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London court gives DPC respite in row

The Indian unit of US energy major Enron Corp said on Thursday it had obtained a ruling from a London court preventing the Maharashtra government from legally challenging international arbitration proceedings.

Enron's Indian unit, Dabhol Power Company, has taken the Maharashtra State Electricity Board to the International Court of Arbitration in London for a breach of contract.

MSEB had signed a contract to buy the output from Dabhol's $2.9 billion power plant on the western coast of India. It later said it did not need all the power from the 2,184 MW plant, and that it was too expensive.

But a local regulatory authority, the Maharashtra State Electricity Commission, said the power company's dispute with the utility fell within its ambit, and that Dabhol could not proceed with the arbitration. This sparked a round of litigation, which is now at a stage where the Bombay high court must decide whether Dabhol can take the dispute to London.

In order to prevent more litigation, Enron obtained an injunction from the Commercial Court in London which restrains the government of Maharashtra, which owns the utility, from also filing a suit in India challenging the international arbitration proceedings.

"Over the past few months, the government of Maharashtra and other government entities have taken actions to avoid complying with their contractual obligations," Dabhol said in a statement received late on Thursday. "This has frustrated the rights of international investors that were legally agreed to by the relevant parties several years ago."

Government officials could not be reached for comment.

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