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ARBITRATION AND THE ACT OF STATE DOCTRINE

Lloyd's Maritime and Commercial Law Quarterly

ARBITRATION AND THE ACT OF STATE DOCTRINE

Thomas Sebastian*

Reliance Industries v Union of India
The judgment of the Commercial Court in Reliance Industries Ltd v The Union of India 1 arose out of an arbitration involving the Government of India. The Government had entered into long-term production sharing contracts with two private parties to develop oil and gas fields off the west coast of India. Disputes arose and the private parties commenced arbitration in London.
One of the claims advanced was a contractual claim for the price of certain volumes of oil and gas supplied to nominees of the Government of India. The Government’s defence was that, as a matter of Indian law (which was the agreed governing law), its contractual duty to pay had been abrogated by executive instruments issued by (its own) Ministry of Petroleum and Natural Gas. The private parties responded that, as a matter of Indian public law, the Government could not unilaterally release itself from its contractual obligations by means of executive orders. The tribunal ruled that it lacked jurisdiction to resolve the public law issue (on the basis that its jurisdiction was limited to matters of contractual interpretation).2 Popplewell J (as he then was) upheld that conclusion but on a different basis: he found that the public law issue was not arbitrable as a matter of English law.

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