Bombay High Court Upholds $24.7 Million Arbitration Award Against ONGC
Stories are grouped across languages, rewritten into a fixed editorial format, and linked to original sources. How we report.
TL;DR
- Bombay High Court rejected ONGC's challenge to a $24.7 million international arbitration award.
- The dispute related to a redevelopment contract for Mumbai High South Field with Sapura Fabrication.
- The court held that patent illegality is not a ground for setting aside international commercial arbitral awards.
- ONGC had already deposited the awarded sum in court; dismissal allows Sapura to seek release of funds.
Overview
On June 19, 2026, the Bombay High Court dismissed Oil and Natural Gas Corporation's (ONGC) challenge to a $24.7 million international commercial arbitration award issued in favor of Malaysian contractor Sapura Fabrication (now VTEB Fabrication). The dispute arose from a turnkey contract for redevelopment work in ONGC's Mumbai High South Field.
What Happened
ONGC and Sapura entered into a contract in 2015 for offshore redevelopment works in the Mumbai High South Field. After project completion, Sapura initiated six extra work claims, four of which ONGC rejected.
The dispute was referred to arbitration. A tribunal led by former Chief Justice AP Shah issued a unanimous award in May 2024, allowing several of Sapura's claims and ordering ONGC to pay over $24 million plus interest and legal costs.
ONGC challenged the award before the Bombay High Court under Section 34 of the Arbitration and Conciliation Act, arguing that the tribunal ignored material evidence and alleging patent illegality.
Justice Sandeep Marne held that under Section 34(2A) of the Act, patent illegality is not a valid ground for challenging an international commercial arbitration award, and dismissed ONGC's petition. The court found no grounds to interfere with the tribunal's findings or the awarded sums.
Context
Section 34(2A) of the Indian Arbitration and Conciliation Act restricts setting aside arbitral awards for patent illegality to domestic arbitrations only.
The court relied on a prior Supreme Court decision clarifying that such challenges do not apply to international commercial arbitration, even if the seat is in India.
With ONGC's petition dismissed and the award sum already deposited in court, Sapura is now able to seek release of the awarded funds.
Why It Matters
- The ruling reinforces the limited grounds for Indian courts to set aside international commercial arbitral awards, increasing finality and certainty for parties engaged in cross-border contracts.
- It clarifies that allegations of patent illegality cannot be used to challenge such awards under Indian law.