Government wins $0.5 million claim for legal costs

By Mohammad Kamran

ISLAMABAD: The Pakistan government has won a claim of $592,000 in legal costs for the defence of a $510 million lawsuit by a Malaysian construction company in the International Chamber of Commerce (ICC) in Paris.

Derek Firth, the sole arbitrator appointed by the ICC, on Monday awarded full legal costs incurred by the government in its successful defence of the lawsuit. Amhurst Brown of Islamabad, who represented the government in the case, has received the award.

The government had awarded Sabah Shipyard a $300 million contract for a barrage-mounted power project to sell electricity to the Karachi Electric Supply Company (KESC). A Memorandum of Understanding was signed in 1995 in Malaysia. In March 1996, the government signed an implementation agreement (IA) with Sabah and KESC signed a power purchase agreement (PPA) to purchase electricity from Sabah.

However, Sabah did not complete its work within the specified period of 20 months, and the government cancelled the IA while KESC cancelled the PPA. Sabah filed two claims for arbitration with the ICC. The claim against the government was initially for $227 million which Sabah increased to $510 million including damages. Sabah’s claim against KESC was for about $9 million. KESC quickly lost the arbitration against Sabah in Singapore. Barrister Munawar Akhtar of Amhurst Brown said he and his team then convinced the managing director and the legal director of the Private Power & Infrastructure Board (PPIB), the institution which safeguards the government of Pakistan’s interests in power projects, to allow them to investigate Sabah in Malaysia and Singapore.

After months of investigations, the Pakistani lawyers discovered that at the time the contracts were awarded to Sabah, the organisation was practically bankrupt and was deeply indebted to Westinghouse of USA, its main supplier of equipment for the Pakistan project.

Consequently, Amhurst Brown prepared Pakistan’s defence and filed it with the arbitrator. Within a couple of months of receiving Pakistan’s defence, Sabah abandoned its claim but the government filed a claim of legal costs and won the award of $592,000.

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