Iran may seek a penalty of $18 billion from Pakistan through Paris-based International Arbitration if Islamabad doesn’t advance the Iran-Pakistan (IP) gas pipeline project. Tehran extended the deadline by 180 days until September 2024.
Iran offered to send its legal and technical team to Pakistan to develop a mutually beneficial strategy within this timeframe. The team’s visit, initially planned for January 21, was delayed due to recent tensions between the two nations.
Iranian experts are expected in Pakistan in the second week of February. Both countries will formulate a feasible strategy for the project’s realization. The Iranian delegation will include international law experts, legal advisors, and engineers.
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The project has faced delays since 2014, with Pakistan receiving a notice 25 days ago. In late 2022, Iran issued a second notice, urging Pakistan to build its portion of the pipeline by early 2024 or face a hefty penalty. Tehran had previously warned of arbitration in 2019 for non-compliance.
Pakistan attributes the delay to US sanctions on Iran, a stance Tehran disputes. Countries like Iraq, Turkey, and India have managed waivers from these sanctions.
Pakistan has sought clarity from the US about the impact of sanctions on the IP gas line project, but Washington hasn’t responded.
The Gas Sales Purchase Agreement (GSPA), governed by French law, designates the Paris-based Arbitration Court to resolve disputes. This court doesn’t recognize US sanctions.
