Supreme Court appoints arbitrator in Offshore Infrastructures–BPCL dispute, holds COVID extension saves limitation

Case Name: Offshore Infrastructures Limited v. Bharat Petroleum Corporation Limited
Date of Judgment: October 07, 2025
Citation: 2025 INSC 1196, Civil Appeal Nos. 22105–22106 of 2025 (arising out of SLP (C) Nos. 22105–22106 of 2024)
Bench: Hon’ble Mr. Justice Dipankar Datta and Hon’ble Mr. Justice Augustine George Masih

Held: The Supreme Court allowed the appeals filed by Offshore Infrastructures and set aside the Madhya Pradesh High Court orders which had dismissed its Section 11 application for appointment of an arbitrator as time-barred. The Court ruled that although limitation ordinarily ran from the date the final bill became due or the “No Claim Certificate” was issued, the COVID-19 extension orders of this Court excluding the period between March 15, 2020 and February 28, 2022 had to be applied. Once this exclusion was given effect, the arbitration application was within limitation. The Court also clarified that even if an arbitration clause becomes partly inoperative due to statutory amendments, the core reference to arbitration survives and courts can appoint an independent arbitrator to preserve party intent.

Summary: The dispute arose out of contracts awarded to Offshore Infrastructures in 2016 for works at the Bina Refinery. Although work was to be completed by May 2017, it was finished in January 2018, and the final bill was submitted in March 2018. A “No Claim Certificate” was issued in October 2018 and final payment, with liquidated damages deductions, was released in March 2019. Offshore raised consolidated claims in April 2021 and issued a notice invoking arbitration in June 2021, but Bharat Petroleum refused. Offshore then filed a Section 11(6) application in March 2022, which the High Court dismissed as barred by limitation. The High Court also held the arbitration clause ineffective because it named the Managing Director of Bharat Oman Refineries (later merged into BPCL) as arbitrator, who by virtue of statutory amendments was disqualified.

Before the Supreme Court, Offshore argued that limitation commenced only upon notice of arbitration and refusal, and that in any event the COVID-19 orders extended time. It further contended that the arbitration agreement itself was not invalidated, only the appointment procedure was. BPCL maintained that limitation expired in 2021 and that the arbitration clause was rendered redundant once the named authority was disqualified.

Decision: The Supreme Court held that the existence of the arbitration clause remained unaffected by the ineligibility of the named arbitrator, and that courts are empowered to appoint a neutral arbitrator under Section 11(6) in such cases. On limitation, it held that while the cause of action arose in 2018–2019, the exclusion of the COVID-19 period saved Offshore’s application, making it timely. Accordingly, it set aside the High Court’s orders, referred the matter to the Delhi International Arbitration Centre, and directed it to appoint an arbitrator to decide the disputes in accordance with law. The appeals were allowed without costs.