Active Stocks
Mon Mar 04 2024 15:59:52
  1. Tata Steel share price
  2. 153.10 -1.32%
  1. NTPC share price
  2. 353.80 3.50%
  1. Bharti Airtel share price
  2. 1,137.00 0.57%
  1. Larsen & Toubro share price
  2. 3,643.95 -0.28%
  1. Power Grid Corporation Of India share price
  2. 294.45 2.63%
Business News/ Companies / News/  SC allows ArcelorMittal Nippon Steel, IOC to appoint arbitrators in Essar case
BackBack

SC allows ArcelorMittal Nippon Steel, IOC to appoint arbitrators in Essar case

The apex court also set aside the October ruling of the Delhi high court which had rejected IOC's plea for appointment of an arbitral tribunal to settle its claims

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 in 2019.. Photographer: Amit Bhargava/Bloomberg News.Premium
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 in 2019.. Photographer: Amit Bhargava/Bloomberg News.

New Delhi: The Supreme Court on Monday allowed ArcelorMittal Nippon Steel (AMNS) and Indian Oil Corp (IOC) to nominate an arbitrator each within a week to resolve their dispute involving Essar Steel. 

The apex court also set aside the October ruling of the Delhi high court which had rejected IOC's plea for the appointment of an arbitral tribunal to settle its claims.

According to the top court's directive, the nominated arbitrators will need to appoint a third arbitrator to complete the formation of the arbitral tribunal. 

On Friday, AMNS and IOC informed the apex court that they had mutually agreed to appoint arbitrators to settle all disputes. The two parties had also urged the court to set aside the Delhi high court's ruling in the case.

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 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 high 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

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 12 Feb 2024, 12:26 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie