ISLAMABAD : The National Transmission and Despatch Company (NTDC) has sought the Attorney General’s guidance and assistance in recovery of foreign arbitral award with the Iranian firm M/s GAM ARAK Industrial Corporation, sources told Newzshewz.
According to details, National Grid Company of Pakistan (NGC) formerly National Transmission and Despatch Company Ltd. (NTDC) has apprised the Attorney General Office that the dispute arose from a contract of February 2, 2011 between NGC and GAM ARAK Industrial Co. (Iran) for the design, supply, installation, testing, and commissioning of the 500kV Guddu-Multan 3rd Circuit Transmission Line at Rahim Yar Khan Substation. Due to significant delays and non-performance by GAM ARAK, NGC terminated the contract on March 9, 2015. The project was subsequently completed in January 2018 by Northeast China International Electric.
Following termination, GAM ARAK initiated arbitration proceedings, claiming approximately Rs 180 million ($ 1 million) for unpaid invoices and retention money. NGC, in response, filed counterclaims amounting to Rs 1.166 billion ($ 6.4 million), including costs incurred due to delays, breach of contract, liquidated damages, and additional completion costs.
On April 21, 2020, the ICC tribunal dismissed GAM ARAK’s claims and issued a Final Award in NGC’s favor, granting NGC the following: (i) JPY 295,121,280 ;(ii) Rs 265,385,838 ; and (iii) EUR 30,000 along with interest at 7.92% per annum.
A corrective Addendum was issued on July 28, 2020. As of December 31, 2024, the total value of the Award, including accrued interest, is estimated at approximately $ 4.2 million (subject to verification from the date of claim).
NTDC is of the view that despite repeated reminders, GAM ARAK has failed to honor the Award. While they proposed a settlement offer of EUR 1.5 million on October 21, 2021, NGC rejected the offer in view of the favorable Award and its duty as a public sector entity to safeguard public interest.
The sources further stated that NGC engaged CMS Consultants and local law firm Legal Oracles, who proposed a legal and strategic framework for enforcement. A detailed presentation was made to the Board of Directors of NGC, which in its 278th meeting, directed those negotiations be resumed with GAM ARAK before pursuing alternate enforcement avenues.
NGC has approached Power Division for assistance in engaging the Iranian Embassy, through coordination with the Ministry of Foreign Affairs, to facilitate constructive dialogue.
CMS Consultants outlined the following legal pathways for enforcement and recovery: (i) primary jurisdictions for enforcement France, Iran, and Pakistan are the most viable jurisdictions for enforcement. Other jurisdictions may be explored following asset tracing.
Enforcement in France (Seat of Arbitration): A French court can issue an exequatur order, making the Award enforceable in France for up to 10 years.
Enforcement under the New York Convention (1958) : the Award can be enforced in any signatory country where GAM ARAK holds assets, including Iran.
Asset Tracing : engagement of professionals to identify global assets of GAM ARAK for targeted enforcement.
Assignment of Award: NGC may assign the Award to a third party, subject to approval under its Articles and Memorandum of Association or Shareholders Agreement.
Third-Party Monetization Options are outright sale of Award rights on the secondary market. Third-Party funding arrangement where an investor finances enforcement in exchange for a share of recoveries.
Given the Board’s direction to prioritize amicable resolution, the following negotiation options are being explored. NGC seeks the support of your esteemed office in evaluating and facilitating these options: (i) direct negotiation with GAM ARAK-
settlement may be explored on the principal amount only, subject to Board approval for waiver of interest ;(ii) possibility of material substitution, e.g., GAM ARAK providing towers or equipment in lieu of cash ; and (iii) a neutral price evaluator may be engaged to assess value.
Diplomatic Engagement through Ministries : NGC, via Ministry of Energy and Economic Affairs Division, may approach Tavanir (Iran’s national energy company), seeking facilitation in recovery through a government- to-government dialogue.
Negotiation through SUNIR (Iranian Company) : SUNIR is engaged in the Gwadar Transmission Project (47 km, EUR 29 million) and has known affiliations with GAM ARAK. Possibility of indirect settlement or offsetting arrangements with SUNIR may be explored.
The Embassy of Pakistan in Tehran may assist in engaging relevant Iranian authorities and GAM ARAK directly to encourage compliance with the Award.
NTDC has requested the Attorney General Office in the following: (i) advisory assistance on legal and diplomatic channels for resolution ;(ii) coordination with relevant ministries and embassies, both in Pakistan and Iran ; (iii) oversight and endorsement of any negotiated arrangement, ensuring it aligns with national and public interest and ;(iv) guidance on interest -waiver or in-kind settlement options within the legal framework applicable to state-owned enterprises. Ends
