Delhi HC Quashes Arbitration Award in Favor of Reliance in KG Basin Dispute.......

In a significant development, the Delhi High Court has quashed an arbitration award that favored Reliance Industries Limited (RIL) in a long-standing dispute over the Krishna-Godavari (KG) Basin gas fields. The court ruled that the arbitration tribunal had exceeded its jurisdiction, marking a setback for Reliance in the high-stakes legal battle.

The dispute stems from a disagreement between Reliance and the Indian government over the recovery of costs incurred by RIL in developing the KG-D6 gas fields. The government had alleged that Reliance had overstated its expenses, leading to a reduction in the profit share due to the state. Reliance had challenged the government's decision, and an arbitration tribunal had ruled in favor of the company in 2018.

However, the Delhi High Court, in its recent judgment, held that the tribunal had overstepped its mandate by interpreting the terms of the production-sharing contract (PSC) in a manner that was beyond its scope. The court emphasized that the tribunal's decision had effectively rewritten the contract, which was not permissible under the arbitration framework.

The ruling is a major victory for the Indian government, which has been seeking to recover what it claims are billions of dollars in lost revenue. Reliance, on the other hand, has expressed disappointment with the decision and is likely to appeal the judgment in the Supreme Court.

The KG Basin dispute has been a contentious issue for over a decade, with significant implications for India's energy sector. The Delhi High Court's decision is expected to have far-reaching consequences for future arbitration cases involving government contracts.