(Web Desk) — Iran has issued a final warning to Pakistan, threatening legal action if Pakistan fails to complete its portion of the Iran-Pakistan (IP) gas pipeline by September 2024.
According to a leading Pakistani newspaper, Iran plans to take the case to the Paris Arbitration Court if the deadline is not met. This project, signed under a Gas Sales Purchase Agreement (GSPA) in 2009 and governed by French law, has been delayed for over a decade due to concerns about potential U.S. sanctions. The Paris-based court, which will handle the dispute, does not recognize these sanctions.
A revised contract between Pakistan’s Inter-State Gas Systems (ISGS) and Iran’s National Iranian Gas Company (NIGC) in September 2019 set a new deadline for Pakistan to complete its part of the pipeline by February-March 2024. Despite an additional 180-day extension, Iran claims that Pakistan has not fulfilled its obligations.
Iran’s final notice comes with a serious ultimatum: if legal action is not initiated by September 2024, Iran will forfeit its right to pursue the matter in court. This warning follows a previous legal notice issued in late 2022, where Iran demanded completion by early 2024 or an $18 billion penalty. Tehran has long signaled its readiness to move to arbitration, citing a daily penalty of $1 million for Pakistan’s non-compliance since January 1, 2015.
Pakistan’s current administration is reportedly frustrated by the final notice and is consulting with foreign law firms to prepare a defense. Senior officials blame U.S. sanctions as the major hindrance, noting the Biden administration’s strong opposition to the IP gas project. Despite efforts to secure a waiver, a U.S. Congressional panel has warned of severe repercussions if Pakistan proceeds with the project.
Tehran dismisses Pakistan’s arguments about the sanctions, pointing out that other countries like Iraq and Turkey have successfully obtained waivers. The project, which was originally supposed to be completed by December 2014, has made minimal progress, with only an 81-kilometer section of pipeline from Gwadar to the Iranian border constructed, which also fell short of expectations. Failure to resolve the dispute in arbitration could potentially leave Pakistan liable for billions of dollars.
