ISLAMABAD, Dec 29: Pakistan has won an international arbitration against a Malaysian firm M/s Sabah Shipyard which had claimed $510 million compensation from the government for non-implementation of a power project in Karachi.

The sole arbitrator appointed by the International Chamber of Commerce, Paris, also awarded recovery of full legal costs amounting to $592,000 from the Malaysian firm to be paid to the Pakistan government.

Senior lawyer, Barrister Munawar Akhtar of the law firm Amhurst Brown told reporters here at his office on Tuesday that Derek Firth, the sole arbitrator appointed by the International Chamber of Commerce (ICC) had awarded the full legal cost of $592,000 incurred by the government to win the arbitration.

The award was received by government's lawyers Amhurst Brown of Islamabad on Monday, he said. Giving details he said, M/s Sabah Shipyard was awarded a contract of $300 million to set up a barge mounted power project to sell electricity to the Karachi Electric Supply Company (KESC).

A memorandum of Understanding (MoU) was signed by ex-secretary Salman Farooqi during the visit of former Prime Minister Benazir Bhutto and her husband Asif Zardari to Malaysia in 1995.

In March 1996 the government of Pakistan signed an Implementation Agreement (IA) while Sabah and KESC signed a Power Purchase Agreement (PPA) to purchase electricity from Sabah to meet the power requirements of Karachi city.

However, Sabah failed to complete the work within the specified period of 20 months. Consequently the government cancelled the IA whereas KESC cancelled the PPA as per requirements of the respective agreements.

Sabah filed two claims for arbitration with the ICC. The first claim against the government of Pakistan was initially for $227 million which was later increased by Sabah to $510 million for the award of damages allegedly caused to Sabah by the cancellation of IA, he said.

In the second claim, Sabah demanded a recovery of $9 million from the KESC for encashing the performance letters of credit and interest. Barrister Munawar Akhtar of the law firm explained that he and his team of lawyers after analyzing the claim and relevant documents convinced the management of the Private Power and Infrastructure Board (PPIB), that they should be allowed to investigate about Sabah's story in Malaysia and Singapore.

He said, in the second arbitration Sabah had raised objection to the jurisdiction of the arbitrator. This, however, was rejected by the arbitrator while its appeal to the Singapore High Court also failed.

The government's lawyers, Amhurst Brown, also filed detailed documentation with the ICC in support of the application for the award of costs. The lawyers also satisfied the arbitrator that Sabah's claim lacked merit from the start.

Amhurst Brown had earlier also successfully defended Wapda in London during 1983-84 in another ICC arbitration against a Belgium Company, ACEC, in which Wapda was also awarded legal costs from the opposite party, he said.