This is a challenge under sections 68 and 69 of the Arbitration Act 1996 (referred to in the judgment as the 1996 Act) to an award in long-running arbitration proceedings between the parties. The supervisory jurisdiction of this court is available because the seat of the arbitration is London, although the arbitration concerns two production sharing contracts governed by Indian law relating to offshore oil and gas fields in India.
The main question of law raised in the application under section 69 is whether the arbitration tribunal was correct to decide an issue of res judicata according to English law because the seat of the arbitration is in London. Specifically at issue is the application of the well-known English law principle in Henderson v Henderson (1843) 3 Hare 100, 67 ER 313 ("Henderson v Henderson"), that a party is precluded from raising in subsequent proceedings matters which were not but could and should have been raised in the earlier proceedings. The matters which the Government were precluded from raising through the application of Henderson v Henderson are what were called its threshold matters/objections concerning, in the main, Indian constitutional law principles.
The essence of the challenge under section 68 of the 1996 Act is that there is a serious irregularity causing substantial injustice in the award through the failure of the arbitration tribunal to apply these principles of Indian constitutional law. These are in Articles 297 and 299 of the Indian Constitution. Article 297 provides, in summary, that natural resources in Indian waters vest in the Union and are held for the purposes of the Union. Article 299(1) provides for formalities in the execution of Government contracts.
Reliance Industries Limited ("Reliance") and BG Exploration and Production India Limited (formerly Enron Oil & Gas India Ltd) ("BG") are the claimants in the underlying arbitration. In this judgment they are described as "Reliance/BG". The Union of India ("the Government"), acting by its Joint Secretary (Exploration) of the Ministry of Petroleum and Natural Gas, is the respondent in the underlying arbitration. The arbitration proceedings are being undertaken under the 1976 UNCITRAL Rules. The arbitration tribunal ("the Tribunal") is currently constituted by Christopher Lau SC of Singapore (presiding), Mr Peter Leaver QC, and Justice B. Sudershan Reddy of India (who replaced Justice B.P. Jeevan Reddy).
The background to these applications involves two production sharing contracts ("PSCs") concerning a gas field and an oil/natural gas field off the west coast of India. The fields are known as Tapti and Panna Mukta respectively, and the associated PSCs as the Tapti PSC and the Panna Mukta PSC. The PSCs were entered into on 22 December 1994 between the Government, Oil & Natural Gas Corporation Ltd, an entity controlled by the Government, Reliance, and BG. Collectively Oil & Natural Gas Corporation Ltd, Reliance and BG are called "the Contractor" under the PSCs. Pursuant to the PSCs, the Government granted exclusive rights to the Contractor to exploit the fields for a period of 25 years.
The PSCs are in similar, but not identical, terms. I gratefully adopt the outline of PSC terms in the judgment of Popplewell J (as he then was) ("the Popplewell judgment") in Reliance Industries Ltd & Anor v Union of India  EWHC 822 (Comm),  1 Lloyd's Rep 562,  2 All ER (Comm) 1090,  1 C.L.C. 648:
"The PSC terms in outline
3. Article 7.3 of the PSCs obliges the Contractor to carry out the exploitation of the fields at its sole risk, cost and expense, expeditiously and in accordance with good international petroleum industry practice. The work programmes to be carried out under the PSCs are to be approved by the Management Committee (Article 5.6(a)), a body consisting of representatives of each of the four parties (Article 5.2) with the Government representative having an effective power of veto (Articles 5.7 and 5.13). The initial programme for development (as opposed to exploration or production) was to follow the indicative plan annexed as Appendix G. Appendix G sets out a non-exclusive list of matters which were to be included in the development plan. Article 13.1.2 provides that those plans for development would be revised, subject to Management Committee approval, by the Contractor in a 'Development Plan first submitted pursuant to this Contract'. That initial development plan is also referred to as the 'Initial Plan of Development', or 'IPOD'. Subsequent plans, including variations to previous plans, might then be approved by the Management Committee.
4. Article 13 of the PSCs entitles the Contractor to recover its costs from the total volume of petroleum produced and saved from the fields in each financial year. Article 13.1.2 limits the extent to which Development Costs may be recovered in this way. It provides that the recovery of 'Development Costs' is to be capped by the Cost Recovery Limit or 'CRL'. The CRL is US$545 million for Tapti and US$577.5 million for Panna Mukta. Development Costs incurred by the Contractor in excess of these limits fall to be borne by the Contractor. If, in certain specified circumstances, the CRL is exceeded, it can be increased to reflect those circumstances, either by the Management Committee or, in default of agreement by the Management Committee, by an arbitral tribunal (Articles 13.1.4(c) and 13.1.5)…
6. The PSCs are governed by Indian law (Article 32.1), save that the arbitration agreement in each of them, found in Article 33, is governed by English law (Article 33.12). The PSCs also state at Article 33.9 that arbitration proceedings are to be conducted in accordance with 'the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL) of 1985'; it is common ground that the date was a mistake, and the reference was intended to be to the 1976 UNCITRAL Arbitration Rules. In the event of any conflict between the UNCITRAL Rules and the provisions of Article 33, the provisions of Article 33 are to prevail (Article 33.9). The seat of arbitration was agreed to be London: Article 33.12 originally provided as much, and although the seat was changed to Paris when the Second Claimant became part of the BG Group, it was then changed back to London on an ad hoc basis for the purposes of the present arbitral proceedings."
For present purposes Article 34.2 should also be noted:
"This Contract shall not be amended, modified, varied or supplemented in any respect except by an instrument in writing signed by all the Parties, which shall state the date upon which the amendment or modification shall become effective."
There are long running arbitration proceedings in relation to the PSCs which are still ongoing. Reliance/BG commenced the arbitration by a Notice of Arbitration dated 16 December 2010. The only point to note is that under "Relief claimed", Reliance/BG sought an order that the CRL in respect of the Tapti PSC be increased pursuant to Article 13.1.4(c).
So far, the Tribunal has issued eight substantive partial awards. The position up to 2018 was helpfully summarised in 2018 in the Popplewell J judgment, at ):
"(a) A "Final Partial Consent Award" dated 29 July 2011 (the "Consent Award"). This recorded in particular the ad hoc agreement of the parties that London was to be the seat of the arbitration.
(b) A "Final Partial Award on Arbitrability" dated 12 September 2012 (the "Arbitrability Award"). In this award the Tribunal determined that certain specific matters whose arbitrability had been challenged were arbitrable…
(c) A "Final Partial Award on Issues B, C and D of the May 2012 Issues" dated 10 December 2012 (the "CRL Award"). The CRL Award concerned, among other things, how the CRL cap was to operate on recovery of Development Costs by [Reliance/BG] as a matter of the true construction of Article 13.1 of the PSCs…
(d) A "Final Partial Award" dated 12 October 2016…The Award was issued after four hearings, in November 2013, September 2014, November 2014 and October 2015.
(e) A "Final Partial Award" dated 11 January 2018, disposing of disputes relating to certain audit exceptions."
Subsequent to the Popplewell judgment there have been other awards:
(f) A "Final Partial Award" dated 1 October 2018, in this judgment called the 'Agreements Case Award'. It followed the Popplewell judgment in 2018 remitting matters to the Tribunal. Reliance/BG's Agreements Case was that at Management Committee meetings the Government had agreed that the Contractor could recover Development Costs in respect of certain works in any event, whether by way of either an increase in the CRL or otherwise.
(g) A "Final Partial Award" dated 12 March 2019; and
(h) A "Final Partial Award" dated 29 January 2021, which is the award the Government challenges in these proceedings.
The 2012 CRL Award
In outline, the Tribunal decided in this award on the meaning of CRL in both PSCs. By a majority (Justice B. P. Reddy dissenting) the Tribunal concluded that Development Costs incurred in respect of works beyond a certain level of production, which varied between the fields, were outside the CRL and were fully cost recoverable. This was described as Reliance/BG's "upside case". Notwithstanding those conclusions the Tribunal decided that whether Reliance/BG were entitled on the merits either in law and/or on the facts to succeed in their claim for Development Costs as falling outside the CRL depended upon the Tribunal's subsequent determination following further pleadings, evidence, and submissions.
The 2016 Award
In general terms this award dealt with issues arising out of the 2012 CRL Award. It found, amongst other things, in favour of the Government that Reliance/BG were estopped from relying on the interpretation of the CRL determined by the 2012 Award. Consequently, their so-called upside case was rejected. The Tribunal determined whether specific development costs fell within or outside the CRL.
The Government's case on estoppel by conduct was based on the mutual understanding of the parties to the PSCs of its terms. That understanding was to be found as a matter of Indian law since that was the governing law of the contract. Under Indian law, the Government argued, estoppel was not merely a rule of procedure but could create or defeat rights. The Tribunal determined that, since estoppel under Indian law was a rule of evidence, with London as the seat of arbitration, estoppel was governed by English law. As indicated, it upheld the Government's estoppel case: there was a common understanding that when executing the PSCs, the parties did so on the basis that the CRL cap set out in Article 13.1.2 of the PSCs would apply to Development Costs incurred in respect of works either listed in Appendix G or listed in the IPOD.
The Popplewell judgement on the 2016 Award
The Popplewell judgment concerned the 2016 Award. In outline the proceedings before Popplewell J involved challenges by Reliance/BG to findings of the Tribunal. One challenge was advanced under section 69 in relation to alleged errors of law in the Tribunal's findings on estoppel. Applying principles of English law, Popplewell J rejected this: there could be no legitimate criticism of the formulation of the principles by the Tribunal, nor of their application.
Reliance/BG also applied under section 68 of the 1996 Act on the basis that there had been a number of serious procedural irregularities. Popplewell J held that there was only one serious irregularity giving rise to substantial injustice i.e., the Tribunal's failure to address whether there had been agreements that additional development costs should be recoverable. This was Reliance/BG's so-called "Agreements Case", which had been advanced before the Tribunal but not determined. The issue was what the Tribunal meant when it had decided that the Agreements Case no longer fell for determination.
The Order of the court following the Popplewell judgment ("the 2018 Order") remitted the 2016 Award to the Tribunal to consider the Agreements Case.
The Agreements Case Award 2018 and Robin Knowles J's judgment
As a result of the remission, there was a hearing before the Tribunal in July 2018. The Tribunal published in October 2018 the Agreements Case Award. In it the Tribunal allowed Reliance/BG to cost recover approximately US$177m of Development Costs at Tapti. Part of the Panna Mukta Development Costs within the Agreements Case were costs incurred on the so-called Expanded Plan of Development project ("EPOD"). The Tribunal found in favour of Reliance/BG in an amount of approximately US$143m of EPOD costs on various resolutions which the Management Committee had issued after 10 December 2003. However, it denied them some US$259m because it considered that the resolutions which they asserted evidenced agreements for this sum had not been relied upon as part of the Agreements Case prior to the 2016 Award. RIL/BG's claim for this balance sum came to be known as their Balance EPOD Agreements Case.
In October 2018 both sides began proceedings before this court under the Arbitration Act 1996. The Government advanced jurisdictional and procedural grounds under sections 67 and 68. One aspect was that the Tribunal relied upon a mechanism for calculating EPOD costs as falling within the CRL which had not been advanced by Reliance/BG as their case.
In Reliance Industries Ltd v The Union of India  EWHC 263 (Comm),  1 Lloyd's Rep 489, Knowles J rejected this challenge, along with the other grounds the Government advanced. However, he agreed with Reliance/BG's jurisdictional challenge under section 67 of the 1996 Act. He held that the Tribunal had erred in deciding that it had no jurisdiction on the remission from Popplewell J's decision to consider resolutions which Reliance/BG had not previously referred to in the context of their Agreements Case but were on the record prior to the issue of the 2016 Award.
The Order of the court dated 5 March 2020 ("the 2020 Order") consequent on Robin Knowles J's judgment varied the Agreements Case Award under section 67(3)(b) of the 1996 Act by deleting certain words in paragraph 3.22(d) of the award and inserting that the Tribunal did have jurisdiction, in relation to Reliance/BG's case concerning the costs of EPOD ("the EPOD Agreements Case"), to
"take into account (a) documentary and other evidence which had not previously been referred to by [Reliance/BG] in the context of the EPOD Agreements Case before the [2016 Award], provided that it was evidence which was already on the record in the arbitration prior to the release of the [2016 Award], and (b) submissions in respect of such evidence".
For the avoidance of doubt the Order identified this evidence by reference to paragraphs in Reliance/BG's skeleton for the July 2018 remission hearing and the submissions made in the skeleton argument and orally at the remission hearing.
The 2019 Award
The Tribunal's 2019 Award addressed jurisdictional and threshold issues raised by the Government. It was in response to Reliance/BG's claims following the 2016 Award for an increase in CRL, including what was called the "residual upside" claim. The Government contended that Reliance/BG's statement of claim should be rejected since it did not fall within the scope of Article 13.1.4(c) of the PSCs and consequently Article 13.1.5 could not be triggered. Reliance/BG was seeking to rewrite the PSCs, it submitted, but these had been executed in accordance with Article 297 of the Constitution of India which has been interpreted by the Supreme Court of India to contain the 'Doctrine of Trust'. Thus, the Government submitted, any application for an increase of the CRL which did not fulfil the parameters of Articles 13.1.4(c) and 13.1.3(e) of the PSCs would have to be rejected and "entertaining any such plea would amount to gross violation of the constitutional mandate and the law."
Alternatively, the Government contended, the claims were either barred by res judicata, constructive res judicata (Henderson v Henderson type res judicata), or issue estoppel and/or were outside the scope of Article 33. Reliance/BG, the Government argued, was seeking to reopen issues that had already been determined in the 2016 Award and had attained finality. In its argument, the Government cited Virgin Atlantic Airways Limited v Zodiac Seats UK Limited  UKSC 46,  AC 160 ("Virgin Atlantic" or "the Virgin Atlantic case") as regards res judicata and abusive proceedings.
By a majority the Tribunal determined inter alia that it did not have jurisdiction in respect of Reliance/BG's residual upside case because of res judicata. Reliance/BG could have and should have raised this in relation to the matters they now advanced prior to the release of the 2016 Award.
The 2021 Award
This is the award under challenge in these proceedings. It was consequent on Robin Knowles J's judgment and the 2020 Order.
The Tribunal had issued directions for pleadings to be filed and a hearing to take place. In June 2020, the Government filed a submission with its defence relating to the EPOD Agreements Case. This contained the Government's so-called threshold matters/objections, mainly under Indian substantive law, and submissions as regards the documents on which Reliance/BG relied. In July 2020 Reliance/BG filed a responsive submission, arguing inter alia that the Government's threshold matters/objections were beyond the scope of the Tribunal's jurisdiction in that they fell outside the 2020 Order or were barred by res judicata or abuse of process.
For the reasons given the applications are refused.