In a major setback for the government, the Supreme Court on Wednesday upheld a foreign arbitration award in favour of Vadanta and Videocon for the development of the Ravva oil and gas fields off the coast of Andhra Pradesh between 2000 and 2007. The ruling allowed the companies to recover $499 million for the project, an amount that was capped at $198 million by the centre, dismissing the government’s appeal against the foreign arbitration award.
The Supreme Court said the Malaysian court rightly examined the Ravva arbitration award, which doesn’t offend public policy of India, as it is a subsequent event. The enforcement court cannot reassess evidence available, it said.
The top court upheld an order by the Delhi High Court, which refused to interfere with the arbitral award in the production-sharing contract (PSC) for Ravva oil fields in the Krishna Godavari basin. Cairn India (now Vedanta) and Videocon were allowed to recover $198 million as per the contract.
In July 2014, the Malaysian Court of Appeals had upheld the arbitral award allowing additional recoveries to Vedanta.
The dispute centres around the production-sharing contract between the companies and the government over exploration of the Ravva oil fields between 2000 and 2007.
The Petroleum Ministry moved the top court in June this year, after the Delhi High Court refused to interfere with the arbitral award in favour of Vedanta.