ISLAMABAD: A Pakistani oil firm has won a legal battle against a Bermuda-based company at the International Court of Arbitration, which ruled that Pakistani laws govern the Petroleum Concession Agreements (PCAs) signed in the country.

The Bermuda-based company Frontier Holdings Ltd (FHL) faced defeat in a prolonged legal dispute at the International Court of Arbitration against Petroleum Exploration (Pvt) Ltd (PEL).

The over 80-page arbitration court ruling also marks a pivotal moment in Pakistan’s legal landscape, affirming the country’s legal sovereignty over arbitration agreements related to Petroleum Concession Agreements (PCAs) and Joint Operating Agree­ments (JOAs).

The tribunal declared by a majority that it does not have jurisdiction over this dispute, and FHL will bear the arbitration costs, which were fixed at $250,000.

The legal battle was initiated by FHL, a subsidiary of Canadian company JuraEnergy Corporation, after their dispute with a local partner, PEL, in the Badin North and Badin South blocks, in which FHL holds a 27.5pc share.

The blocks were awarded in 2006 by the Ministry of Petroleum.

The tribunal’s ruling highlights that parties entering into agreements related to PCAs and JOAs in Pakistan must abide by Pakistani laws regarding the legal framework governing their transactions.

Meanwhile, a senior PEL official said the international arbitration was intended to obstruct oil and gas exploration and production (E&P) activities in Pakistan.

The official added that such companies function as non-operators in the E&P sector and have defaulted on their financial obligations towards the government of Paki­stan and key industry players, including OGDCL and Mari Petroleum.

On the other hand, FHL’s chief executive officer has yet to respond despite repeated requests by Dawn to present his point of view on the matter.

Published in Dawn, April 13th, 2024

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