Govt loses to IPPs in British Court

Published: October 22, 2018
Representational image. PHOTO: REUTERS

Representational image. PHOTO: REUTERS

ISLAMABAD: Pakistan has suffered a setback when a court of appeal in the UK rejected its final plea, challenging the jurisdiction of the London Court of International Arbitration (LCIA) in a suit filed by the independent power producers (IPPs) for the recovery of dues from a government-owned national grid company.

The LCIA had ruled in favour of the nine IPPs for the recovery of approximately Rs11 billion unpaid capacity payments from the National Transmission and Despatch Company (NTDCL).

The IPPs claiming recovery of dues are: the Hub Power Company (Narowal), Sapphire Electric Company, Halmore Power Generation Company, Liberty Power Tech, Atlas Power, Nishat Chunian Power, Nishat Power, Orient Power and Saif Power.

NTDC to hire consultant for technical study

The NTDC had approached the London High Court against the international tribunal’s award regarding the payment of almost Rs11 billion to the IPPs. After conducting the proceedings for two days, the NTDC withdrew its case. However, the court did not waive the cost.

“In pursuant to the order dated 25 May 2018 of the London High Court, the court, inter alia, ordered NTDC to pay £400,000 to the IPPs on account of costs by June 29, 2018,” the court order read. Later, the cost was paid by NTDC.

Subsequently, the power purchaser approached the Court of Appeal, challenging the LCIA’s jurisdiction and the international arbitrator to award in favour of the IPPs.

The Court of Appeal on October 4 held that the judge correctly decided that the seat of the arbitration was London because of final and binding determination to that effect by both — the LCIA court and arbitrator.

He also correctly decided that in those circumstances, on the basis of well-established principles set out by the Court of Appeal, it was the sole supervisory jurisdiction in relation to the arbitration in England, says the order, which is available with The Express Tribune.

The order further says that the NTDC seeks to challenge the conclusion of the judge’s order and that final and binding determination on the basis that the governing law of the relevant agreements — the law of Pakistan — makes it unlawful for Pakistani parties (which both the sides in this case are) to seek to oust the jurisdiction of the Pakistani courts.

“If there were any merit in this argument, it could and should have been advanced before the LCIA and the arbitrator which it was not.”

The order further says that the respondents (IPPs) are correct that it is not open to the applicant (NTDC) to challenge the sole seat of arbitration and thus of the supervisory jurisdiction in England.

“Contrary to the applicant (NTDC) submissions, C v D (Claimants vs Determination) is neither distinguishable nor wrongly decided. As that the case demonstrates, once the seat of arbitration is decided as London, English courts have the sole supervisory jurisdiction over the arbitration and it is irrelevant to the conclusion that the governing law of the agreement is a foreign law, there New York here Pakistan.”

It is further noted that the NTDC counsel’s contrary arguments are ‘ingenious but have no real prospect of success’.

Penalised: Regulator imposes Rs10m fine on NTDC

Lastly, the order says that the challenge to the “judge’s consequential orders is also hopeless”.

A senior lawyer, while commenting on the October 4 order says that if the NTDC challenges the award in a Pakistani court now, then it shall be in contempt of court in England.

Earlier, LCIA judge Justice Phillips had restrained the NTDC from challenging the Partial Final Award in proceedings in Lahore, Pakistan, or anywhere other than England and Wales on a permanent basis.

The PTI-led government is facing major battles in world legal forums, paying billions of dollars in damages in several controversial matters, especially in the Reko Diq and Karkey.

Both the cases – the Karkey rental power plant and Riko Diq – will be concluded next year. It is learnt that the federal government is unable to evolve a fruitful strategy to deal with the cases.

“Currently, Pakistan is facing more than 40 cases of different nature at international courts. The majority of IPPs also filed cases with international arbitrators, seeking clearance of their pending dues, amounting to more than Rs1 trillion,” the legal experts said.

The country would have to pay astronomical sums because of the judgments passed by the Supreme Court led by former chief justice Iftikhar Muhammad Chaudhry.

The legal experts are urging the courts to restrain from adjudicating matters related to financial deals wherein arbitration clauses are added to avoid consequences.

Facebook Conversations

Reader Comments (2)

  • rashid
    Oct 22, 2018 - 9:03AM

    Do we get a wholesale discount if we lose a lot of cases?Recommend

  • Tzaman
    Oct 22, 2018 - 9:05PM

    Former CjP Chaudhry Iftekhar was nothing but trouble. What would his ardent supporters reporter Mr. Ansar and our current PM would say?Recommend

More in Pakistan