Hardy Oil & Gas plc India Supreme Court Ruling (8702B)
September 25 2018 - 5:30AM
UK Regulatory
TIDMHDY
RNS Number : 8702B
Hardy Oil & Gas plc
25 September 2018
25 September 2018
Hardy Oil and Gas plc
(LSE: HDY)
INDIA SUPREME COURT RULING
Hardy Oil and Gas plc ('Hardy'), the oil and gas exploration and
production company focused in India, announces that earlier today
the Supreme Court of India (SC) had issued an order upholding the
Union of India's (UOI) Civil Appeal 4628/2018 and Petition for
Special Leave to Appeal (C) No(s). 31356/2017.
As disclosed previously, the SC had been considering the UOI
appeal against an earlier final judgment and order dated 27-07-2016
in FAO No. 59/2016 passed by the High Court of Delhi at New Delhi
(HC). The HC had previously ruled that the India High Court did not
have jurisdiction to hear the UOI appeal against the merits of an
arbitration tribunal's ruling that the relinquishment of the
CY-OS/2 exploration licence by the UOI was unlawful. In February
2013, an arbitration tribunal had ordered the reinstatement of the
exploration licence to Hardy Exploration & Production (India)
Inc. (HEPI) and awarded HEPI compensation (background provided
below).
The Special Bench of the SC consisting of Chief Justice D Misra,
Justice Dr DY Chandrachud and Justice AM Khanwilkar judged that
Indian courts have jurisdiction over the Award, thereby allowing
the Civil Appeal filed by UOI to be heard by the High Court.
HEPI had argued before the Special Bench of the SC that:
1. The arbitration agreement within the CY-OS/2 Production
Sharing Contract (PSC) specified that the venue of arbitration
shall be Kuala Lumpur. The Pre-NELP bid round was the first to
invite non-Indian companies to participate with a neutral venue
designated for dispute resolution.
2. The arbitration agreement within the PSC makes mention of the
Permanent Court of Arbitration at the Hague in three places thereby
conferring international influence on the process.
3. The arbitration agreement within the PSC specifies that the
arbitration proceedings shall be conducted in accordance with the
UNCITRAL Model Law on International Commercial Arbitration 1985 (a
departure from reference to Indian domestic law i.e. the Indian
Arbitration and Conciliation Act 1996).
4. The final hearings of the arbitration proceedings were held at Kuala Lumpur, Malaysia.
5. The arbitration award was made, signed and handed down
(delivered) by the Tribunal sitting in Kuala Lumpur, Malaysia
6. Kuala Lumpur was not a 'convenient place' for all the parties
involved in the arbitration process.
7. Hardy presented a number of precedent cases from both the
courts of India and England & Wales wherein similar arbitration
agreements which contained the term 'venue' was determined to mean
'seat' (of arbitration).
In addition it should be noted that the arbitration clause of
the governing PSC states that the decision of arbitration tribunal
shall be final and binding upon the parties.
Hardy is reviewing the SC order to assess the further legal
options available to the Company. It is likely that the SC order
will result in significantly extending the legal process required
to conclude the arbitration award.
A copy of the full order is available on the Supreme Court of
India's website at:
https://www.sci.gov.in/supremecourt/2016/34525/34525_2016_Judgement_25-Sep-2018.pdf
For further information please visit www.hardyoil.com or
contact:
Hardy Oil and Gas plc 012 2461 2900
Ian MacKenzie, Chief Executive Officer
Richard Galvin, Treasurer &
Corporate Affairs Executive
Arden Partners plc 020 7614 5900
Ciaran Walsh
Paul Shackleton
Tavistock 020 7920 3150
Simon Hudson
Barney Hayward
CY-OS/2 exploration licence background - Hardy is the operator
of the CY-OS/2 exploration block and holds a 75 per cent
participating interest. The block is in the northern part of the
Cauvery Basin immediately offshore from Pondicherry, India and
covers approximately 859 km(2) . The Ganesha-1 discovery well was
drilled to a depth of 4,089 m and on testing the well flowed
natural gas at a peak rate of 10.7 mmscfd.
Award summary - relinquishment by the Ministry of Petroleum and
Natural Gas (MOPNG) of the GOI was illegal; the unincorporated
Joint Venture (uJV) shall be entitled to a period of three years
from the date on which the block is restored to it, to carry out
further appraisal; the uJV shall be paid compensation calculated at
the simple rate of 9 per cent per annum on the amount of Rs. 5.0
billion from the date of relinquishment till the date of the award;
interest will then accrue at a rate of 18 per cent per annum on the
amount of Rs. 5.0 billion until the block is restored to the uJV.
As published in Hardy's Annual Report for the year ended 31 March
2018, HEPI's compensation entitlement amounted to US$78.2
million.
-ends-
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END
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