February 17, 2003	Monday	Zul Hijjah 15, 1423

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ISLAMABAD, Feb 16: The Italian contractor of Ghazi Barotha Hydro-electric Power Project, Impregilo, has drawn Pakistan into another costly legal battle, as it has approached the International Centre for the Settlement of Investment Disputes (ICSID) for the settlement of its dispute with the Pakistan government.

Official sources told Dawn that the Italian contractor, who had refused to return after leaving the project incomplete after Sept 11 incident in 2001, has filed the claim for damages before the ICSID. It is yet not clear how much the contractor has demanded, but the Pakistan government has been intimated that the claim has been filed.

The Italian contractor has invoked force majeur clause of the agreement. Under this clause all the losses incurred due to delay in the project would be borne by the Water and Power Development Authority (Wapda) because the clause means the working environment is not good or some emergency exists which may affect the contractors in terms of life and financial loss, sources maintain.

The sources said Wapda had negotiated for out of court settlement with the contractor, but it could not be finalised with the result that the contractor has approached the ICSID.

Wapda has been blaming the contractor of taking refuge under the force majeur clause as it had already made up its mind to leave.

Ghazi Barotha Hydro-electric Power project, started with the estimated cost of $2.5 billion, was to be completed in 1998, but even after four years of the required period it could not be completed.

All sorts of disputes arose at the Ghazi Barotha project starting from labour unrest, payment disputes and handing over of the required land.

The contractor company had left the project one month after the Sept 11 incident, which, according to Wapda estimates, cost the Pakistan government around one million dollars per day and the total loss has gone much beyond hundreds of millions.

The Wapda has engaged local as well as foreign firms to complete the rest of the work at Ghazi Barotha.

The contractor had refused to return after receiving a number of letters from the Pakistan government, arguing that the European governments had declared the NWFP and Balochistan security risk zones.

Pakistan, however, had taken the plea that Ghazi Barotha project was situated in Punjab that never fell in the security risk bracket.

Pakistan is facing accumulative claims of about $950 millions at the ICSID by the Swiss company, SGS; Turkish company Bayinder and now Italian company Impregilo.

Irrespective of the outcome at the ICSID, participation in the proceeding is so expensive that countries like Pakistan usually avoid appearing before it.

When a complaint is registered at the ICSID, both the parties are required to deposit $100,000 as fee apart from engaging the foreign lawyers who have specialised in ICSID proceeding, mostly held in foreign countries.

If a suit is decreed ex parte by the ICSID, the other party can ask for the execution of the treaty by identifying Pakistan’s foreign assets.

In one case, French government had threatened to confiscate Pakistan’s foreign assets for realising the claim of $100 million. The government had to sign a loan agreement of $100 million with French government to pay the whole amount to the company.