The Pakistani government has assembled a high-caliber legal team to defend the country in an international arbitration case initiated by Iran over the delayed cross-border pipeline. 

The ongoing dispute centers on Pakistan’s failure to complete its portion of the Iran-Pakistan (IP) gas pipeline project despite multiple warnings from Tehran. 

The legal team comprising White & Case, Three Crowns, Willkie Farr & Gallagher, and a prominent Australian energy lawyer, was officially briefed on October 18, 2024, and has since submitted its information to the Court of Arbitration in Paris.

The case stems from Pakistan’s repeated delays in constructing its section of the pipeline and its subsequent failure to import the agreed-upon 750 million cubic feet per day (mmcfd) of gas. 

Iran issued a final notice in August 2024, triggering the arbitration process after Pakistan missed a September 2024 deadline.

Initially signed in 2009, the Iran-Pakistan pipeline project has been plagued by delays primarily due to U.S. sanctions on Iran, making Pakistan unable to meet the new deadline signed in 2019.

Following the deadline lapse, the French-based arbitration court, operating independently of U.S. sanctions, will now oversee the dispute resolution process, which could see Pakistan pay over $18 billion in arbitration fees. 

As outlined in the original Gas Sales Purchase Agreement, Pakistan faces potential penalties, including a $1 million daily fine, for delays beyond January 2015.

Government officials in Pakistan attribute the delays to U.S. sanctions, citing the Biden administration’s opposition to the project after the U.S. repeatedly warned Pakistan of potential repercussions for proceeding with the IP pipeline.