OPINION | How arbitration certainty can unlock investment in India’s oil and gas sector

On November 2, a bench of Justices J.B. Pardiwala and Manmohan of the Supreme Court declined to interfere with a Delhi High Court order allowing Vedanta and Ravva Oil (Singapore) to enforce two foreign arbitral awards arising from the 1994 Ravva production sharing contract (PSC). In doing so, the Bench observed that continued resistance at the enforcement stage could weaken trust in India as a contracting partner.

The case has a long history. Arbitration began in 2004 and a partial award followed that year, later upheld by Malaysia’s Federal Court in 2011. A final award in 2016 was upheld in Malaysia in 2019, and enforcement proceedings in India concluded only this week. Both the High Court and the Supreme Court found the awards enforceable.

Experts are looking at the ruling in a wider context, noting that predictability in honouring awards matters for India’s ambitions as an arbitration hub and as a treaty partner. The judgment and the Court’s observations are best read not as a criticism but as an opportunity. Over the past decade the government has done a great deal to improve upstream terms through OALP, DSF, New Petroleum & Natural Gas Rules, and other related reforms. A more settled approach to disputes would let those reforms deliver their full value.

Can this be the guiding light for disputes in upstream?

What this observation highlights is the principle of finality. Section 48 of the Arbitration and Conciliation Act allows only narrow grounds for resisting enforcement of a foreign award, and courts have consistently read them narrowly. Domestic awards are governed by different provisions, including Sections 34 and 36, but the underlying principle of avoiding unnecessary litigation remains relevant.

Applying the same principle across pending upstream matters would serve everyone, while recognising that different disputes involve different contractual and legal issues. In the KG-D6 gas-migration case, an international tribunal ruled for Reliance, BP and Niko in 2018; a single judge upheld the award, a Division Bench set it aside in 2025, and the matter is now before the Supreme Court. In Panna-Mukta-Tapti, it is the government seeking enforcement of a 2016 award (please check fact). A consistent approach, whichever side has won strengthens the system for all parties, including the State.

The second principle concerns how commercial disagreements interact with licensing decisions. The Vedanta–ONGC matter over the Cambay block CB-OS/2 is another ongoing dispute in the Court. In September 2025, the government declined extension of the PSC and directed ONGC to take control of the block, operated by Cairn Oil & Gas. Vedanta challenged the decision, but a Single Judge of the Delhi High Court dismissed its petition in July 2026. ONGC subsequently took over the block, and Vedanta has appealed. The case illustrates how disagreements over profit-petroleum accounting and decisions on contract extensions can raise separate but related questions, while recognising the government’s responsibility to enforce contractual conditions. It also highlights the importance of timely and reasoned decisions on extension applications. For capital intensive sectors with long gestation periods, such cases raise an alarm for global investors.

Lessons beyond upstream

The experience is not unique to oil and gas. The Delhi Airport Metro Express dispute with DMRC went through several rounds over many years, including a curative petition in 2024. In highways and power, the finance ministry told Parliament in 2024 that a sample of NHAI and NTPC cases showed over 60 per cent of awards being challenged, and the ministry has itself acknowledged the need for better outcomes in high-value contracts. The Supreme Court has also recently asked the Law Commission to examine how the enforcement of awards can be made faster. There is clearly a shared interest in reform.

India needs investments, not litigation

There is a pressing need for faster resolutions for upstream disputes, building on the principles the courts have now set out. For a country whose 88 per cent of crude oil and 50 per cent of natural gas requirements are met through imports (please check fact), it is imperative to look for practical solutions to prevent and reduce litigation for enabling energy security. Some ideas that can make a meaningful difference.

Honouring awards as the norm: Government and its PSUs could challenge an arbitral award only after an independent review finds strong grounds under the applicable provisions of the Arbitration and Conciliation Act, rather than as a matter of routine. Such a review should take into account the legal merits, contractual obligations and public interest, including the protection of public revenue.

Time-bound decisions on contract extensions to avoid litigation: PSC extension applications could be decided within a fixed period, with reasons recorded, so operators can plan investment with certainty. Commercial disagreements over cost recovery or profit petroleum should, wherever legally and contractually possible, be resolved on their own track, without unnecessarily holding up decisions on who operates a field.

A one-time settlement window. A Vivad se Vishwas-style scheme for legacy pre-NELP disputes would free up capital and management bandwidth on both sides ahead of the next bid rounds. Fast-tracking dispute resolution through such a voluntary window, with clear eligibility, transparent settlement criteria, appropriate approvals, a fixed deadline and a time-bound process, could clear a substantial part of the backlog of legacy cases rather than leaving them to run for decades.

From Vivad to Vishwas

These measures would bring the spirit of Vivad se Vishwas to a sector where disputes have too often run for decades, and show that the State would rather resolve disputes through fair and timely settlement than prolong litigation unnecessarily. The objective should not be to avoid litigation at any cost, but to pursue it only where justified by law, contractual obligations and the public interest.

The payoff would be considerable. When global oil companies decide where to commit capital that may take a decade or more to pay back – especially when other geographies like Ghana and Venezuela are attracting investments – they weigh contract certainty as carefully as geology and fiscal terms. A dispute settled quickly will do more to reassure boardrooms in Houston, London and Abu Dhabi than any roadshow. For private operators who have stayed invested in India through every cycle, it would confirm that the State is a dependable partner.

India has done the hard work of reforming its upstream policy. Living up to Vivad se Vishwas, by reducing unnecessary litigation and choosing trust over prolonged dispute, would let those reforms deliver. It would also bring in the private and global investment the country’s energy security depends on.

The author is former secretary general of FICCI.

The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.