India is the world’s fastest growing energy market. An expanding economy and a growing population have resulted in increased consumption of primary energy resources such as coal, crude oil and natural gas in India. However, as Russia – key supplier of natural gas to a host of nations– faced several sanctions following its war with Ukraine, global oil prices saw a steep increase. Pursuant to the imposition of these sanctions, most of the exports from Russia were redirected to Asian countries, including India. India, having not imposed sanctions, continues to import oil from Russia, which is now available at lower prices. Taking advantage of discounted prices, India raised its imports of Russian crude from 950,000 b/d in June 2022 to around 1.96 million b/d in May 2023.Continue Reading Oil is Well for India

Reinstating Party Autonomy in Ad Hoc Arbitrations

The Supreme Court in Oil and Natural Gas Corporation Limited (“ONGC”) Afcons Gunanusa JV (“Afcons”),[1] while deciding on four cases, inter alia held that:

(i) arbitrators cannot unilaterally decide their own fees but can exercise discretion to apportion the costs, demand deposit, and exercise lien over the delivery of the arbitral award if payments to it remain outstanding;

(ii) the fees of the arbitrator must be fixed at the inception to avoid unnecessary litigation and conflicts between parties at a later stage;

(iii) the term ‘sum in dispute’, which is the header of the first column of the Fourth Schedule to the Arbitration and Conciliation Act, 1996 (“the Arbitration Act”), refers to the sum in dispute in a claim and counter-claim separately and not cumulatively. Consequently, arbitrators are entitled to charge separate fees for the claim and the counter-claim in an ad hoc arbitration proceeding;

(iv) the highest fee payable in an arbitration proceeding governed by the Fourth Schedule is INR 30,00,000, which is a ceiling applicable on a per-arbitrator basis and subject to a sole arbitrator’s entitlement of an additional amount of 25% on the fee payable as per the Fourth Schedule;

(v) the Fourth Schedule is to have a mandatory effect on the stipulation of fees by arbitrators appointed by arbitral institutions designated for such purpose in terms of Section 11 of the Arbitration Act in the absence of an arbitration agreement governing the fee structure; and

(vi) as regards court-appointed arbitrators, the Supreme Court held that the Fourth Schedule is by itself not mandatory in the absence of rules framed by the High Court concerned, and issued directives for fixing of fees in ad hoc arbitrations where arbitrators are appointed by courts.Continue Reading Reinstating Party Autonomy in Ad Hoc Arbitrations

International Regime

A three judge bench of the Hon’ble Supreme Court of India in its recent judgment dated April 27, 2022, in Oil and Natural Gas Corporation Limited v. M/s Discovery Enterprises Pvt. Ltd. & Anr.[1], while deciding on a challenge to an interim award on the ground that the arbitral tribunal failed to apply the group of companies doctrine, has held that a non-signatory company within a group of companies can be held bound to an arbitration agreement.Continue Reading Hon’ble Supreme Court Follows the International Regime: Upholds Group of Companies Doctrine in Arbitration