NTDC wins $4.5mln compensation claims against Iranian firm

LAHORE: An international tribunal has admitted all the counterclaims of the National Transmission and Despatch Company (NTDC) against an Iranian contractor in a two-year long case involving at least Rs700 million as compensation amount, it was learnt on Saturday.

The NTDC, falling under the purview of the ministry of energy, prevailed in an international commercial arbitration initiated by GAM ARAK Ind. Co. in 2017 against it.

NTDC spokesman said the arbitral tribunal constituted under the rules of the Paris-based International Chamber of Commerce dismissed all the claims brought by the Iranian company and accepted and granted several counterclaims of NTDC amounting to approximately Rs714 million (approximately $4.5 million) plus interest at the rate of 7.925 percent per year as of the date of NTDC’s counterclaims dating back to July 2018 until full payment. The ruling was released on 24 April, 2020.

The spokesman said the dispute arose out of a contract between the Iranian company and NTDC executed in February 2011 for the design, supply, installation, testing, and commissioning of 500 kV Guddu-Multan 3rd Circuit at Rahim Yar Khan 500kV substation.

NTDC terminated the contract due to persistent delays on the part of the Iranian contractor and the project was eventually completed by another contractor.

The spokesman said the Iranian firm initiated the arbitration in early 2017, claiming an amount of approximately Rs180 million (approximately $ 1.1 million) on account of unpaid invoices and damages.

NTDC, apart from defending the claims, filed its own counterclaims related to delays, costs required to complete the project, liquidated damages, mobilisation advances, customs duties, and demurrage.

On NTDC’s counterclaims, the arbitral tribunal said the NTDC had validly terminated the contract as the Iranian company was responsible for the delay in the project.

Accordingly, NTDC was awarded liquidated damages in the amount of Japanese yen 93.6 million and Rs57.4 millionto compensate NTDC for the delay in project completion.

Furthermore, NTDC was also awarded Y151.6 million and Rs167.5 million as differential costs in respect of the new contractor engaged by NTDC to complete the project.

The tribunal also ordered the Iranian company to repay NTDC the unadjusted portion of the mobilisation advance given to it at the time of the project commencement amounting to Y49.8 and Rs12.2 million and a portion (Rs28.1 million) of the demurrage charges paid by NTDC when shipments were stuck at port.

The spokesman further said the NTDC is also entitled to interest at the rate of 7.925 percent per annum for the Pakistani rupee portion of the damages awarded in its favour. The interest will accrue from 6 July 2018 and run until such time as payment of the award is made. Given NTDC’s near-total success on its counterclaims, the sole arbitrator also awarded NTDC 78 percent of its legal and other costs in the arbitration.

During the hearing, NTDC was represented in this matter Zafar Abbas, managing director, Hamza Randhawa, chief legal officer, and Arslan Akhtar, manager Legal). NTDC engaged the services of Pakistani law firm, Axis Law Chambers led by Partner Syed Shahab Qutub and assisted by Sameer Khosa, Maria Farooq, Abdullah Tariq, Hira Jaleel, Salman Ijaz, and Yumna Baloch. NTDC did not engage any foreign lawyer or experts for this arbitration.