Peshawar BRT: Contractors approach world court of arbitration

PESHAWAR: The JV contractors of the Peshawar BRT project have finally invoked the provisions of the contract and approached the International Court of Arbitration to pay them Rs57 billion in outstanding disputed amounts.

If the claim is accepted, the total cost of BRT Peshawar will exceed Rs120 billion. The contractor has demanded money for increasing the scope of the project, frequent changes in design, escalation & price adjustment, delayed payments, financial charges, retention amount and interest on all outstanding amount.

A PDA official, on condition of anonymity, told this correspondent that the dispute could not be resolved amicably between the two parties due to the NAB inquiries.

M/s SGEC-MAQBOOL-CALSONS, a joint venture between Chinese and Pakistani companies, has sent an arbitration request to the Secretariat for the International Court of Arbitration, International Chamber of Commerce Paris, France. The request letter said that as provided in the contract sub-clause 20.5, the contractor has made several serious attempts for amicable settlement with the Peshawar Development Authority on all the disputed matters, including disputes decided in its favor by the Dispute Board, but the employer didn’t listen.

The arbitration request says the PDA conceived the Peshawar Bus Rapid Transport project and in collaboration with the Asian Development Bank (ADB) against a loan launched the project for the facilitation of citizens of Peshawar. After a transparent international competitive bidding process, JV was awarded the contract of civil works for the project.

The request said that due to frequent changes in the design, the work was advised to be suspended several times by the client. As a result, the contractors suffered delays and costs for idling of machinery and their other mobilized resources. Some serious imperfections in the design were also pointed out by the contractors.

The contract sub-clause 20.2, said the Dispute Board (DB) was to be constituted within 28 days of the commencement of the project; however, PDA has constituted DB after 343 days. As a result of the late constitution of DB, the contractual disputes that arose meanwhile couldn’t be referred to the DB for adjudication which resulted in financial difficulties for the contractors and impacted the progress as well.

As many as 77 disputes were referred to the DB out of which only 23 disputes were decided by the DB, and the rest are pending. Due to non-payment to the DB members by the PDA, the chairman DB has tendered his resignation on August, 24 2022 and the DB is no longer functional. PDA to this day has not paid any of the amounts decided by the DB in favour of the contractors and huge payments are pending with the PDA. The contract sub-clause 20.6 provides for international arbitration in case the DB is not in place or any of the parties has expressed his dissatisfaction with the decisions delivered by the DB.

“We are, therefore, left with no option but to invoke the provisions of international arbitration as per sub-clause 20.6 & sub-clause 20.8, and have asked our legal team to serve a legal notice on the employer,” the contractor said.

The letter said the disputed amount pending to PDA in Reach-I is around Rs11,178.527 million while DB adjudicated Rs221.055 million in favour of the contractor while Rs11,069.96 million are still disputed.

Similarly, Rs16,656.97 million was pending as disputed in Reach II while DB adjudicated Rs257.919 million in favour of the contractor while Rs16,909.704 million is still pending. Likewise, in Reach-III, Rs22,097.360 million is disputed while DB adjudicated Rs2,376.07 million and an amount of Rs19,985.32 million is still pending. The contractor has raised Rs57,082.627 million total disputed bills but DB adjudicated Rs2,855.048 in favour of the contractor while Rs55,114.760 million is still pending arbitration. The retention money amounting to Rs2 billion is withheld by the PDA against the provision of the contract.