The arbitration tribunal's jurisdiction in awarding costs above the capped amount was upheld, confirming that the enforcement petition was timely and that the government's objections lacked merit.

JUDGMENT

Rajiv Shakdher, J.

TABLE OF CONTENTS

Preface:

1. I have before me, for adjudication, one enforcement petition, and two applications. The enforcement petition has been filed under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996 [hereafter referred to as the "1996 Act"] by Cairn India Limited (in short "CIL"), Ravva Oil (Singapore) Pte Ltd. [in short "ROS"], and Videocon Industries Limited (in short "VIL").

1.1. CIL, ROS, and VIL; wherever necessary, will collectively be referred to as petitioners.

1.2. The enforcement petition is numbered as OMP (EFA) (COMM.) 15/2016 [originally numbered as OMP 1269/2014]¹ .

1.3. The petition seeks enforcement of a unanimous final foreign award dated 18.01.2011 (in short "award").

1.4. First of the two applications i.e. I.A. 20459/2014 has been preferred by the petitioners to seek condonation of delay in filing OMP (EFA) (COMM) 15/2016.

1.5. The second application is I.A. 3558/2015. This application has been preferred by the Government of India (in short "GOI"). The GOI, via this application, has preferred its objections qua the award under Section 48 of the1996 Act.

1.6. For the sake of convenience, the petitioners and GOI will be collectively referred to as parties unless in the context of the discussion they are required to be referred to separately.

2. The dispute between the parties revolves around the recovery of development costs by petitioners beyond the cap provided for Base Development Cost (in short "BDC") under Article 15.5(b) read with proviso to Article 15.5(c) of the Production Sharing Contract (in short "PSC") executed between the parties. The PSC was entered into between the parties herein and Oil and Natural Corporation Limited [hereafter referred to as "ONGC"] to work what is known as the Ravva Oil and Gas Field.

3. Broadly, it is the stand of GOI that petitioners were not entitled to recover development costs above 105% of the amount at which BDC had been capped. The BDC, under Article 15.5 of the PSC, has been capped at USD 188.98 million. Therefore, according to the GOI, in terms of the provisions of Article 15.5(b), the petitioners could recover development costs incurred after the effective date in connection with development operations, an amount which was not more than 5% of the BDC. As noted above, BDC was pegged at USD 188.98 million. In a nutshell, as per the GOI, the total development cost that the petitioners could recover was USD 198.43 million.

Background:

4. Thus, the core issue, which has been etched out hereinabove, is required to be examined in the backdrop of the following broad facts.

5. On 28.10.1994, the petitioners executed the PSC with the GOI concerning the Ravva Oil and Gas Field.

5.1. Since disputes erupted between the parties with regard to recovery of development costs beyond USD 198.43 million, CIL on behalf of itself as also ROS and VIL, issued a Notice of Arbitration (in short "NOA") dated 18.08.2008 under the provisions of Article 34.3 of the PSC. In this notice, the petitioners set out the name of its nominee-arbitrator, one, Mr. Andrew Berkeley.

5.2. Having received the NOA, the GOI, on 05.03.2009 appointed Hon'ble Dr. Justice Adarsh Sein Anand, former Chief Justice of India, as its nominee-arbitrator.

5.3. The third and the presiding arbitrator was appointed on 07.04.2009 by the aforementioned nominee-arbitrators. The nominee-arbitrators chose Rt. Hon'ble Sir Anthony Evans as the c