Khalid Hasnain Updated April 27, 2020

LAHORE: The National Transmission and Despatch Company (NTDC) is set to serve a notice on an Iranian firm this week for the payment of about Rs714 million with interest under a recent decision of the Paris-based International Chamber of Commerce (ICC).

The NTDC may move a court in Pakistan for implementation of the ICC’s international arbitration-based decision in case the Iranian firm fails to pay, it is learnt.

“We have started preparing a notice. It will be served on the Iranian firm within this week for the payment of Rs714m with interest. If the firm fails to pay, we will file a petition in a court in Pakistan for implementation of the ICC verdict,” NTDC chief legal officer Hamza Khalid Randhawa told Dawn on Sunday. “We have also identified some of the Iranian firm’s assets abroad in this regard,” he added.

Paris-based tribunal ordered Iranian company to pay for delays in executing project at Rahim Yar Khan substation

The ICC announced its decision on April 24 in the international commercial arbitration initiated by the Iranian company in 2017 before a tribunal constituted under the ICC’s rules.

In its award / judgement, the tribunal dismissed all claims brought by the Iranian company and accepted several counterclaims of the NTDC amounting to approximately Rs714m with the interest at the rate of 7.925 per cent per year with effect from July 2018 to until full payment.

The dispute arose out of a contract between the Iranian company and the NTDC executed in February 2011 for the design, supply, installation, testing, and commissioning of 500 kV Guddu-Multan third circuit at Rahim Yar Khan 500kV substation. The NTDC terminated the contract due to persistent delays on the part of the Iranian contractor and the project was eventually completed by another contractor.

The Iranian firm initiated the arbitration in early 2017 claiming an amount of about Rs180m ($1.1m) on account of unpaid invoices and damages.

The NTDC, apart from defending the claims, filed its own counterclaims on the basis of the Iranian company’s delays, the costs incurred to complete the project by another contractor, and claims related to liquidated damages, mobilisation advances, customs duties and demurrage.

On the NTDC’s counterclaims, the tribunal declared that company had validly terminated the contract as the Iranian firm was responsible for the delay in the project. Accordingly, it directed the Iranian firm to pay the NTDC Rs714m in different heads.

The NTDC is also entitled to the interest at the rate of 7.925pc per year for the Pakistani rupee portion of the damages awarded in its favour. The interest will accrue from July 6, 2018 and run until such time as payment of the award is made. Given the NTDC’s near-total success on its counterclaims, the arbitrator also awarded NTDC 78pc of its legal and other costs in the arbitration.

“The last hearing at the ICC tribunal was held in October 2019 in which the judgement was reserved. Finally it announced its decision on April 24 this year,” Mr Randhawa said.

Published in Dawn, April 27th, 2020