a day ago
- Business
- Business Recorder
Star Hydro case: CPPA-G files appeal in UK
ISLAMABAD: The Central Power Purchasing Agency-Guaranteed (CPPA-G) has filed an appeal with regard to the case of Star Hydro Power Company Limited (SHPL) before August 22, 2025, sources told Business Recorder.
Sharing the details, sources said, London High Court of Justice, upon dismissing the Star Hydro Power Limited's interim anti-suit injunction application, granted permission to appeal the said dismissal before the Court of Appeal.
The London Court of Appeal, vide its order dated July 24, 2025, has allowed the appeal filed by SHPL while granting injunction sought by SHPL whereas no permission to appeal the Order has been allowed to the Power Purchaser.
A meeting chaired by Law Minister Azam Nazir Tarar on the disputes with M/s SHPL was convened at Ministry of Law and Justice on August 4, 2025, whereby it was decided to challenge the order before the UKSC in the event that Foreign Counsel already engaged in the proceedings 'the Counsel.' so advises.
The CPPA-G is now in receipt of the advice of the Counsel whereby it is recommended that NTDC/CPPA-G should apply for permission to appeal to the UKSC before August22, 2025. The Counsel - Toby Lando England - has shared its fee quotation to file the permission to appeal.
Bearing the paucity of time to file the appeal before UKSC, it is important to engage the Counsel to proceed further in the matter.
Pursuant to the Standard Operating Procedures (SOPs) for engagement of Foreign Law firms/lawyers in Foreign Litigation/Arbitration on behalf of Government of Pakistan issued by the Office of the Prime Minister of Pakistan and circulated on February 17, 20 issued by the Ministry of Law and Justice (the 'SOPS'), in the event of foreign litigation or arbitration involving the state or its instrumentalities, the Ministry of Law and Justice is to constitute a committee chaired by the Attorney General for Pakistan to select a suitable foreign counsel to represent the state/its instrumentality, settle the terms and conditions of said counsel's engagement, and approve the engagement contract/letter for said counsel's engagement.
Bearing the gravity involved in the matter which has been dealt with by the Counsel, and limitation of a short time to file the appeal against the Order, approval for the engagement of the Counsel to represent CPPA(G)/NTDC before the UKSC was sought.
The dispute dates back to September 2022 when Star Hydro initiated arbitration under the GoP Guarantee after the National Transmission and Despatch Company (NTDC) — the state-owned power off-taker—refused to honor an earlier arbitration award. That award ordered NTDC to pay significant sums for liquidated damages caused by delays in the project's commercial operation date. The amounts included: (i) Rs. 2.02 billion in delay-related invoices; (ii) $16.45 million in principal damages; (iii) $2.73 million in partial legal costs; and (iv) £51,180 in arbitration costs. These remain unpaid.
Under the terms of the MIGA guarantee, Pakistan is obligated to pay the awarded amounts. If it fails to do so within 180 days, MIGA would be required to compensate the investor, creating an international obligation for Pakistan.
The MIGA has never had to pay a claim under its breach of contract risk in its history. Should that change, the implications for Pakistan could be significant, both financially and diplomatically. The Finance Ministry is therefore weighing a negotiated settlement to mitigate potential long-term consequences and uphold Pakistan's international financial commitments, the sources added.
Managing Director PPIB, Shah Jahan Mirza gave a detailed presentation to the meeting presided over by the Law Minister, on the nature of dispute between Star Hydro Power Limited) and National Transmission & Despatch Company recently renamed as National Grid Company (NGC)/CPPA and financial impacts of the claims made by SHPL in all three arbitrations before LCIA and related legal proceedings before Lahore High Court and UK Courts. Other participants of the meeting also gave their respective input into the deliberations.
After thorough discussions and deliberations following pertinent decisions were made with consensus: (i) given the status of these LCIA arbitrations and related legal proceedings in UK courts, designated officials of Power Division, Ministry of Finance, SIFC, NGC/CPPA and PPIB will immediately engage with SHPL through MIGA's good offices, and negotiate in good faith an amicable settlement of all disputes and officials of International Dispute Unit (IDU), AG office, and Ministry of Law & Justice who will extend all possible support in such negotiations and drafting of Settlement Agreement; (ii) if SHPL agrees, GoP and SHPL may agree to enter into an Agreement for Stay of Proceedings whereby proceeding pending before LCIA will be put on hold for the negotiations to be concluded within a specified time period; (iii) if foreign counsel of CPPA/NGC so advises that an Appeal must be filed before Supreme Court of the United Kingdom (UK SC) against the judgment of Court of Appeals which anti-suited NGC/CPPA in relation its application under the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 before Lahore High Court, NGC/CPPA as a fallback position will finalize the draft of Appeal and will cause it to be filed on or before22nd August 2025 only in case negotiations with SHPL either fail or remain pending till August 18, was decided that in order to save cost of counsel fee for filing of Appeal before UK SC, NGC/CPPA should engage a counsel who charges relatively lower fee and later if need arises, original counsel may be engaged again for final arguments; and (iv) pending negotiations with SHPL or in case such negotiations fail during the period as agreed under the Agreement for Stay of Proceedings or otherwise, the AG office/PPIB shall continue to take all necessary actions to vigorously defend GoP in both LCIA Arbitrations.
Copyright Business Recorder, 2025
