ICC tribunal allows Punj Lloyd to fight Sirte case

Mumbai: The ongoing insolvency proceedings are no bar for an Indian company to fight a legal battle overseas.

An International Chamber of Commerce Arbitral Tribunal has ordered continuance of an arbitration case initiated by Punj Lloyd against a state-owned Libyan oil company, which sought to stall the proceedings citing the “moratorium” ground of bankruptcy law in India.

“I do not order the stay requested by the respondent, and these proceedings will continue,” said Richard Harding, the sole arbitrator in the order dated May 13. “Neither party has fully explained why, as an ICC tribunal seated in Paris, I should be bound to follow India law.”

Along with the bankruptcy admission comes the moratorium, which limits any other litigation within specific legal provisions. MZM Legal, the law firm representing Punj Lloyd, confirmed the development, although Waseem Pangarkar, a senior partner of the firm, declined to divulge details of the latest ICC tribunal order. ET has viewed a copy of the order.

Punj Lloyd initiated arbitration against the Libyan government-owned Sirte Oil, seeking to recover .Rs 1,300 crore in dues, ET reported on January 11 last year.

“I have an obligation to deal with these proceedings fairly (following ICC rules),” the arbitrator said in the order. It has revised select dates of hearing with the respondent – Sirte Oil – to make its second submission on June 24.

Punj Lloyd moved the International Chamber of Commerce (ICC) for arbitration, alleging the Libyan company had unilaterally expanded the scope of a five-year project that was signed only for laying gas pipelines between 2006 and 2011.

The North African country was ravaged by civil war during the period, delaying construction.

On March 8 this year, the National Company Law Tribunal’s principal bench in New Delhi ordered the commencement of a corporate insolvency resolution process in respect of Punj Lloyd, an international diversified conglomerate.

Sirte Oil later raised the matter before the ICC arbitrator, praying for a stay order in the case.

“It seems that this arbitration will need to be stayed…” it said, adding that the continuation of these arbitration proceedings should occur only when the moratorium is no longer in place.

“I find that there are no principles of provisions of Indian law which require me to stay these proceedings,” Harding said.

A victory for Punj Lloyd will also be seen as a diplomatic triumph for the global economic order represented by democratic countries such as the US and India.