NOC, IOC agree to seek int’l arbitration in S’poreNepal Oil Corporation (NOC) and Indian Oil Corporation (IOC) have agreed to settle all unresolved legal disputes at the Singapore International Arbitration Centre.
Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC) have agreed to settle all unresolved legal disputes at the Singapore International Arbitration Centre. A provision in this regard has been incorporated in the bilateral petroleum agreement signed recently between NOC and IOC.
Singapore’s legislation on international commercial arbitration is considered as one of the best in the world as it is regularly revised to incorporate internationally accepted codes and rules. Rulings on arbitration extended by the Singaporean court are enforceable in over 150 countries worldwide.
“While signing the fresh five-year petroleum supply agreement, both the sides agreed to turn to arbitration if issues could not be settled bilaterally,” said Supplies Minister Deepak Bohara.
Bohara said both the sides agreed to settle disputes in Singapore considering it as a neutral venue—albeit the Indian side had “initially proposed to settle disputes in India”.
Arbitration is the process of settling legal disputes in a private and confidential manner without engaging the public court. Many now prefer to settle commercial disputes in arbitration courts, as they extended rulings relatively faster.
In the case of NOC and IOC, legal disputes will only be taken to the Singaporean arbitration court, if the dispute settlement mechanism formed jointly by the two parties fails to resolve the issues. This joint committee will include three representatives from each country.
Nepal will be represented by officials of NOC, the Foreign Affairs Ministry and the Supplies Ministry in the joint committee. Similarly, India has agreed to send officials of IOC, the Foreign Ministry and the Petroleum Ministry to the committee.
NOC and IOC have been engaged in petroleum business for over four decades now. Over the years, NOC has, however, faced a number of problems like delay in fuel supply from IOC, petroleum theft, road accidents of tankers loaded with fuel and involvement of tanker drivers in malpractices.
During the four-and-a-half-month Indian blockade last year, IOC even disrupted fuel supply to Nepal. As a result, NOC incurred losses worth billion of rupees. Since that time, NOC has been pushing IOC to extend compensation. However, IOC has been declining Nepal’s request.
Bohara said the option on arbitration will help Nepal to take matters like disruption in supply of petroleum products as during the trade blockade last year to the international court.