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Ladder Of Success

S. K. MISRA MEMORIAL INTERNATIONAL

MEDIATION AND NEGOTIATION
COMPETITION 4.0

CONFIDENTIAL INFORMATION
Prelimiary Round II
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Date: 10th to12th March 2023

In association with

LLOYD LAW COLLEGE

TECHNICAL SUPPORT BY SUPPORTED BY PROFESSIONAL PARTNERS
 MEDIATION PROBLEM II

IMBALANCED GSA CONUNDRUM

CONFIDENTIAL INFORMATION OF PPT - REQUESTING PARTY

In each GSA, there was a clause that stated: “During the pendency of this Agreement, the purchaser shall
neither contract nor purchase any quantities of PNG from the seller’s [TPCL] competitors unless otherwise
agreed.” However, PPT’s stance regarding this clause is that – after hiring new legal counsel, it has come to
PPT’s observation that this clause is illegal in the eyes of the law as it restricts the ability of PPT to continue,
grow, and expand its business and survive in the competitive oil and gas market.

Since February 2021, PPT has not purchased any fresh supplies of PNG from TPCL. It has come to TPCL’s
notice that PPT has been purchasing fresh supplies of PNG from TPCL’s biggest competitor: QDCL. This has
been ongoing since February 2021. TPCL found this information via QDCL’s annual reports 2020-21 and
2021-22, which showed how QDCL has been supplying PNG in bulk to PPT since February 2021.

When TPCL enquired about the same to PPT, PPT responded by stating that: “Due to the existence of a Force
Majeure situation [COVID-19 pandemic] and the inability of PPT to invoke the Force Majeure clause, the
GSAs came to an end before PPT began purchasing PNG from QDCL.” According to PPT, the intention to
terminate the GSAs was communicated to TPCL in response to TPCL’s legal notices from May 2020 to
January 2021. However, TPCL denied the same by stating that the GSAs were not terminated as the intention
to terminate the GSAs was non-existent because PPT continued to purchase PNG from May 2020 to January
2021. In response to the same, PPT stated that the intention to invoke the Force Majeure clause between May
2020 to January 2021 is sufficient to amount as an intention to terminate the GSAs.

Further, PPT conducted various quality checks on the PNG supplied by QDCL. PPT was shocked to find that
QDCL’s PNG performed poorly on the quality checks as it was found that QDCL’s PNG is highly
combustible, posing significant health and life risk to various customers of PPT. This revelation leads to a
looming and impending threat of a detailed inquiry being conducted on PPT by the Petroleum and Natural Gas
Regulatory Board (PNGRB), which is a Regulatory Board that aims to regulate the refining, processing,
storage, transportation, distribution, marketing and sale of petroleum, petroleum products, and natural gas to
ensure uninterrupted and adequate supply of petroleum, petroleum products, and natural gas in all parts of
India.

In light of the same, PPT’s current position is that it aims to terminate all the GSAs with QDCL and continue
its GSAs with TPCL or enter into fresh GSAs with TPCL. In other words, PPT needs to retain TPCL as a
supplier to ensure PPT stays afloat in the oil and gas market.
It is imperative to note that PPT’s financial position is still being rebuilt as the COVID-19 pandemic’s
disruption severely impacted PPT. Therefore, PPT cannot afford to pay “heavy” amounts of compensation
and interest rate or additional costs for new/existing GSAs to TPCL.