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Mumbai , Sept. 26

THE Mumbai High Court has restrained GE and Bechtel, stakeholders in the Dabhol Power Company, from pursuing an arbitration under the New York Court against the MSEB subsidiary Maharashtra Power Development Corporation Ltd (MPDCL), also a DPC shareholder.

The two companies had on September 22, approached a New York court against MPDCL for its May 2001 actions, which led to the closure of the power plant at Dabhol. Mr Justice Hemant Gokhale in an order issued on September 25, restrained both companies from pursuing arbitration against MPDCL.

According to MPDCL, the action was related to an ongoing case in Mr Justice Gokhale's Court in which it has alleged that actions of directors on the DPC board had been unfairly prejudicial to MPDCL's rights (as minority shareholder in DPC) and against public interest.

The arbitration against MPDCL is one in a series of 10 ongoing arbitrations in London and New York against MSEB, the Government of Maharashtra and the Union Government. The arbitration against MPDCL is part of clause 8.1 of the shareholders agreement under which disputes between shareholders can be settled under ICC rules in New York State alone, under the exclusive jurisdiction of the New York law.

GE and Bechtel had approached the New York Court for an anti-injunction order against MPDCL to stop it from approaching any Indian Court from seeking restraining orders. The New York Court had however, given MPDCL a three-day notice to be present before the court. MPDCL approached the Mumbai High Court for a restraining order before the end of the three-day show-cause notice.

On September 22, the same day of filing the arbitration against MPDCL, Bechtel Enterprises Holdings Inc and GE Structured Finance had also filed an international arbitration claim of $1.2 billion against the Union Government to recover their investments in Dabhol Power Company.

Of the 10 cases, only one has been settled. The international court had, earlier this month, ordered the Union Government to pay OPIC a total claim of $57 million as per an insurance agreement with GE and Bechtel.

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