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ArcelorMittal Nippon Steel, IOC agree to appoint arbitrator in Essar Steel case
- ArcelorMittal Nippon Steel and Indian Oil urged the apex court to set aside the Delhi high court's judgment and refrain from passing further orders in the case
ArcelorMittal Nippon Steel and Indian Oil Corp (IOC) informed the Supreme Court on Friday that they have agreed to appoint an arbitrator to settle their dispute involving Essar Steel.
Both sides urged the apex court to set aside the Delhi high court's judgment, which has been challenged in the current petition. The legal counsels requested the court to refrain from passing further orders in the case.
The top court decided to pass the final directions in the case on Monday.
The dispute traces back to a conflict over a gas supply agreement (GSA) in 2009 between IOC and the then Essar Steel India (ESIL), which AMNS acquired after a corporate insolvency resolution process approved by the Supreme Court in 2019. IOC had challenged the termination of the agreement by Essar Steel in 2017, demanding dues, which led to an arbitration invocation when Essar failed to respond.
On 2 August 2017, the National Company Law Tribunal (NCLT) in Ahmedabad admitted ESIL into insolvency proceedings based on pleas by State Bank of India and Standard Chartered. IOC lodged a claim of over ₹3,500 crore with the appointed resolution professional (RP), but the RP only admitted the claim for a notional value of ₹1. The Committee of Creditors (CoC) of Essar Steel accepted Arcelor Mittal's resolution plan, which was approved by the NCLT on March 8, 2019.
The legal dispute escalated when the NCLT disagreed with the RP's decision regarding the admission of claims, including IOC's, at a nominal value of ₹1. Appeals were made in the National Company Law Appellate Tribunal (NCLAT), but similar decisions were reached. Eventually, the Supreme Court overturned the rulings of the NCLT and NCLAT, allowing the RP's actions and approving AMNS' resolution plan. ArcelorMittal acquired 100% of Essar Steel India's shares on 16 December 2019.
After the resolution plan was implemented, IOC sought payment as per the terms of the GSA. ArcelorMittal denied IOC's claim, leading the oil company to invoke arbitration by serving notice to ArcelorMittal to appoint an arbitrator. However, AMNS remained unresponsive, prompting IOC to approach the Delhi High Court.
In October 2023, the Delhi high court dismissed IOC's plea because once the resolution process has been completed and the resolution plan approved, no fresh claims can be laid against the successful resolution applicant.
The court ruled that the dispute sought in the current case could not be reintroduced before the arbitral tribunal, as it had already acknowledged the acceptance of the resolution plan as final. Allowing the petition would effectively imply a reopening of the resolution plan, making the issues raised by IOC unsuitable for arbitration.
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Business NewsCompaniesNewsArcelorMittal Nippon Steel, IOC agree to appoint arbitrator in Essar Steel case
First Published:9 Feb 2024, 03:47 PM IST
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