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Mumbai
20-21 July 2013
Business
Partners’ Meet
2013

Business Partners’ Meet July 2013
2
Dispute Resolution
Mechanisms in ONGC
By
J.K Bodha,
Chief Legal Services, ONGC

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Presentation overview
1 IEM
2 Conciliation
3 Arbitration
4 Court

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? Pre Contractual Disputes:
- Independent External Monitor (IEM-Integrity
Pact)
? Post Contractual Dispute:
- Conciliation through Outside Experts Committee
(OEC)
- Arbitration
- Court
Dispute Resolution Mechanisms

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IEM

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? Appointed for the first time in 2006
under Integrity Pact
? Disputes relating to Bid – Evaluation,
Awarding of Contract and matters
under Integrity Pact
- To ensure transparency and integrity in
Award of Contract
- Post Contractual Commercial Disputes
(Claim/Counter Claim) – not to be referred
IEM

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? Panel of Independent Monitors
(Qualification – Member of CAG/ High level Govt.
Officials etc.)
? Constitution of IEM - 1 or 3 Members
- Aggrieved bidder can make complaint
- Opportunity of hearing to the parties –
Discretionary.
- Observations are recommendatory in nature
- Not binding.
Contd.

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Conciliation

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? Conciliation is a confidential, voluntary and private
dispute resolution process in which a neutral person
helps the parties to reach a negotiated settlement
? Why Conciliation
- The unresolved disputes landing up in arbitration or
court litigation involve
o blockage of enormous capital,
o delay in the execution of critical projects and
o Invariably expensive
Conciliation

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? The Arbitration Act 1940 – did not have provisions
for Conciliation
? United Nations Commission on International Trade
Law (UNCITRAL) Rules on Conciliation, 1980 –
proposed conciliation as a method of amicably settling
disputes
? The Arbitration and Conciliation Act, 1996 (“The
Act”)
- for the first time in India, conciliation for commercial
disputes recognized
- Part III of the Act provides for conciliation of
disputes (Section 61 to 81)
Contd.

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? Section 67 of the Act mandates a conciliator to be
guided by:
- Principles of Objectivity, Fairness and Justice;
- Consider, among other things,
o Rights and obligations of the parties;
o Usages of the trade concerned;
o Circumstances surrounding the dispute;
o Including any previous business practices
between the parties
? Section 66 of the Act - Conciliator not bound by the
Code of Civil Procedure, 1908 or the Indian Evidence
Act, 1872.
Guiding Principles

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? Conciliation through Outside Experts Committee
(OEC) introduced with Board’s approval vide PMC
Circular dated 21.9.1998
- Initially for dispute involving INR 1 Crore and
above
- In 2007 - the limit of INR 1 Crore was removed
- In 2011 – OEC clause made a part of the contract
- No OEC clause for Contract below INR 5 Lacs
Conciliation - In ONGC

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? Party to give 30 days notice with points of disputes and
claim amount.
? Consent of the contractor is obtained
? Proposal for OEC constitution is put up before CMD
? CMD nominates 3 members OEC. (Exceptionally 1
Member OEC )
-Technical
-Financial/ Commercial
-Legal
? OEC members to give Declaration of independence
? OEC Meetings are held in - Delhi/Mumbai/Chennai
? Time Period – 8 to10 Weeks
? Parties present their case.
? Advocates are not allowed.
? No Oral Evidence – Only Documentary Evidence
? OEC makes recommendations which are non-binding in
nature
Procedure of OEC

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? Recommendation of OEC is placed before
Competent Authority for consideration
o Upto INR10 Crore – Executive Committee
o Above INR 10 Crore – Board through Committee on
Dispute Resolution
? If the recommendations are acceptable to both the
parties, settlement agreement is signed
? Settlement agreement is authenticated by OEC
? Section 73 of the Act - After authentication,
settlement agreement acquires the status of an
Award which is binding and enforceable.
Contd.

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? Section 75 of the Act - All the matters relating to
Conciliation Proceedings (OEC) are confidential in
nature.
? The Settlement Agreement can not be disclosed
except for the purposes of implementation and
enforcement.
? Section 81- The party shall not rely as evidence in
Arbitral or Judicial Proceedings on the
- Views expressed or suggestions made during
Conciliation Proceedings
- Admissions made by Parties before the Conciliator
- Proposal made by the Conciliators etc.
Conciliation – Confidentiality

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? INR 10,000/- per meeting (maximum INR
1,00,000) per OEC Member
? INR 10,000/- - Fees for drafting of
Recommendation to any one Member
? Air Travel in Executive Class
? Loading and Boarding – 5 Star Hotel
? Conveyance
Fee of OEC Members, Cost of holding
meetings and other expenses are shared equally
by the parties.
Facilities/Fees of OEC Members

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? Cost Effective and Expeditions.
? Purpose of conciliation is not to prove who is right and
who is wrong as per contract.
? Parties try for an amicable settlement.
? Conciliator’s role is to assist the parties in an independent
and impartial manner in their attempt to reach an amicable
settlement of their disputes.
? The conciliator may not follow the procedural law strictly.
? Section 77: Pending OEC, Judicial/Arbitration Proceedings
can be kept in abeyance, with the parties consents.
? Conciliation does not affect the legal rights of the parties
to approach to Arbitration/Judicial Forum.
Benefits of OEC

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? Conciliator may persuade the parties to come to a
settlement on principles of ex aeque et bono or
amiable compositeur.
? Conciliation does not close the option of arbitration
or litigation until settlement is signed by the
parties.
? Article 137 of Limitation Act, 1963 - Period of
Limitation gets extended till the date Conciliation
fails.
? The settlement agreement when signed is treated at
par with decree of the Court and can be executed.
Contd.

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OEC Success Story
64
14
42
Total Cases referred to OEC: 120
Settled Sucessfully Reccomendation not accepted by Parties Ongoing
Disputes involving approximately USD 525 MM +
INR 2115 Crore have been settled successfully

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Arbitration

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? Disputes which are not settled in OEC can be
referred to Arbitration
? No Arbitration Clause for Contracts below INR 5
Lacs.
? Party raising the dispute to give 60 days notice with
points of dispute and claim amount in INR.
? L-I in ONGC - Competent Authority to appoint
arbitrator from the existing Panel of Arbitrators
(Item LA-4 of BDP, 2009)
Arbitration

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Appointment of Arbitrator
? Sole arbitrator from Panel of
Retd Officers - appointed by
ONGC.
Claim up to
INR 50 Lacs
? Sole arbitrator from Panel of
Retd. Judges - appointed by
ONGC.
Above INR 50
Lacs to INR 5
Crore
? 3 arbitrators from the panel-
each party to choose one
Arbitrator and the two
arbitrators to appoint Presiding
Arbitrator
Above INR 5
Crore

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? Only those who accept the terms including fees
rates to be appointed.
? Serving employee not to be appointed.
? In 2011: A lump sum fees was fixed to be paid to
each Arbitrator.
? Lum-sum fees includes fees for study of
pleadings, case material, writing of the
award, secretarial charges etc.
? The Fee of the Arbitrator is to be shared equally
by the Parties.
Panel of Arbitrator

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Fee of Arbitrator
Amount of Claims and Counter
Claims
Arbitrator Fee (shared equally by
Parties)
Upto INR 50 lakhs INR 10,000 per meeting subject to a
ceiling of INR 1,00,000/-.
Above INR 50 lakhs to INR 1 crore INR 1,35,000/- plus INR 1,800/- per
lakh or a part there of subject to a
Above INR 1 crore and upto INR 5
Crores
INR 2,25,000/- plus INR 33,750 per
crore or a part there of subject to a
Above INR 5 crores and upto INR 10
crores.
INR 3,60,000/- plus INR 22,500/- per
crore or a part there of subject to a
Above INR 10 crores INR 4,72,500 plus INR 18,000/- per
crore or part thereof subject to a

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Time Stipulations
? for disputed amount upto
INR 5 Crore.
8 months
? for disputed amount above
INR 5 Crore.
12 months
The time would run from the first meeting
of the Arbitrators

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20% –On filing of reply to the claim
40% –On completion of pleadings
20% –On conclusion of final hearing
20 % –At the time of Award
Payment of Arbitrator’s fees:

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Courts

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? Award of an Arbitrator, unless set aside by Court, is
final and binding.
? The Award of Arbitrator can be challenged in court
within 3 months of the receipt.
? Maximum 30 more days can be granted by court.
? No further time is allowed to file objections.
? If not objected or if the objections are rejected by
the court, it can be enforced as a decree of the
court.
Court

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THANK YOU

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