Hardy Exploration & Production (India), Inc. v. Government of India, Ministry of Petroleum and Natural Gas

219 F. Supp. 3d 50, 2016 U.S. Dist. LEXIS 164956
CourtDistrict Court, District of Columbia
DecidedNovember 30, 2016
DocketCivil Action No. 2016-0140
StatusPublished
Cited by3 cases

This text of 219 F. Supp. 3d 50 (Hardy Exploration & Production (India), Inc. v. Government of India, Ministry of Petroleum and Natural Gas) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hardy Exploration & Production (India), Inc. v. Government of India, Ministry of Petroleum and Natural Gas, 219 F. Supp. 3d 50, 2016 U.S. Dist. LEXIS 164956 (D.D.C. 2016).

Opinion

MEMORANDUM OPINION

Granting in Part and Denying in Part Defendant’s Motion To Dismiss

RUDOLPH CONTRERAS, United States District Judge

I. INTRODUCTION

Petitioner Hardy Exploration & Production (India), Inc. (“HEPI”) has filed a Petition to confirm an arbitration award (“Award”) against Respondent, the Government of India (“India”), acting through its Ministry of Petroleum and Natural Gas (“Ministry”). See generally Pet. Confirm Arbitration Award (“Pet.”), ECF No. 1. HEPI filed its Petition pursuant to Section 207 of the Federal Arbitration Act. 9 U.S.C. § 207. Because India is a foreign state, HEPI must effect service under the Foreign Sovereign Immunities Act (“FSIA”). 28 U.S.C. § 1608. India moves to dismiss the Petition, arguing that HEPI did not properly effect service on India and, thus, that this Court lacks personal jurisdiction over India. See generally Spe *53 cially-Appearing Resp’t’s Mot. Dismiss (“Mot. Dismiss”), ECF No. 16; Specially-Appearing Resp’t’s Mem. Law Supp. Mot. Dismiss (“Resp’t’s Mem.”), ECF No. 16-1. India’s motion is now ripe and ready for decision.

The Court finds that HEPI has failed to demonstrate that it properly served India. The contract between the parties does not constitute a special arrangement for service for the purposes of the FSIA, and, therefore, India has not been served. The Court will not, however, dismiss the Petition. Instead, HEPI will be permitted another opportunity to serve India by relying on the other methods for service identified in the FSIA.

II. BACKGROUND

The Court will begin its analysis by providing an overview of the facts giving rise to this dispute before turning to the parties’ subsequent arbitration and litigation.

A. Factual Background 1

This case originates in the parties’ participation in a Production Sharing Contract (“PSC”) for the development and production of hydrocarbons. The PSC governs the exploration of a geographic block called CY-OS/2 (the “Block”) found off the southeastern coast of India. See Pet. ¶ 5; Deck of Ian MacKenzie (“MacKenzie Deck”) ¶ 3, ECF No. 1-2. See generally Production Sharing Contract (“PSC”), MacKenzie Deck, Ex. 2, ECF No. 1-4. The PSC has been in force since November 19, 1996. See Pet. ¶ 6; see also PSC at 136. At that timé, an agreement was reached by three private companies, India’s state-owned oil company, and “the President of India, acting through the Joint Secretary, Ministry of Petroleum and Natural Gas.” See Pet. ¶ 6 (quoting PSC at 1). The PSC permitted the private companies to explore the Block and, if they found commercially viable hydrocarbon reserves, extract those resources under a production sharing arrangement. See Pet’r’s Mem. Law Supp. Pet. to Confirm Arbitration Award (“Pet’r’s Mem.”) at 2-3, ECF No. 1-1; PSC art. 14-15.

HEPI was not an original participant in the PSC. See Pet. ¶ 7. Instead, HEPI acquired a 25% participation share in the PSC from one of the original private companies in 1997. See Pet’r’s Mem. at 3. HEPI’s interest was confirmed in the initial addendum to the PSC executed on March 30, 2000. See MacKenzie Deck, Ex. 3 at 1-2, ECF No. 1-5. Subsequently, each of the other private companies decided not to participate further in the PSC, and HEPI acquired a 100% participation share. See Pet’r’s Mem. at 3; see also Arbitration Award at 3, MacKenzie Deck, Ex. 1, ECF No. 1-3. This change was reflected in the second addendum to the PSC, which was executed on August 17, 2001. See Mac-Kenzie Deck, Ex. 4 at 1-2, ECF No. 1-6. Finally, HEPI transferred a 25% share of its interest in the PSC to GAIL (India) Ltd., a state-owned, Indian company in the business of gas processing and distribution. See Pet’r’s Mem. at 3. This change was reflected in an additional amendment to the PSC. 2 See generally MacKenzie *54 Decl., Ex. 5, EOF No. 1-7. India was a signatory to each of these three amendments to the PSC. See MacKenzie Decl., Ex. 3 at 6; Ex. 4 at 4; Ex. 5 at 5. HEPI continued to own a 75% share during the period giving rise to the underlying dispute between the parties. See Pet’r’s Mem. at 4.

In late 2006, an exploratory well drilled in the Block yielded hydrocarbons. See id. at 4; Arbitration Award at 6. HEPI and GAIL alerted the Ministry of Petroleum and Natural Gas about the discovery on January 8, 2007. See Pet’r’s Mem. at 4; Arbitration Award at 6-7. The PSC defined the procedure the parties would follow in the event of such a discovery. See PSC art. 9. Under the PSC, an appraisal period followed any discovery of hydrocarbons. See Pet’r’s Mem. at 4; Arbitration Award at 7. At the end of the appraisal period, the PSC required the participating companies to issue a determination as to whether the discovery was a “Commercial Discovery,” meaning that the production of the hydrocarbons would be economically feasible. See Pet’r’s Mem. at 4; PSC arts. 9.5, 21.4.4. The PSC provided different appraisal period durations depending on the type of hydrocarbons discovered. See Pet’r’s Mem. at 4. If the discovery was crude oil, as defined by the PSC, the appraisal period would be two years. See PSC art. 9.5. If the discovery was natural gas, on the other hand, the appraisal period would be five years. See PSC art. 21.4.4.

The parties disagreed about whether the discovery was crude oil or natural gas. See Pet’r’s Mem. at 5. The Ministry maintained that the discovery was crude oil, and informed HEPI that its rights to the Block were relinquished after the shorter two-year appraisal period concluded on January 7, 2009. See Pet’r’s Mem. at 5; Arbitration Award at 9-10. During 2009 and 2010, HEPI pursued a number of avenues in an attempt to convince the Ministry to change its position. See Pet’r’s Mem. at 5; Arbitration Award at 10-12. The Ministry refused, insisting that the discovery was crude oil and that HEPI had forfeited its rights to the Block. See Pet’r’s Mem. at 5.

B. The Arbitration and Subsequent Litigation

The PSC includes an arbitration provision. See PSC art. 33. Specifically, Article 33 of the PSC provides that “any unresolved dispute, difference or claim which cannot be settled amicably within a reasonable time may ... be submitted to an arbitral tribunal for final decision.” PSC art. 33.3. Article 33 sets forth the procedures for any arbitration, including selecting Kuala Lumpur, Malaysia as the venue. See PSC art. 33.12.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
219 F. Supp. 3d 50, 2016 U.S. Dist. LEXIS 164956, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hardy-exploration-production-india-inc-v-government-of-india-dcd-2016.