Arbitration Looms Over Iran-Pakistan Pipeline

Pakistan has sought a fresh 10 year extension until 2035 from Iran to start the Iran Pakistan gas pipeline amid potential arbitration penalties risk concerns.

The request comes as Pakistan faces a possible 18 billion dollar claim in arbitration initiated by Iran before Paris based court under French law proceedings.

The federal government is contesting the case while pursuing diplomatic efforts to secure an out of court settlement, officials said through parallel talks and negotiations.

A ministerial oversight committee under Deputy Prime Minister Ishaq Dar is reviewing legal and diplomatic options to limit exposure from potential financial penalties and claims.

Read More: Gas Supply Suspended Amid Winter Demand Surge

Iran launched arbitration in September 2024 alleging Pakistan failed to build its pipeline section despite multiple deadline extensions under the gas sales purchase agreement terms.

Pakistan argues international sanctions on Iran made project execution impossible within the final one hundred eighty day deadline set earlier under bilateral contractual obligations framework.

Officials say the arbitration ruling is expected in 2027 or 2028 while diplomatic engagement continues without breakthrough so far between Islamabad and Tehran currently ongoing.