Delhi HC asks Cairn India to initiate arbitration proceedings in Ravva oil field dispute

Cairn India is in court to get a refund of costs it paid on behalf of Videocon Industries to operate the Ravva oil field


The case will be heard next on 20 February. Photo: HT
The case will be heard next on 20 February. Photo: HT

New Delhi: The Delhi high court on Wednesday asked Cairn India Ltd to initiate arbitration proceedings within two weeks in a dispute at its Ravva oil field off the coast of Andhra Pradesh.

Cairn India is in court to get a refund of costs it paid on behalf of Videocon Industries Ltd to operate the oil field.

Justice S. Muralidhar said initiating arbitration will expedite the hearing in the case and accordingly, Cairn should seek recourse under arbitration laws along with it being heard at the Delhi high court.

“Within the next two weeks, the petitioner should set up an arbitral tribunal by issuing requisite notices to the parties and writing to the International Court of Arbitration of the International Chamber of Commerce (ICC) under terms of the joint operating agreement (JOA) between parties.” Muralidhar held.

The Ravva field is being developed jointly by Cairn India, which has a 22.5% participating interest, Oil and Natural Gas Corp. (40%) and Videocon and Ravva Oil, with 25% and 12.5% interest, respectively. The PSC under which the oil field is being developed by the four companies is valid until 2019.

The four companies are required to invest in operation of the oil field and default by any of them is to be borne by the rest as per their participating interest.

The dispute arose out of a default by Videocon over the years in making payment towards operating costs of the oil field under a production sharing contract (PSC) with Cairn, the operator of the oil and gas field.

Cairn had submitted before the court that ONGC and Ravva oil had failed to respond to cash calls by Cairn and could not shy away from sharing the burden due to default on Videocon’s part.

The case will be heard next on 20 February.

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