Gas Authority of India Limited (GAIL) and SEFE Marketing & Trading Singapore Pte Limited (SMTS) on January 15 reached a settlement in their arbitration dispute over the non-delivery of liquefied natural gas (LNG) supplies..The parties agreed to conclude the London Court of International Arbitration (LCIA) proceedings, with SMTS making a payment of $285 million (approximately ₹2,500 crore) to GAIL..In 2012, GAIL entered into a 20-year agreement with Gazprom Marketing and Trading Singapore to procure up to 2.85 million tonnes per annum of LNG, with deliveries commencing in 2018. Following Russia's invasion of Ukraine in 2022, Western sanctions led to the German government's takeover of Gazprom Germania, rebranding it as Securing Energy for Europe (SEFE). This geopolitical shift disrupted LNG supply, with SEFE halting deliveries to GAIL in June 2022. Although the supply resumed in March 2023, GAIL contended that the interruption posed significant challenges to it..In response to the supply disruptions, GAIL initiated arbitration proceedings on November 30, 2023, before the LCIA, seeking up to $1.817 billion in compensation for the undelivered LNG cargoes. GAIL contended that the contract was a portfolio agreement, obligating SMTS to ensure deliveries regardless of sourcing challenges.On April 2, 2024, SMTS submitted its defence, denying liability beyond the value of the missed cargoes. The firm cited force majeure and subsequent operational constraints as reasons for the supply disruptions, asserting that these factors were beyond its control and should exempt it from further compensation claims..GAIL’s legal team included Senior Advocate and King's Counsel Harish Salve (Blackstone Chambers), Chintan Chandrachud (Brick Court Chambers), Kamal Shah, Charlotte Welsh and Daniel Boon (Stephenson Harwood LLP) and Shikher Aggarwal and Faisal Sherwani (Luthra & Luthra)..SMTS’ legal team included Laurence Rabinowitz KC (One Essex Court), Kate Davies KC and Kiara Kottegoda (Skadden, Arps, Slate, Meagher & Flom LLP).
