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Arbitration proceedings -- Dabhol gets restraint order from UK court

Our Bureau

MUMBAI, Oct. 11

THE Commercial Court of London has given an ex-parte order restraining the Maharashtra Government from filing a suit in India challenging the international arbitration proceedings initiated by Dabhol Power Company (DPC).

The Enron-promoted DPC obtained the order today and the State has 23 days to respond. Maharashtra has been restrained from ``commencing or prosecuting or continuing or taking any steps in or otherwise participating in proceedings in any court or tribunal in India in restraint of or otherwise relating to the three arbitrations'', the order said. The three arbitrations relate to State guarantees to the project.

A DPC spokesman said now ``the arbitration process in London would continue as originally contemplated and agreed by the State Government and DPC. This has no bearing on the on-going proceedings involving DPC, MSEB and MERC before the Mumbai High Court a nd Supreme Court''. He also said Maharashtra is not a party to any of the on-going proceedings before the Mumbai High Court and the Supreme Court.

``Over the past few months, the State Government and other Government entities have taken actions to avoid complying with their contractual obligations. This has frustrated the rights of international investors that were legally agreed to by the relevant parties several years ago. The injunction facilitates the timely and impartial review by the international arbitration panel of the dispute between DPC and the State,'' the company said.

The arbitration panel had been constituted sometime ago and proceedings were expected to begin any time. However, the proceedings could not take off as a dispute over the jurisdiction of the Maharashtra State Electricity Regulatory Commission had dragged on to the Mumbai High Court and then the Supreme Court. Both courts had restrained DPC from continuing international arbitration pending resolution of the MERC jurisdiction issue.

The State Government was expected to file a civil suit in the Mumbai High Court accusing the company of fraud and misrepresentation. Internal differences in the Government and the legal team over proving ``fraud'' had led to the resignation of the State counsel.

Meanwhile, the Enron Virodhi Andolan has accused Mr Sharad Pawar's Nationalist Congress Party of deliberately sabotaging the Indian legal process to help the multinational.