K-G Basin row has all the makings of a vodafone-like tussle

 

“In the present scenario, a mere demand has been made by the government, which is yet to be adjudicated in an arbitral forum,” he says.

 

Nonetheless, with all claims of such a high value, attempts by the government at securing the amount at the earliest are sure to be watched closely by the company and the legal community.

 

Under the Arbitration and Conciliation Act, there are several routes that may be taken to realise a demand even before conclusion of an arbitral process, if so chosen.

 

Section 17 of the Act allows a party asserting a claim to approach the arbitral tribunal to secure the amount as demanded or to preserve the subject matter of the dispute, as an interim measure.

 

However, as the arbitral tribunal in the present dispute is yet to be fully constituted, this provision cannot come to the aid of the government as of yet.

 

 

Section 9 of the Act also allows an Indian court to provide similar relief at the interim stage. This provision may be invoked even before the constitution of an arbitral tribunal, right till the enforcement of the eventual award.

 

“Such reliefs, however (by a court or tribunal, once constituted), must take into consideration factors such as the financial strength of the company, potential for removal of assets, etc. In this case, it will be a tough hurdle for the government to obtain this kind of remedy, considering the strong balance sheet of the company,” says Sitesh Mukherjee, partner, Trilegal.

 

Still, given the right circumstances, if the government approaches the Indian court under Section 9, interim relief may be granted and this could be transferred to the arbitral tribunal once it is functional.

 

“But, in case the petition for interim relief is finally disposed by the time the arbitration tribunal is constituted, any relief provided would ordinarily continue throughout the arbitral proceedings, subject to appeal under the Act," notes Karia.

 

Once the arbitral tribunal is finally functional, though, any Section 9 action seems unlikely. For, the courts in India will not ordinarily entertain a petition for interim relief unless it is felt the tribunal cannot provide the necessary remedy on its own.

 

The issue has the potential of becoming even more complex, with RIL suing the government for damages if the arbitration eventually turns in their favour. However, the tale unfolds, there seems to be much gas left in the chamber.