In a major setback to the central government and big relief to Vedanta Ltd. and Videocon, the Supreme Court on Wednesday upheld a foreign arbitration award to recover $499 million, instead of $198 million capped by the Centre for Development of Ravva Oil and Gas fields off the Andhra Coast between 2000 and 2007.
The top court upheld Delhi High Court’s order which refused to interfere with the arbitral award in production sharing contract (PSC) for Ravva oil fields in the Krishna Godavari basin. Vedanta (formerly Cairn India) and Videocon had entered into PSC for Ravva oil fields and as per the contract Vedanta and Videocon was allowed to recover $198 million. However, the government claimed that it had recovered $499 million.
Following the conflict between government and Vedanta, they entered into arbitration in Malaysia which favoured Vedanta. In July 2014, the Malaysian Court of Appeals upheld the arbitral award allowing additional recoveries to Vedanta.
After Delhi High Court refused to interfere with the arbitral award in favour of Vedanta, the centre moved the top court in June.
The Supreme Court in today’s ruling said that Malaysian court rightly examined Ravva oil field arbitration award and arbitral award doesn’t offend public policy of India as it is a subsequent event.
The top court added that enforcement court can’t reassess evidence available.