JUDGMENT

Suriyadi Halim Omar JCA:

[1] The appeal came before us and we unanimously allowed it with costs, for here and below, whereupon the order of the High Court, which was in favour of the Government of India (the respondent), was set aside. The appeal came about as the learned judicial commissioner (JC), had set aside the finding over an issue (hereinafter referred to as 'the relevant issue') in the award, decided by the majority arbitrators in favour of the appellants on 12 January 2009.

[2] I now reproduce the factual matrix and they are as follows. Cairn Energy India Pty Ltd and Ravva Oil (Singapore) Pte Limited (the appellants) and the respondent had a contractual relationship pursuant to an agreement called the Production Sharing Contract dated 28 October 1994 (the PSC). The respondent, through the PSC had agreed to exploit the Ravva Oil Fields in India with a few companies viz the appellants, Petrocorn India Ltd and Oil and Natural Gas Corporation Ltd (ONGC). The appellants and Petrocorn India Ltd, are collectively called the Companies whilst the Companies together with ONGC, are collectively referred to as the "contractor".

[3] Trouble brewed between the appellants and the respondent resulting in the disputes being referred for arbitration. The Arbitral Tribunal delivered awards on six issues, of which four were in favour of the respondent and two in favour of the appellants, with the relevant issue before us being one of the latter. The respondent being dissatisfied with the decision over the relevant issue caused an application to be filed at the High Court of Malaya. The relevant issue brought by the successful respondent reads as follows:

whether the Companies are entitled to include in the accounts, for the purposes of PTRR calculation in accordance with the provisions of Article 16 and Appendix D of the PSC, sums paid by the Companies in accordance with article 3.3 of the PSC (the question).

[4] The relevant provisions mentioned in that reference are reproduced herewith, beginning with art. 3.3, which reads:

3.3 ONGC Carry

In consideration of ONGC having paid the Past Costs, the Companies covenant to ONGC that they shall:

(a) during the Transfer Period, pay the share of Exploration Costs, Development Costs and Production Costs incurred by the Operator; and

(b) after the Transfer Period, pay the share of Contract Costs,

that would otherwise be payable by ONGC, in the proportion that their respective Participating Interests bear to their total Participating Interests, until such time as the amount paid by the Companies pursuant to this Article 3.3 equals the amount that is equivalent to the Companies' total Participating Interest share of the difference between Past Costs and Transfer Period Net Revenue PROVIDED THAT the Companies' obligations under this Article 3.3 shall not exceed the sum of thirty three million US Dollars (US$33 million) less an amount equivalent to the Companies' total Participating Interest share of Transfer Period Net Revenue to which but for Article 7.5(c) the Companies would otherwise be entitled. Thereafter, Contract Cost shall be borne and paid by the Companies and ONGC in proportion to their Participating Interest.

[5] Article 15 reads:

Article 15

Recovery Of Costs For Oil And Gas

15.1 Contractor Entitled to Recover Contract Costs and Past Costs

The Contractor shall be entitled to 100% of the total volumes of Petroleum produced and saved from the Contract Area in accordance with the provisions of this Article until the value of such Petroleum entitlement, after deduction of all applicable levies including all Royalty and Cess paid in respect of Petroleum produced and saved from the Contract Area, is equal to Contract Costs together with Past Costs. For the avoidance of doubt, it is agreed that Past Costs shall not exceed the sum of fifty five million US Dollars ($US55 million) for the purposes of cost recovery.

[6] Article 16 reads:

Article 16

Production Sharing Of