ISLAMABAD: The Office of Attorney General for Pakistan is said to have distanced itself with respect to strategy to deal with award of millions of dollars in favour of Star Hydro Power Limited (SHPL), suggested by the foreign counsel engaged by the CPPA-G/ Power Division, well informed sources told Business Recorder.
AGP Office, sources said, referred to Central Power Purchase Agency (Guarantee) Limited correspondence of June3, 2024 stating that it concurs with the strategy proposed by CPPA’s foreign counsel, Toby Landau KC and Tariq Baloch, in their advice of June 1, and requested the endorsement of AGP s Office to proceed with the same. Final Award in arbitration was issued against NTDC/ CPPA-G on May 7, 2024. The Federation/ GoP is not a party to the subject arbitration proceedings but consequential proceedings arising from non-payment of arbitral awards against NTDC/ CPPA-G will result in further litigation invoking sovereign guarantees against the federation.
The advice clarifies the following matters relating to the Award and potential chances of successfully challenging the Award before the United Kingdom High Court:
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a. In Para 9: “Accordingly, our reading of the above parts of the dispositive section-alone -is that the arbitrator has found that: (i) SHPL is entitled to payments based on the COD tariff of Rs 10.3632/Kwh from November 8, 2017 until the end of the PPA”; (ii) damages owed to SHPL will be the dealt between what has been paid to it based on the existing pre-Award tariff applied from November 8, 2017 and what the arbitrator has found they are entitled to from November 8, 2017.
In Para 18: “Our view is that imperfect though the Award may be in its reasoning, anywhere outside Pakistan a court may well interpret it as a concretely awarding damages.”
In Para 105(a): “Seeking set aside in England comes with risks. First, it is well known that very few challenges succeed. The arbitrability objection is still novel. Indeed, one way of looking at the similar facts of Tamil Nadu is that it is a lesson about how an English court would seek to salvage a case like this one and uphold the Award. And finally, the findings in the English courts will create estoppels that would then be deployed in other cases relating to the PPA both in England and abroad.”
In Para 105 (d): “The Guarantee options give SHPL the chance to bypass the Pakistani courts and cash in on the Award before a new tribunal. If the matter goes down the same route as the Second Award and Preliminary Issue Award then SHPL would have an Award against Pakistan which it can then enforce against Pakistan’s assets abroad, as well as triggering the MIGA Guarantee.”
In Para 106: “Our current thinking is that it is best not to create wider public findings in the English court or invite, via clarification, the Sole Arbitrator to improve his reasoning.
Rather NTDC/ Pakistan should maintain that the Award is unenforceable, and for that purpose should explore whether Pakistani court will provide a declaratory judgment. The worst case scenario is that the Guarantee arbitration would be lost, but at that stage a settlement can be reached; the best case scenario is that any Guarantee arbitration is won.
This approach avoids the risk of losing a set aside application before the England courts, with wider findings that the court may make leading to estoppels elsewhere.
In view of the current situation, Attorney General Office is of the view that this Office has no objection to CPPA’s decision to apply and implement the strategy proposed by foreign counsel; i.e., namely of not to challenge or seek clarity of the Award in view of the risks and proceed to initiate proceedings in Pakistan for a declaratory judgment that may be used in consequential arbitration proceedings invoking the sovereign guarantee against the Federation.
AGP maintains that considering all power purchase agreements are endorsed by the Ministry of Energy (Power Division) and NTDC/ CPPA-G without the involvement of AGP Office, it is for the Ministry of Energy (Power Division) and CPPA-G to endorse and implement the strategy.
Copyright Business Recorder, 2024
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