Arbitration court takes up KP BRT project

PESHAWAR: The International Court Arbitration has commenced the Peshawar Bus Rapid Transit project arbitration process and issued notice to the Peshawar Development Authority.

The contractor and PDA have been asked to decide the number of the arbitrators. If the contractor’s claim is accepted, the national exchequer is feared to suffer huge losses. The cost of appointing one arbitrator will be USD320,958 (Rs89,226,324) for both parties, while for appointing three arbitrators, both parties will have to deposit USD758,086 (Rs210.75 million). Both the parties are directed to inform the court and deposit the fee as soon as possible.

The JV contractors (SGEC-MAQBOOL-CALSONS-JV) of the Peshawar BRT project had invoked the provisions of the contract and approached the International Court of Arbitration to pay them Rs57 billion in outstanding disputed amounts on only one package.

The BRT consists of three packages, while three parking plazas were built in three additional packages. 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 and price adjustment, delayed payments, financial charges, retention amount, and interest on all outstanding amounts.

The International Court of Arbitration sent a letter no 24th April 2024/ sza/ jfg 28549/HTG to both complainant and respondent. The letter says the secretariat notified the respondent that, on March 21, 2024, it received the request from the claimants. Under article 4(2) of the ICC Rules of Arbitration (“Rules”) in force as of January 1, 2021, this arbitration commenced on March 21, 2024.

The ICC International Court of Arbitration has asked the PDA to submit reply within 30 days. The respondent may apply for an extension of time for submitting the reply by providing its comments on the number of arbitrators and, where required, nominating a co-arbitrator (Article 5(2)). Such information will enable the International Court of Arbitration of the International Chamber of Commerce (“Court”) to take steps towards the constitution of the arbitral tribunal. If any of the parties refuses or fails to take part in the arbitration at any stage thereof, the arbitration will proceed notwithstanding such refusal or failure under Article 6(8).

The arbitration agreement does not provide for the number of arbitrators. Claimants have not provided comments on the constitution of the arbitral tribunal and are invited to do so within 15 days. The arbitration court has sent two options for a single tribunal and a three-member tribunal

The estimated fee for one arbitrator is US$320,958, while the cost of three arbitrators is $758,086. Both parties are directed to inform the office as soon as possible.

However, the parties can settle their dispute amicably at any time during the arbitration. The parties may wish to consider conducting an amicable dispute resolution procedure under the ICC mediation rules, which, in addition to mediation, also allow for the use of other amicable settlement procedures. The ICC can assist the parties in finding a suitable mediator.