Introduction
The recent judgement of the Delhi High Court in Union of India v. Reliance Industries & Ors, is a reminder to sceptics that Indian judicial philosophy eschews interference with the arbitral process.
Facts
The arbitration arose out of a dispute under a Production Sharing Contract (PSC) for the exploration and of natural gas on an offshore field in India. UOI contended that RIL had in breach of an approved Initial Development Plan (IDP) drilled a lesser number of wells but had sought to recover and appropriate costs for development of a larger number of wells. The alleged excess recovery and/or appropriation of enhanced costs by RIL led to an arbitration seated in India.
The arbitral tribunal at the instance of Reliance Industries Ltd (RIL) directed the Union of India (UOI) to disclose certain documents to RIL. UOI filed an appeal challenging the procedural directions issued by the tribunal for disclosure to the Delhi High Court under Section 37 of the Arbitration & Conciliation Act, 1996 (Act). The Delhi High Court in a well-reasoned judgement dismissed UOI's challenge.
Disclosure of documents
After completion of pleadings the parties exchanged their respective Redfern Schedules. Five orders for disclosure ware passed by the tribunal. UOI disputed the 5th order of disclosure, (which according to it) lacked relevance/ materiality, were privileged inter-governmental correspondence and was a mere fishing expedition.
The arbitral tribunal after considering the law on disclosure of documents and the facts of the case rejected UOI's objections and directed it to produce and disclose the requisite documents and information to RIL.
Appeal against order of disclosure
Section 37 of the Act restrictively catalogues the types of appealable orders. It permits an appeal to a court from an order granting or refusing any interim measures by the tribunal under Section 17 of the Act. UOI accordingly sought to shoe-horn its appeal to the Delhi High Court under Section 17 of the Act.
The Delhi High Court gave this short shrift by finding that the disclosure orders sought to be appealed could not be regarded as interim measures ordered by the tribunal. The Court ruled that the tribunal's power to order disclosure stemmed from Section 19 of the Act which corresponds to Article 19 of the Model Law. Section 19 of the Act confers on the tribunal the power to determine its procedure and enables it to conduct proceedings in a manner it considers appropriate, including deciding on the admissibility, relevant, materiality and weight of any evidence.
The Delhi High Court dismissed UOI's appeal as matters of procedure fell exclusively within the ken of the arbitral tribunal and were not appealable under Section 37 of the Act.
Conclusion
This decision of the Delhi High Court was subsequently upheld by the Supreme court. The ruling illustrates that Indian Courts are supportive of arbitration and will not interfere with procedural orders of the arbitral tribunal.
Originally published November 11, 2019.
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