GOVERNMENT OF INDIA v. 1. VEDANTA LIMITED (FORMERLY CAIRN INDIA LTD.) 2. RAVVA OIL (SINGAPORE) PTE. LTD. 3. VIDEOCON INDUSTRIES LIMITED

The following Judgment of the Court was delivered : A JUDGMENT INDEX* I Background Facts 2 II Relevant Terms of the Production Sharing Contract 3 B III Genesis of Dispute 8 IV Challenge to the Award before the Seat Courts at Kuala Lumpur 13 V Submissions on behalf of the Appellants 15 VI Submissions on behalf of the Respondents 22 C VII Discussion and Analysis 28 Part A Limitation for filing an enforcement/ execution petition of a foreign award under Section 47 of the 1996 Act 28 D Part B Scheme of the 1996 Act for enforcement of New York Convention awards 37 Part C Whether the Malaysian Courts were justified in applying the Malaysian law of public policy while deciding the challenge to the foreign award? 44 Part D Whether the foreign award is in conflict with the Public Policy of India? 54 INDU MALHOTRA, J.

1. Leave granted. F

2. The present Civil Appeal has been filed by the Government of India to challenge the Judgment and Order dated 19 February 2020 passed by the Delhi High Court, wherein the application under Section 48 of the Arbitration and Conciliation Act, 1996 being I.A. No. 3558 of 2015 filed by the Government of India has been dismissed; the Application filed under Section 47 read with 49 being O.M.P. (EFA) (Comm) 15 of 2016 G for the enforcement of the foreign award by the Respondents, and the I.A. No. 20149 of 2014 for condonation of delay in filing the execution petition by the Respondents were allowed.

*The Index is as per the Original Judgment. H

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A I. Background Facts In 1993, the Government of India was desirous of exploring and developing the petroleum resources in the Ravva Gas and Oil Fields (lying 10 to 15 kms offshore in the Bay of Bengal), for which a global competitive tender was floated to invite bids. Pursuant thereto, Videocon B International Ltd. and Command Petroleum Holdings NV, the predecessors of the Respondents submitted their bid to develop the Ravva Field along with other bidders. The contract for this petroleum development was to be given on a production sharing basis through a Production Sharing Contract. C On 28.10.1994, the Production Sharing Contract (the “PSC”) was executed between the Government of India and the following parties to commercially explore and develop the Ravva Oil and Gas Field: (a) Command Petroleum (India) Pvt. Ltd, an Australian Company established under the laws of the State of New D South Wales, which has since been renamed as Cairn Energy India Pty. Ltd; (b) Ravva Oil (Singapore) Pty. Ltd, a company established under the laws of Singapore; (c) Videocon Industries Limited, a company established under E the laws of India; and (d) Oil and Natural Gas Corporation Ltd (ONGC). The PSC was for a period of 25 years, and the development and exploration of the Ravva Field was to be conducted in terms of the ‘Ravva Development Plan’. As per Articles 11.1 and 11.2 of the PSC, F Addendums 1 and 2 to the Rvva Development Plan were annexed to the PSC as Appendix F. The Respondents were required to carry out Petroleum Operations in the Ravva Field as per the said Plan. The Ravva Development Plan inter alia contemplated the drilling of 19 oil and 2 gas wells in the Ravva Field. G II. Relevant Terms of the Production Sharing Contract The dispute between the Parties emanates from Article 15 of the PSC which inter alia provides for the recoverability of Base Development Costs (“BDC”) incurred by the Respondents-Claimants for the development of the Ravva Field. The relevant clauses of the H PSC are extracted hereinbelow :

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 19 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

(i) Article 11.2 of the PSC reads as : A “11.2 Ravva Development Plan Appendix F to this contract shall constitute the approved development plan for the Existing Discoveries (hereinafter to as “the Ravva Development Plan”). The Ravva Development Plan shall be deemed to have been approved by the Managing Committee.” (ii) The Proposed Development Plan for the Ravva Field (including Addendums 1 and 2), which was accepted by the Parties as the approved Ravva Development Plan, states as follows : C Ravva Field Development Drilling Estimated Average Well Cost (in US dollars)

TOTAL COST OF AVERAGE WELL $ 2,430,000 Attachment 10 D Ravva Field Development Capital Costs ITEM COST US $ million Development of R10 and R17 Blocks Oil and Associated Gas Reserves E

Drill and Complete 19 Wells SPM and Tanker Loading Line Four Platforms 201.1 Production/Injection Pipelines to/from Shore F Infield Flowlines Onshore Oil Process Facilities Onshore Oil Storage Gas Treatment and Compression Water Injection G Gas Lift Pipeline and Compression Project Management etc.

Development of R1,7,9 Non-Associated Gas Reserves H

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A Drill and Complete 2 Wells 16.9 One Monopod Tower Production Pipeline to Shore Onshore Gas Treatment Plan

TOTAL 218.0 B

Note: This would be the project, as further defined in the Development Plan, which would be the subject of the cost variation condition. The cost stated includes Import Duty but does not include expenditures related to exploration and appraisal or field abandonment. The difference between the US $218 million total and the estimated US $ 236 million total project capital cost quoted in Section 1 of the accompanying letter is the US $ 18 million abandonment cost.” (emphasis supplied) D (iii) Article 15.5 of the PSC provides for the procedure of recovery of Development Costs incurred by the Respondents in the exploration, discovery and production of oil and gas from the Ravva Oil and Gas Field. Article 15.5 is extracted hereinbelow: “Article 15 E RECOVERY OF COSTS FOR OIL AND GAS 15.1 15.2 15.3 F 15.4 15.5 Recovery of Development Costs and 5% Cost Cap (a) Development Costs incurred by the Contractor in the Contract Area shall be aggregated, and the Contractor shall G be entitled to recover out of Cost Petroleum the aggregate of such Development Costs at the rate of one hundred percent (100%) per annum. (b) Notwithstanding the provisions of Article 15.5 (a) and subject to the remaining provisions of this Article 15.5, the Contractor shall not, for the purposes only of determining H

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 21 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

the volume of Petroleum to which Contractor shall be entitled under Article 15.1 as Cost Petroleum, claim as Contract Costs Contractor’s Development Costs incurred after the Effective Date in connection with Development operations under the Ravva Development Plan which exceed Contractor’s Base Development Costs (as hereinafter defined) by more than five percent (5%). (c) For the purpose of this Article 15.5 “Contractor’s Base Development Costs” means costs incurred after the Effective Date relating to the construction and/or establishment of such facilities as are necessary to produce, process, store and transport Petroleum from within the Existing Discoveries, in order to enable Crude Oil production of 35,000 BOPD in accordance with the Ravva Development Plan plus such costs as are allowed pursuant to Section 3.3 of the Accounting Procedure. Such costs shall include, but not be limited to costs incurred in relation to the following facilities and matters in connection therewith, such as: (i) Offshore tanker loading facilities for tankers up to 120,000 DWT; (ii) Wellhead platforms capable of supporting up to total of 24 development wells; E

(iii) Follow lines necessary to transport well fluids ashore for processing; (iv) Process facilities onshore for processing up to 40,000 Barrels of fluid per day; F (v) Storage facilities with a nominal capacity of 500,000 Barrels; (vi) Facilities to allow injection of water into the reservoirs for the purposes of reservoir pressure maintenance; (vii) Construction of an onshore supply base to support G production operations; (viii) Environmental studies; (ix) Geophysical, geological and petroleum engineering studies; H

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A (x) The drilling of nineteen (19) Development Wells and two (2) Gas Production Wells; (xi) Facilities for developing, transporting and processing NANG; (xii) Project insurance; and B (xiii) Project Management. The Parties agree that for the purposes of this Article 15.5 the Contractor’s Base Development Costs shall be the sum of US $188.98 million (as indicated in the August 1993 C Addendum to the Ravva Development Plan.) …. (i) Having regard, inter alia, to the matters referred to in Article 15.5(d), the Parties agree as follows: (i) Costs relating to Site Restoration and exploration and D appraisal drilling shall not be subject to the limit on Contractor’s Development Costs as provided in Article 15.5(b); (ii) the costs of developing the reserves and/or potential reserves and/or Satellite Fields referred to in Article E 15.5(d) (i) shall not be subject to the limit on Contractor’s Development Costs as provided in Article 15.5(b) notwithstanding that the development of such reserves and/or potential reserves and/or Satellite Fields may include shared flow lines, injection lines, gas-lift lines F and other facilities with those constructed as part of the Ravva Development Plan; (iii) In the event that the Contractor ’s Base Development Costs are exceeded by more than five per cent (5%) as a result of: G (aa) delays in carrying out the Development Operations referred to in Article 15.5(d) (iii) due to delay in obtaining necessary approval; (bb) material changes to the Ravva Development Plan necessitated by Contractor’s review of data provided to H the Companies by the Government and/or ONGC after

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 23 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

the Effective Date pursuant to Article 8.1) (iv), where the A Companies are able to establish that had such data been available prior to the Effective Date in the Companies, acting reasonably, would have included such changes in the Ravva Development Plan; (cc) a material change to the international market B conditions referred to in Article 15.5(d)(v); (dd) the range of physical reservoir characteristics being materially different from the ranges for such characteristics on which the Ravva Development Plan has been based; C (ee) a variation to the Ravva Development Plan approved by the Management Committee; or (ff) an event of force majeure as provided in Article 32; Then the Management Committee shall, at the request of the operator, in a meeting convened under Article 6,7, promptly consider what, if any, increase should be made to the Contractor’s base Development Costs to fairly reflect the circumstances in the question PROVIDED THAT in the case of delays referred to in Article 15.5 (e) (ii) (aa) the Management Committee shall not be obliged to consider any increase where such delay has been caused by the Contractor’s failure to act in a diligent manner. (e) In the event that: F (i) There is any dispute between the parties, whether or to what extent, a circumstance referred to in Article 15.5(e) (iii) has arisen, or resulted in the Contractor ’s Base Development Costs being exceeded by more than five percent (5%); or (ii) The Management Committee is unable to agree G whether an increase should be made to the Contractor’s Base Development Costs, or is unable to agree on the amount of any such increase; then at any time after thirty (30) days from the date of the Management Committee meeting referred to in H

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A Article 15.5(e)(iii), any Party shall be at liberty to refer the matter to a sole expert for decision in accordance with the provisions of Article 34.2.” (emphasis supplied) (iv) Article 33 of the PSC provides the law applicable to the PSC, B and reads as under: “Article 33: APPLICABLE LAW AND LANGUAGE OF THE CONTRACT “33.1 Indian Law to Govern C Subject to the provisions of Article 34.12 this Contract shall be governed and interpreted in accordance with the laws of India. 33.2 Law of India Not to be Contravened Subject to Article 17.1 nothing in this Contract shall entitle D the Contractor to exercise the rights, privileges and powers conferred upon it by this Contract in a manner which will contravene the laws of India.” (emphasis supplied) E (v) Article 34.12 of the PSC reads as under : “Article 34: Sole expert, conciliation and arbitration “34.1… 34.2 References to Sole expert Matters which, by the terms of this contract, the Parties F have agreed to refer to a sole expert and any other matter, which the Parties may agree to so refer, shall be referred to an independent and impartial person of international standing with relevant qualifications and experience, appointed by agreement between the Parties. Any sole expert appointed shall be acting as an expert, and not G as an arbitrator, and the decision of the sole expert on matters referred to him shall be final and binding on the Parties, and not subject to arbitration. If the Parties are unable to agree on a sole expert, the matter may be referred to arbitration. H

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 25 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

34.3 Unresolved Disputes A Subject to the provisions of this Contract, the Parties hereby agree that any matter, unresolved dispute, difference or claim, which cannot be agreed or settled amicably within twenty one (21) days may be submitted to a sole expert (where Article 34.2 applies), or otherwise to an arbitral tribunal for final decision as hereinafter provided. … 34.12 Venue and Law of Arbitration Agreement The venue of sole expert, conciliation or arbitration proceedings pursuant to this Article, unless the Parties otherwise agree, shall be Kuala Lumpur, Malaysia and use the English Language. In so far as practicable, the Parties shall continue to implement the terms of this Contract notwithstanding the initiation of arbitral proceedings and any pending claim or dispute. D Notwithstanding the provisions of Article 33.1 the arbitration agreement contained in Article 34 shall be governed by the laws of England.” (emphasis supplied) III. Genesis of the Dispute E

(i) The PSC contained a Development Plan for the “Existing Discoveries” known as the Ravva Development Plan. The scheme of the PSC was that the Claimants would incur the costs of the petroleum operations, and were entitled to recover their costs from the petroleum produced. The F Government and the Claimants would receive their respective share in the ratio fixed under the PSC. (ii) Article 15 of the PSC provided for recovery of costs for oil and gas; Article 15.1 is a general provision with respect to contract costs; Article 15.2 to 15.4 pertain to G exploration costs. The disputes have arisen on the interpretation of Article 15.5 which pertains to Development Costs. Article 15.5(c) defines the Contractor’s Base Development Costs, and enumerates a list of facilities and other matters required to be constructed by the Claimants. H

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A The Contractor’s Base Development Costs were the costs incurred after the effective date, relating to the construction and / or establishment of such facilities as are necessary to produce, process and transport petroleum within the “Existing Discoveries” in order to enable crude oil production of 35,000 Barrels of Oil Per Day (“BOPD”) in accordance with the Ravva Development Plan. The facilities included the construction of offshore tanker loading facilities for tankers upto 120,000 DWT; wellhead platforms capable of supporting upto a total of 24 Development Wells; process facilities; storage facilities with a nominal capacity of 500,000 Barrels; the drilling of 19 Development Wells and 2 Gas Production Wells, etc. Article 15.5(b) and (c) recorded the Agreement between the parties that the Contractor’s Base Development Costs shall be the “sum of US $ 188.98 million plus five percent”. D It was envisaged that the production profile of 35,000 BOPD would be reached after about two years, and the said production figure would be maintained as a plateau production for 6 years thereafter. A total field production life of 14 years was estimated. E (iii) The Contractor’s Base Development Costs were agreed on certain assumptions and / or factors set out in Article 15.5(d), including the range of physical reservoir characteristics not being materially different from the ranges on which the Ravva Development Plan was based.

F (iv) There are specific exclusions contained in Article 15.5(e)(i) and (ii), and sub-Article (e)(iii) which set out the circumstances in which the agreed amount of the Contractor’s Base Development Costs may be increased by the Management Committee; or in default by an expert, as provided in the dispute resolution clause. G (v) During the working of the PSC, the production rate of 35,000 BOPD was achieved in 1997-1998. By 1998-1999, when the complete extent of the reserves in the Ravva Field was known, the Claimants requested the Government of India to permit an increased production of 50,000 BOPD. H

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 27 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

This increase was approved by the Management Committee A on 25.03.1998, and by the Government on 01.04.1999. By 1999-2000, the increased rate of production at 50,000 BOPD was achieved. This rate of production was maintained till 2008-2009, after which it decreased to 40,000 BOPD. The oil fields were found to be enormously profitable for both B parties. (vi) The Claimants submitted that by 1999-2000, they had incurred Development Costs to the tune of about US $ 220 million to achieve the production rate of 35,000 BOPD. The Claimants sought that the ‘cap’ in Article 15.5 should be increased accordingly. After 1999-2000 and until 2007-2008, C the Claimants incurred Development Costs totalling a further US $ 278 million, which they contended that they were entitled to recover as Cost Petroleum, since the ‘cap’ would no longer apply post 1999-2000. The Claimants claimed that they were entitled to more than US $ 264.35 million with respect to Development Costs incurred in 1994-1995 until 2008-2009. (vii) On the other hand, the Government contended that all the Development Costs claimed by the Claimants were incurred in connection with the Ravva Plan, and were subject to the ‘cap’ on such costs as provided by Articles 15.5(b) and (c), notwithstanding the increased quantity of production. The exceptions, were however not subject to the ‘cap’, and were properly recovered from Cost Petroleum under Article 15.5(a) which totalled to US $ 65.95 million. F (viii) The Government contended that the work contemplated by the Ravva Plan, as per Article 15.5(c) was not completed till 1999-2000, when only 14 wells had been drilled; the remaining 7 wells stipulated in Article 15.5(c)(xi) were drilled by 2007-2008. Consequently, the ‘cap’ on the Contractor’s G Base Development Costs would apply to the whole of the costs incurred till 2007-2008, and not the costs incurred till 1999-2000. The Claimants were not entitled to claim more than the Cost Petroleum agreed at US $ 198.43 million plus US $ 65.95 million (towards exceptions). H

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A (ix) The Government raised counter claims equivalent to the amounts which the Claimants had claimed as Cost Petroleum, in excess of the agreed amount of US $ 198.43 million plus US $ 65.95 million. (x) On 18.08.2008, the disputes were referred to arbitration B under Article 34 of the PSC. The Claimants nominated Mr. Andrew Berkeley as its nominee-arbitrator; the Government of India appointed Hon’ble Dr. Justice Adarsh Sein Anand (former Chief Justice of India) as its nominee-arbitrator. The nominee arbitrators appointed Rt. Hon’ble Sir Anthony Evans as the presiding arbitrator. C (xi) The tribunal passed the Award on 18.01.2011 inter alia holding that : a) The Claimants constructed facilities which were necessary to produce, process, store and transport D Petroleum within the Existing Discoveries to enable Crude Oil production of 35,000 BOPD. The Base Development Costs under Article 15.5(c) was to be interpreted with reference to the object of achieving a production profile of 35,000 BOPD, and the facilities contemplated to achieve that profile. The Claimants E achieved the target of 35,000 BOPD by 1999-2000 by drilling of 14 wells, and incurred Development Costs of US $ 220,737,381. Article 15.5(b) and (c) imposed a cap on the Development Costs to the agreed figure of US $ 188.98 F million plus 5%. The Claimants were not entitled to recover Development Costs in excess of US $ 198.43 million in view of the cap provided under Article 15.5(c) of the PSC for the period 1994-95 to 1999-2000. b) The Claimants had wrongly recovered US $ G 22,307,381 in excess of the capped figure of US $ 198.43 million as Base Development Costs during the period 1994-95 to 1999-2000. The Government of India was entitled to be credited with the said amount in the final settlement of cost recovery accounts. H

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 29 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

c) The PSC contained certain exceptions where the A Claimants might incur Development Costs in excess of those anticipated under the PSC and Ravva Development Plan. These exceptions were covered under Article 15.5(d) and (e) for increase of the BDC cap by the Management Committee. B d) During exploration in 1998-1999, when the complete extent of the reserves in the Ravva Field came to be known, the Management Committee approved an increase in the production profile from 35,000 to 50,000 BOPD. The Respondents proceeded to develop the Ravva Field to achieve the production rate of 50,000 C BOPD, and drilled 7 additional wells. e) The tribunal accepted the evidence of the Expert Witness produced by the Claimants, which found that the enlarged reservoir known as Block A/D in the Ravva Field, showed a range of physical characteristics which were “materially different” from those on which the Ravva Development Plan was based. The range of relevant characteristics which were different from what was anticipated included the fault line on the north-west boundary, which was found not to be sealed, but to be porous; the permeability of the rocks was found to be greater leading to increased production pressures; the oil / water contact levels were found to be different. Article 15.5(e)(iii)(dd) provided that a request for an increase in the BDC cap could be made, since materially different characteristics were encountered in the drilling of the additional wells. In such circumstances, Claimants would be entitled to recover the increased amounts, notwithstanding the limit imposed by Article 15.5(b) and (c). The tribunal held that the Respondents were entitled to recover US $ 278,871,668 from the Cost Petroleum towards Development Costs incurred by the Respondents for the period 2000-01 to 2008-09. f) The Award declared as under : H

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A “We therefore declare an award, as follows : A. On the true construction of Article 15.5 of the Production Sharing Contract 20th October 1994 (the PSC), all Development Costs incurred by the Claimants after the date of the PSC in connection B with development operations under the Ravva Development Plan are subject (as regards cost recovery from Cost Petroleum) to the cap imposed by Article 15.5 (b) of the PSC, namely, the amount defined as Base Development Cost by Article 15.5(c) plus 5%; C B. The figure stated in Article 15.5(c) of the PSC, namely, US $ 188.98 million, was agreed as the limit for Base Development Cost to be cost-recovered by the Claimants in connection with the Ravva Development Plan as it was agreed in August / D October 1993; C. The Claimants incurred Development Costs totalling $ 220,737,381 in connection therewith up to and including the contract year (31 March annually) 1999/2000; E D. The Claimants were not entitled to cost-recover such costs in excess of the agreed amount plus five percent (5 %) namely, $ 198.43 million; E. That the Claimants incurred Development Costs in F connection therewith from contract years 2000/ 2001 until 2008/2009 in the sum of $ 278,871,668; F. That in response to the Claimant’s request, the amount of Base Development Cost in respect of such period shall be increased by $ 278,871,668 pursuant to Article 15.5(e)(iii)(dd) of the PSC; G G. That the Claimants were entitled to recover all of such costs from Cost Petroleum, namely, $ 278,871,668 made up as follows accepted by the Respondent $ 65, 952, 604 H

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 31 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

increase under (f) above $ 212, 919, 064 A Total $ 278, 871, 668 H. That the Claimants are and shall be entitled to cost- recover further Base Development Cost incurred by them in connection with the Ravva Development Plan after the contract years 2008/2009, if and to the extent that a. Such costs are incurred in further development of the reserves defined by this Award as being materially different from the physical characteristics of the reservoir on which the original (1993) Ravva Development Plan was based; and / or b. The amount of the cap under Article 15.5(b) of the PSC may be increased hereafter pursuant to Article 15.5(e)(iii) of the PSC; and / or c. As the parties may agree; D But not otherwise; I. That the Respondent is entitled to be credited with the sum of $ 22,307,381 in the final settlement of cost recovery accounts in relation E to Development Cost incurred during contract years 1994/5 to 1999/2000 in excess of $ 198.43 million.” (xii) The Respondents-Claimants submit that vide their letter dated 29.04.2011 addressed to the Government of India, the revised costs recovery account statements as per the F Award were enclosed, and credit of the excess Development Costs of US $22,307,381 was given to the Government of India. IV. Challenge to the Award before the Seat Courts at Kuala Lumpur G

(i) On 15.04.2011, the Government of India challenged the Award under Section 37 of the Malaysian Arbitration Act, 2005 before the Malaysian High Court, on three principal grounds: H

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A a) the Award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration; b) the Award contains decisions on matters beyond the scope of the submission to arbitration; and B c) the Award is in conflict with public policy. (ii) The High Court vide Order dated 30.08.2012 rejected the challenge to the Award holding that the requirements of Sections 37(1)(a)(iv) and (v) and Section 37(1)(b)(ii) of the Malaysian Act have not been met, to sustain the challenge C to the award. The Award did not involve any “new difference,” which would have been relevant for determination by the arbitral tribunal. The High Court found no reason which would merit intervention with the Award. (iii) Aggrieved by the Order dated 30.08.2012, the D Government of India preferred an Appeal before the Malaysian Court of Appeal, which was dismissed vide Order dated 27.06.2014. The Malaysian Court of Appeal held that the tribunal had given effect to the agreement between the parties under the terms of the PSC. There was no determination by the tribunal which was outside the submissions of the parties. (iv) On 10.07.2014, a show cause notice was issued by the Government to the Respondents-Claimants, raising a demand of US $ 77 million towards the Government’s share of Profit Petroleum under the PSC. The Respondents were directed to show cause as to why the said amount ought not to be directly recovered from the amounts payable by the Oil Marketing Companies. (v) On 21.07.2014, the Government filed an Application for Leave to Appeal before the Malaysian Federal Court, which was rejected vide Order dated 17.05.2016. (vi) During the pendency of the Application for Leave to Appeal before the Malaysian Federal Court, on 14.10.2014, the Respondents-Claimants filed a Petition for enforcement under Sections 47 read with 49 of the 1996 Act before the H

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 33 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

Delhi High Court, along with an application for condonation of delay. (vii) The Government filed an Application under Section 48 resisting the enforcement of the Award before the Delhi High Court inter alia on the ground that the enforcement petition was filed beyond the period of limitation; the enforcement of the Award was contrary to the public policy of India, and contained decisions on matters beyond the scope of the submission to arbitration. (viii) The Delhi High Court rejected the Petition under Section 48 vide the impugned judgment dated 19.02.2020, allowed the application for condonation of delay filed by the Respondents / Claimants, and directed the enforcement of the Award. (ix) Aggrieved by the judgment of the High Court, the Government has filed the present Civil Appeal before this D Court. This Court issued notice vide Order dated 17.06.2020, and directed the parties to maintain status quo till further orders. (x) Subsequently, the Respondents filed I.A. No. 61469 of 2020 for Modification of the Order of status quo dated E 17.06.2020, and for interim directions. The I.A. was taken up for hearing on 22.07.2020, when the Order of status quo was partially modified, and a direction was issued that the sales revenues be paid directly by the Oil Marketing Companies to the Respondents as per the Orders dated 28.05.2020 and 04.06.2020 passed by the Delhi High Court. F The Order of status quo would, however, continue to operate with respect to the bank guarantees / deposits of US $ 93 million, during the pendency of the present proceedings. V. Submissions on behalf of the Appellants G Shri. K.K. Venugopal, Learned Attorney General for India instructed by Mr. K.R. Sasiprabhu, Advocate represented the Government of India. It was submitted that the enforcement of the Award was liable to be refused on the following principal grounds: H

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A (a) Maintainability of the Petition (i) The Appellants raised an objection to the maintainability of the application on the ground that the petition for enforcement / execution of the foreign award under Section 47 was barred by limitation. B Since there is no specific provision in the Limitation Act for enforcement of foreign awards, it would necessarily fall under the residuary provision – Article 137. (ii) Article 137 applies to the enforcement of foreign awards, which provides a period of 3 years from “when the right to apply accrues”. It was submitted that the right to apply would accrue from the date of making the award. In the present case, the Award was passed on 18.01.2011, and the petition for enforcement / execution was filed by the Respondents on 14.10.2014. The petition was barred by 268 days beyond the period of limitation. (iii) The execution petition for the purposes of the Limitation Act, has to be treated as an application under the provisions of Order XXI of the CPC. The execution of a foreign award under Section 49 of the 1996 Act, is carried out under Order XXI CPC, as held in BCCI v Kochi Cricket (P) Ltd.1 (iv) Section 5 of the Limitation Act, 1963 excludes an application filed under Order XXI, CPC. Section 5 reads as under:- F “5. Extension of prescribed period in certain cases. – Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be admitted after the prescribed G period, if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 35 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

Consequently, the delay in filing the application for enforcement / execution could not be condoned. (v) Even if it is presumed that the Respondents could invoke the provisions of Section 5 of the Limitation Act, the Respondents failed to show sufficient cause for condonation of delay in filing the enforcement petition. The ground of pendency of the challenge to the award before the courts in Malaysia, could not be a sufficient ground for condonation of delay. (vi) It was submitted that the High Court erroneously held that an application for enforcement of an arbitral award would be governed by the limitation period of 12 years under Article 136 of the Schedule to the Limitation Act, 1963. Article 136 deals with an application for execution of any decree or order of a civil court. This finding is contrary to the express holding in Bank of Baroda v Kotak Mahindra Bank,2 wherein it has been held that the period of limitation of 12 years prescribed by Article 136 of the Schedule to the Limitation Act, applies only to a decree or order passed by an Indian court. A foreign award could not be treated to be a decree of a civil court. (vii) It was submitted that the reasoning of the Delhi High E Court is contrary to the provisions of the 1996 Act, since it has ignored the express words of Section 49, which provides that the court would require to be “satisfied that the foreign award is enforceable under this Chapter”. It was submitted that this is further supported by the language of F Section 46 of the Act which pre-supposes an inquiry before the award is said to achieve the status of the decree of a court. The purposive interpretation adopted by the Ld. single judge, could not be used to negate the express terms of the statute. G (viii) For the purpose of making a foreign award enforceable, the procedure available under Part II of the Act is required to be followed. A petition for enforcement and execution of such foreign award by way of a composite 2 2020 SCC OnLine SC 324. H

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A petition is required to be filed under Section 47. A foreign award does not become a decree until and unless it passes the muster of Sections 47 to 49, only after which it acquires the status of a decree. It was only after the Court adjudicates on the enforceability of the foreign award under Sections 47 to 48, would the foreign award be deemed to be a decree B of that Court. Post such adjudication, the foreign award is declared as a deemed decree under Section 49 of the Act. The foreign award has no legal sanctity, till an affirmative decision is obtained under Section 48 of the 1996 Act. The foreign award gets the imprimatur of the Court, C before it can be enforced as a deemed decree under Section 49 of the 1996 Act. (ix) Section 49 provides that where the Court is satisfied that the foreign award is enforceable, it shall be deemed to be a decree of the Court. The limited purpose of the deeming D fiction was to apply the machinery provided under Order XXI of the CPC to enable Indian Courts to execute foreign awards. The foreign award does not transform into a decree of a civil court in India. The foreign award does not lose its character as an arbitral award. It is only presumed to be a E decree of the Court, for the purposes of execution. (b) Challenge on grounds of Public Policy of India The Government inter alia contended that the foreign Award is in conflict with the Public Policy of India as expounded in the Renusagar3 judgment. This Court in F Renusagar held that public policy of India, in the context of foreign awards would be: (a) fundamental policy of Indian law; or (b) the interests of India; or (c) justice or morality. (i) The PSC related to the exploration and development of petroleum in its natural state in the Territorial Waters G and Continental Shelf of India, which is vested in the Union of India. The Government was desirous that the petroleum resources be exploited in the overall interests of India in accordance with good international petroleum industry practices. 3 H 1994 Supp (1) SCC 644.

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 37 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

The PSC in recital (1) expressly states that petroleum being a natural resource is vested in the Government of India under Article 297 of the Constitution of India. Since the PSC related to the exploration of a natural resource, there was an inherent character of national and public interest in the implementation of the PSC, and the natural gas was held in the sovereign trust of the people of India. The sovereignty over the petroleum produced would continue to remain with the nation, since the natural gas is a resource which falls squarely within the purview of Article 297 of the Constitution of India. (ii) The learned A.G. submitted on behalf of the C Government of India that the Award was in conflict with the public policy of India. The tribunal had ignored various clauses of Article 15.5(c) read with the Ravva Development Plan, and particularly Attachment 10 thereto, which contained the basis of computation of the “sum” of US $ D 188.98 million payable to the Respondents as Base Development Costs. Article 15.5(c) of the PSC read with the Ravva Development Plan formed the basis of the dispute between the Parties. Article 15.5(c) provided that the Base E Development Cost shall mean the costs incurred after the Effective Date relating to the construction and / or establishment of such facilities as were necessary to produce Petroleum from within the Existing Discoveries in order to enable crude oil production of 35,000 BOPD in accordance with the Ravva Development Plan. Such costs “shall include, F but not be limited to” costs incurred in relation to the list of facilities mentioned therein. Sub-clause (xi) under Article 15.5(c) of the PSC specifically referred to the “drilling of nineteen (19) Oil Wells and two (2) Gas Production Wells”. Under Article 15.5(c), G the parties had expressly agreed that the Contractor’s Base Development Costs shall be the “sum” of US $ 188.98 million, as indicated in the Ravva Development Plan, which was an integral part of the PSC. The sum of US $ 188.98 million took into consideration the drilling of 21 wells as H

38 SUPREME COURT REPORTS [2020] 12 S.C.R.

A also the construction of facilities mentioned in Article 15.5(c) of the PSC. The tribunal proceeded on the false assumption that every aspect of Article 15.5 (c), must be subjugated to the achievement of 35,000 BOPD. B The failure of the tribunal to look into all the relevant documents, particularly Attachment 10 to the Ravva Development Plan, which formed an integral part of the PSC, and contained the computation of the amount payable as Base Development Costs, would shock the conscience C of the Court, and the award would be in conflict with the basic notions of justice. (iii) The Ld. A.G. contended that the said Plan contained the computation of the sum of US $ 188.98 million to be paid towards Base Development Cost under Article 15.5(c) D of the PSC. The Ravva Plan provided the approximate cost of drilling one well in the Ravva Field as being US $ 2.43 million. Attachment 10 to Addendum 2 of the Ravva Development Plan sets out the Development of R10 and E R17 blocks – Oil and Associated Gas Reserves. It provides for the drilling and completion of 19 wells, SPM and Tanker Loading Lines, Four platforms, production/ injection pipelines to/from shore in-field flow lines, Onshore oil process facilities, Onshore oil storage, Gas treatment and compression, Water injection, Gas lift pipeline and F Compression, Project Management, etc., for which an amount of US $ 201.1 million was earmarked. The total amount payable for the Ravva Development Cost (i.e. 210.1 + 16.9) was US $ 218 million. After deducting US $ 18 million towards abandonment costs and G US $ 11.32 million towards import duty, the amount payable would work out to US $ 188.98 million, which is the amount mentioned in Article 15.5(c) of the PSC. (iv) The tribunal on the basis of one isolated criteria mentioned in Article 15.5 (c) of achieving 35,000 BOPD H passed the Award in favour of the Claimants. In fact, the

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 39 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

Claimants failed to fulfil the other requirements stated in A Article 15.5(c) inter alia with respect to development facilities, which included the drilling of 19 oil wells and 2 gas reserves. This was specifically mentioned in the Ravva Development Plan, which was an integral part of the PSC as stated in Article 11.2 of the PSC. By deciding the claim on the basis of one isolated criteria, it had given a go-by to all the other conditions, which would amount to re-writing the mandatory terms of the contract between the parties, and foisting the Government with obligations, which were never agreed to. The net result of the arbitral award was that the Government of India suffered a huge loss to the tune of approximately Rs.1,600 crores, which would be contrary to the interests of India. The tribunal’s interpretation of Article 15.5(c) had the effect of substituting the plain language of sub-clause (xi) of the said Article, with a new stipulation that the cost of construction of the wells in the Ravva Field would be borne by the Government, once the production capacity of 35,000 BOPD was achieved. This interpretation rendered the stipulation of drilling 19 oil wells and 2 gas wells contained in Article 15.5(c)(xi) as nugatory. The tribunal omitted any reference to Attachment 10 of the Ravva Development Plan, E which was crucial to the determination of the dispute, and formed an integral part of the PSC, since it contained the basis of the computation of the amount payable towards Base Development Cost. Such an Award would shock the conscience of the Court, and would be in conflict with the public policy of India, and contrary to the interests of India. The daily rate of production specified in Article 15.5(c) i.e. 35,000 BOPD, was the ‘plateau’ rate of production which had to be achieved and maintained for a period of 6 years of the contract period. It was not a one- time target to be achieved by the Respondents. The plateau rate of production of 35,000 BOPD could not have been related to the cap of US $ 188.98 million, which related only to the costs incurred for setting up specified facilities under Article 15.5(c), including the 21 wells. H

40 SUPREME COURT REPORTS [2020] 12 S.C.R.

A The tribunal failed to note that the cap of US $ 188.98 million was relatable to the facilities mentioned in Article 15.5(c) of the PSC, which expressly included the drilling and completion of 19 oil wells and two gas wells. The tribunal erred in holding that the cap of US $188.98 million related only to the achievement of a production target of 35,000 B BOPD, and adjusted the capped figure of US $ 188 million upon the drilling of 14 wells, when the production capacity of 35,000 BOPD was achieved. The tribunal held that the costs with respect to the 7 wells drilled thereafter, amounting to US $ 278 million, would have to be borne by the C Government to the Respondents. (v) It was further submitted that the Counter Claim raised by the Government was summarily disposed of in paragraph 100 of the Award, and the tribunal gave a finding which was contrary to the express provisions of the contract. D (vi) It was submitted that Clauses 33.1 and 33.2 of the PSC provided that the PSC was governed and interpreted in accordance with Indian law. The Malaysian Courts at the seat of arbitration had erroneously applied the Malaysian Arbitration Act (Act 646), 2005 while deciding the challenge E to the Award. The Award was to be tested on the basis of Indian law, as mandated by Article 33 of the PSC. The PSC was to be interpreted as per Indian law. (vii) Reliance was placed on paragraph 76.4 of the judgment in Reliance Industries v. Union of India, 4 F wherein this Court in the penultimate paragraph of that judgment had observed that since the substantive law governing the contract is Indian law, even the Courts in England (seat of arbitration), would be required to decide the issue of arbitrability by applying the Indian law of public policy. G In this case, the Malaysian Courts had erroneously applied the Arbitration Act of Malaysia to uphold the validity of the award.

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 41 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

VI. Submissions on behalf of the Respondents A The Respondents were represented by Mr. C.A. Sundaram and Mr. Akhil Sibal, Senior Advocates. (a) On Limitation (i) It was contended that under Section 49 of the 1996 B Act, the foreign award becomes a decree of an Indian court after the objections to the award are adjudicated by the enforcement court. (ii) Article 136 of the Limitation Act prescribes a period of 12 years from the date of the decree of the civil court, C which would be the appropriate provision for execution of a foreign award. In the present case, the foreign award was passed on 18.01.2011, and the Respondents had a period of 12 years to seek enforcement of the award i.e. till 17.01.2023. The execution petition was, therefore, filed within the period of limitation. D (iii) In the alternative, it was contended that if Article 137 of the Limitation Act is held to be applicable for the enforcement of foreign awards, the limitation period would commence from “when the right to apply accrues”, which does not necessarily mean the date of the award. Had this E been the intention of the legislature, it would have been expressly provided so. The right to apply may accrue even on a later date, as it has in the present case. (iv) The Award was passed on 18.01.2011 granting a declaration in favour of the Respondents-Claimants. The F counter claim of the Government of India was partly allowed, directing the Respondents to revise the cost recovery statements. Consequently, an amount of US $ 22 million became payable by the Respondents-Claimants to the Government of India. G On 10.07.2014, the Government of India issued a notice to the Claimants to show cause as to why US $ 77 million ought not to be directly recovered from the amounts payable by the Oil Marketing Companies. H

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A It was thus contended that the right to apply for enforcement of the award accrued on 10.07.2014. (v) It was further contended that the period of limitation would commence from the date when the award attained finality at the seat of arbitration. In the present case, the award attained finality at the seat court on 10.05.2016, when the Federal Court of Malaysia rejected the application of the Government of India seeking leave to appeal. (vi) It was submitted that irrespective of whether limitation under Article 136 or 137 is applicable for enforcement of foreign awards, Section 5 would be applicable in both cases. Section 5 of the Limitation Act is applicable to any appeal, or any application. The application for enforcement / execution was filed by the Respondent-Claimants under Sections 47 and 49 of the 1996 Act, which was a composite application, as per the judgments in Fuerst Day Lawson Limited v. Jindal Exports Limited 5 and LMJ International Limited v. Sleepwell Industries Co. Ltd.6 (vii) It was further contended that limitation is a mixed question of fact and law. Reliance was placed on Article 113 of the Limitation Act, which provides that any suit for which no period of limitation is provided elsewhere in Schedule, the period of limitation is 3 years from the date when the right to sue accrues. The Counsel placed reliance on the judgment of this Court in Shakti Bhog Food F Industries Ltd. v the Central Bank of India7. Article 137 is similar to the residuary provision in Article 113 for filing applications, for which no period of limitation has been provided elsewhere in this division, and provides a period of 3 years from the date when the right to apply accrues. G If the substantive application was filed under Sections 47 and 49 of the 1996 Act, it would not fall under Order XXI of the CPC, and hence an application under Section 5 5 2001 (6) SCC 356. 6 2019 (5) SCC 302. 7 H 2020 SCC OnLine SC 482.

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 43 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

of the Limitation Act, 1963 would be maintainable. A Furthermore, since there was uncertainty in the law, as the Madras High Court had held limitation for enforcement of a foreign award to be 12 years, while the Bombay High Court treated this as 3 years, there was sufficient ground to condone the delay. B It was submitted that there is a difference between the execution of a foreign decree under Order XXI of the CPC, and the enforcement of a foreign award under Section 49 of the 1996 Act. Further, even though Section 36 refers to the enforcement of a domestic award in accordance with the provisions of the CPC, Section 49 does not refer to the C CPC. The application for enforcement of the foreign award was thus a substantive application under Section 47 of the 1996 Act, and not one under Order XXI of the CPC. The provisions of Section 5 would consequently apply to the application for enforcement, and the High Court was empowered to condone the delay in filing the application. (b) On Public Policy of India (i) It was submitted that the dispute between the parties pertains to the interpretation of Article 15.5(c) of the PSC, which provides for recoverability of Base Development Costs incurred by the Respondent-Claimants in the Ravva Field. Article 15.5(c) stipulated that the Respondents were entitled to recover US $ 198 million ($ 188 million + 5%) as BDC for the facilities which they developed to achieve a production capacity of 35,000 BOPD. At the time when the PSC was entered into, it was envisaged that for achieving the production capacity of 35,000 BOPD, 21 wells would be required. However, the production capacity was achieved by the Respondents with the construction of 14 wells. (ii) The Respondents claimed recoverability of BDC as follows: (a) US $ 220 million for achieving a production profile of 35,000 BOPD, spent by 1999/2000; and H

44 SUPREME COURT REPORTS [2020] 12 S.C.R.

A (b) US $ 278 million for raising the production profile from 35,000 BOPD to 50,000 BOPD, spent from 2000/2001 to 2008/2009. (iii) The Respondents contended that the cap of US $ 198.43 million was applicable only to such facilities as were B required to achieve the production capacity of 35,000 BOPD, which in this case was achieved by the drilling of 14 wells. The Respondents were not required to develop the 21 wells enlisted in Article 15.5(c) of the PSC within the cap of US $ 198.43 million. C (iv) The tribunal had correctly interpreted Article 15.5(c) of the PSC, holding that the cap of US $ 198 million on the BDC applied to costs incurred for achieving the production profile of 35,000 BOPD. Since the Respondents had achieved the production capacity of 35,000 BOPD by 1999- 2000 by drilling of 14 wells, the Respondents were entitled D to recover US $ 198.43 million. (v) With respect to the balance 7 wells, it was found that the Ravva Field featured materially different physical reservoir characteristics than those originally perceived when the PSC was executed. Accordingly, the trigger under E Article 15.5(e)(iii)(dd) came into operation during the period commencing from 1999-2000 to 2007-2008. For the drilling of the remaining 7 wells, the Respondents were entitled to an additional sum of US $ 278 million. (vi) It was contended that under the Award, the tribunal F had made declarations in favour of the parties. The tribunal had upheld the manner in which the Respondents-Claimants had computed and recovered the costs due to them under the PSC. The tribunal had declared a sum of US $ 22 million as payable by the Respondents to the Government of India, G which was paid after the Award was passed. (vii) It was contended that the issue of interpretation of the PSC, and a review of the merits of the Award, could not be raised under Section 48 of the 1996 Act. The scope of inquiry under Section 48 is limited, and the Appellants H

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 45 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

cannot invite the Court to take a “second look” at the Award A by seeking a review on merits. Reliance was placed on the judgment of this Court in Shri Lal Mahal Ltd v Progretto Grano Spa,8 wherein it was held that: “45. Moreover, Section 48 of the 1996 Act does not give an opportunity to have a ‘second look’ at the foreign award in the award - enforcement stage. The scope of inquiry under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy. xxx

47. While considering the enforceability of foreign awards, the court does not exercise appellate jurisdiction over the foreign award nor does it enquire as to whether, while rendering foreign award, some error has been committed. Under Section 48(2)(b) the enforcement of a foreign award can be refused only if such enforcement is found to be contrary to (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The objections raised by the appellant do not fall in any of these categories and, therefore, the foreign awards cannot be held to be contrary to public policy of India as contemplated under Section 48(2)(b).” F This view is further fortified by Explanation 2 of Section 48(2) of the Act which clarifies that “the test as to whether there is a contravention with the fundamental policy of Indian law, shall not entail a review on the merits of the dispute”. G (viii) Reliance was placed on the judgment of this Court in Vijay Karia v Prysmian Cavi E Sistemi Srl9, wherein it was held that the enforcement of a foreign award cannot 8 (2014) 2 SCC 433. 9 2020 SCC OnLine SC 177. H

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A be refused by taking a different interpretation of the contract. The Supreme Court held that : “45. The U.S cases show that given the “pro- enforcement bias” of the New York Convention, which has been adopted in Section 48 of the B Arbitration Act, 1996 - the burden of proof on parties seeking enforcement has now been placed on parties objecting to enforcement and not the other way around; in the guise of public policy of the country involved, foreign awards cannot be set aside by second guessing the arbitrator’s interpretation of the agreement of the parties; the challenge procedure in the primary jurisdiction gives more leeway to Courts to interfere with an award than the narrow restrictive grounds contained in the New York Convention when a foreign award’s enforcement is resisted. xxx 96 … As has been held, referring to some of the judgments quoted hereinabove, in particular Shri Lal Mahal (supra), the interpretation of an agreement by an arbitrator being perverse is not a ground that can be made out under any of the grounds contained in Section 48(1)(b). Without therefore getting into whether the tribunal’s interpretation is balanced, correct or even plausible, this ground is rejected.” F (emphasis supplied) (ix) The Respondents contended that the parties had voluntarily chosen Kuala Lumpur, Malaysia as the seat of arbitration. Having made such a choice, the Government could not invite Indian courts to revisit the merits of its case G under the guise of Indian public policy. In this regard, reliance was placed on the judgment of this Court in Bharat Aluminium Co. v Kaiser Aluminium Technical Services Inc10 wherein it was held that :

10 H (2012) 9 SCC 648.

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 47 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

“116. The legal position that emerges from a conspectus A of all the decisions, seems to be, that the choice of another country as the seat of arbitration inevitably imports an acceptance that the law of that country relating to the conduct and supervision of arbitrations will apply to the proceedings. B xxx

163. In our opinion, the aforesaid judgment does not lead to the conclusion that the parties were left without any remedy. Rather the remedy was pursued in England to its logical conclusion. Merely, because the remedy in such circumstances may be more onerous from the view point of one party is not the same as a party being left without a remedy. Similar would be the position in cases where parties seek interim relief with regard to the protection of the assets. Once the parties have chosen voluntarily that the seat of the arbitration shall be outside India, they are impliedly also understood to have chosen the necessary incidents and consequences of such choice. We, therefore, do not find any substance in the submissions made by the learned counsel for the appellants, that if applicability of Part I is limited to arbitrations which take place in India, it would leave many parties remediless.” (emphasis supplied) (x) The Counsel submitted that the view taken by the Tribunal was a plausible view, since Article 15.5(e)(iii)(dd) F is an exception i.e. when there is a change in the range of the physical reservoir, the cap on the Base Development Costs may be increased. The present case fell in this exception. It was argued that Clause 15.5(c) defined the “Base Development Costs” to mean costs incurred after G the effective date relating to the construction and/or establishment of such facilities “as are necessary” to produce petroleum in order to enable crude oil production of 35,000 BOPD in accordance with the Ravva Development Plan. It was argued that the target to be achieved by the Claimants was to produce 35,000 BOPD. H

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A The tribunal correctly relied on Article 15.5(e)(iii)(dd) to hold that the Respondents were entitled to request for an increase in the Base Development Costs, when the range of physical reservoir characteristics of the Existing Discoveries were found to be materially different from those on which the Ravva Development Plan was based. The B Respondents had achieved the target of 35,000 BOPD by 1999-2000 with the drilling of 14 wells. The further wells which were drilled subsequently would take into account the changed physical characteristics of the existing reserves. The tribunal had correctly interpreted Article 15.5(c)(xi) to C hold that it was not an undertaking given by the Respondents to drill 21 wells, even though only 14 were required. The Award therefore was not in conflict with the public policy of India, and did not attract the grounds for refusal of enforcement envisaged under Section 48 of the D 1996 Act. VII. Discussion and Analysis Part A Limitation for filing an enforcement / execution petition of a foreign award under Section 47 of the 1996 Act E (i) On this issue, divergent views have been taken by some High Courts with respect to the period of limitation for filing a petition for enforcement of a foreign award under the 1996 Act. It has therefore become necessary to settle the law on this issue. F Noy Vallesina Engineering Spa v Jindal Drugs Limited 11 A single judge of the Bombay High Court held that there is no period of limitation provided by any of the Articles in the Schedule to the Limitation Act, for G making an application for execution of a foreign award. It was held that the enforcement of a foreign award must take place in two stages. In the first stage, the

11 H 2006 (3) Arb LR 510.

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 49 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]

enforceability of the foreign award would be decided, which would be governed by the residuary provision i.e. Article 137 which provides for 3 years from when the right to apply accrues. After the issue of enforceability of award is determined, the award is deemed to be a decree, and the execution of the award as a deemed decree would be governed by Article 136 which provides a period of 12 years. Louis Dreyfous Commodities Suisse v Sakuma Exports Limited12 Another view was taken by another single judge of the Bombay High Court in this case, wherein it was held that the period of limitation for enforcement of a foreign award would be 3 years from the date when the right to apply accrues i.e. Article 137 of the Limitation Act. D Imax Corporation v E-City Entertainment (I) Pvt. Limited 13 In Imax, a third view was taken by another single judge of the Bombay High Court, which followed the judgment in Fuerst Day Lawson,14 and held that since the foreign award is already stamped as a decree, the award holder may apply for enforcement after steps are taken for the execution of the award under Sections 47 and 49 of the 1996 Act. In one proceeding there may be different stages, the first stage being that the court would be required to decide on the enforceability of the award, having regard to the requirement of the said provisions; and thereafter, proceed to take further steps for execution of the award. It was concluded that Article 136 of the Limitation Act would be applicable for the enforcement of a foreign award. G

12 (2015) 6 Bom CR 258. 13 (2020) 1 AIR Bom 82. 14 (2001) 6 SCC 356. H

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A M/s. Compania Naviera ‘SODNOC’ v Bharat Refineries Limited15 A single judge of the Madras High Court held that under the 1996 Act since the foreign award is already stamped as a decree, the award holder can straight away B apply for enforcement of the foreign award as a decree holder, and would have a period of 12 years for enforcement. Cairn India Limited v Union of India16 The Delhi High Court in the impugned Judgment C in this case held that Article 136 of the Limitation Act would be applicable for the enforcement of a foreign award. The execution of the award takes place in three stages: access, recognition and enforcement. Section 47 deals with the first and second stages i.e. access and recognition. A foreign award which passes the gateway of Section 47 is at that stage enforceable on its own strength as a ‘foreign decree’, and is not necessarily dependent on whether or not it goes through the process of Section 48. Such a foreign award is treated as being equivalent to a foreign decree, whose enforcement may be refused only under Section 48. Section 48 pre- supposes that a foreign award is a decree whose execution can be resisted by a party against whom it is sought to be executed, if it is able to discharge the burden that the objections can be sustained under one or more of the clauses of sub-section (1) and/or sub-section (2) of Section 48 of the 1996 Act. The Delhi High Court held that Article 136 of the Limitation Act would be applicable for filing a petition for enforcement of a foreign award. Even if it is assumed that Article 137 of the Limitation Act is applicable, sufficient grounds for condonation of delay had been urged since the Applicants were under the bona fide belief that the period of limitation for enforcement of a

15 (2008) 1 Arb LR 344. 16 H 2020 SCC Online SC 324.

GOVERNMENT OF INDIA v. VEDANTA LIMITED (FORMERLY 51 CAIRN INDIA LTD.) ETC. [INDU MALHOTRA, J.]