Iran to take Pakistan to int’l court over incomplete IP gas pipeline

ISLAMABAD: Iran has served a final notice on Pakistan after the latter failed to complete work on Iran-Pakistan gas pipeline, threatening to take it to the international court of arbitration in France by September 2024 for damages to the tune of around $18 billion.

Tehran has made it clear that it has no option but to drag Pakistan to the arbitrary court for failing to carry out work on the pipeline since 2014.

Iran has served the notice after Pakistan nearly missed the extended deadline of 180 days as the latter was supposed to complete the work by March 2024.

The IP agreement, governed by French law under the Gas Sales and Purchase Agreement (GSPA), was meant to last 25 years starting in 2009.

The US sanctions on Iran do not affect the France law that governs the gas-related agreement.
Pakistan’s Interstate Gas Systems (ISGS) and Iran’s National Irani Gas Company (NIGC) revised their agreement in 2019.

Iran repeatedly avoided going to the arbitration court over delays, hoping Pakistan would build the pipeline by 2024 for the delivery of 750 million cubic feet of gas daily.

The revised agreement required Pakistan to complete the pipeline by February-March 2024.
Due to delays, Iran extended the deadline by 180 days to September 2024, but Pakistan still failed to start construction work.

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If Iran fails to harangue Pakistan in the arbitrary court it could automatically lose the right to proceed with the legal action.

Background

Earlier, Iran issued a second legal notice to Pakistan in November-December 2022, warning of claiming $18 billion in damages if the pipeline construction under the IP agreement was not completed by February-March 2024.

In the first legal notice issued in February 2019, Iran had warned that they would pursue arbitration court and seek penalties under the GSPA clause against Pakistan.

Sources confirmed that the government of Pakistan has received the final notice and the Petroleum Division is formulating a strategy to respond to Iran by seeking assistance from foreign law firms in this regard.