Iran can move arbitration court against Pakistan over pipeline delay, PM informed

By Khalid Mustafa
March 30, 2023

ISLAMABAD: Prime Minister Shehbaz Sharif has been informed that Iran has the right to move the Court of Arbitration just prior to February 2024 under the French law against Pakistan if the IP gas line project is not completed by Feb-March 2024, sources disclosed to The News.


The News broke the story in its edition of January 31, 2023 under the headline “Iran dangles the threat of penalty of $18 billion over IP gas line project”. It disclosed that Iran, through its notice, had asked Pakistan to construct a portion of the Iran-Pakistan (IP) gas line project in its territory till February-March 2024 or be prepared to pay a penalty of $18 billion.

Reacting to the news report, Prime Minister Shehbaz Sharif in a high-level meeting held on January 31, 2023, constituted a committee headed by the SAPM on Foreign Affairs Syed Tariq Fatemi on how to address the issue with Iran amid the US sanctions.

“Under the new scenario, the committee has submitted its recommendations to the prime minister with focus to keep Iran engaged and extend assurances that Pakistan is very committed to the project as it is a sovereign obligation of the country,” top official sources told The News.

They, however, refused to disclose specific recommendations citing diplomatic sensitivities and the larger interests of the country to make the recommendations public at this stage. However, the officials said that under French law, Iran has the right to move arbitration court against Pakistan prior to February 2024, as the Gas Sales Purchase Agreement (GSPA) was signed between the two countries under the French law.

At the same time, the officials said Pakistan also direly needs to launch a major diplomatic initiative to engage top US functionaries in Washington to seek a waiver to materialize the project. However, preliminary contacts between top Petroleum Division officials and the US ambassador in Pakistan solicited no response from the latter. India, on the other hand, had managed a waiver from the US sanctions and continues to import POL products from Iran.