 2. Therefore, it is apparent that reference t

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