Supreme Court appoints international arbitrator on KG basin dispute

The Supreme Court today decided to appoint an international arbitrator as the Chairman for adjudication 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.

The apex court named James Spigelman, 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 whose two other members are former Chief Justices of India -- S P Bharucha and V N Khare.

Justice Spigelman is not a national of any of the parties involved in the dispute.

While Mukesh Ambani-led RIL has nominated former Justice Bharucha as its arbitrator, the Centre chose Justice Khare as its nominee.

RIL had moved the apex court for appointment of an arbitrator from a foreign country with which parties in disputes are not connected after the Centre had declined the proposal.

Justice S S NIjjar, who had reserved his judgement on the matter, said both, the Centre and RIL provided the list of eminent foreign arbitrators but he preferred to do his own survey for maintaining neutrality and chose the name of Justice Spigelman.

"However, given the sharp difference of opinion between the two arbitrators, I deem it appropriate to perform the task of appointing the third arbitrator in this Court itself.

Therefore, I had requested the learned senior counsel for the parties to supply a list of eminent individuals one of whom could be appointed as the third arbitrator.

"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," Justice Nijjar said.

He rejected the apprehension expressed by the Centre that if a foreign national is appointed as a third arbitrator, the Tribunal would be at a disadvantage as all applicable laws are Indian.

Justice Nijjar said the Centre overlooks the fact that the two arbitrators already appointed are former Chief Justices of India and can be very safely relied upon to advise the third arbitrator of any legal position, which is peculiar to India.

The judge said he examined the submissions on the issue with regard to the neutrality, impartiality and independence of the third arbitrator.

"The apprehension expressed by the Centre seems to be imaginary and illusory. Whatever is being said about the influence/presence of British Petroleum in other jurisdictions would apply equally to the Union of India, if the third arbitrator is an Indian national, within the Indian jurisdiction," Justice Nijjar said.

"I must emphasise here that the trend of the third arbitrator/presiding officer of a neutral nationality being appointed is now more or less universally accepted under the Arbitration Acts and Arbitration Rules in different jurisdictions," the judge said

He said it was also not possible to accept the Centre's submission that the arbitration in the present case is not an international arbitration.

RIL had commenced arbitration against the government on November 23, 2011.