“(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award. A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3). (2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant— (a) failure by the tribunal to comply with section 33 (general duty of tribunal); (b) … (c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties; (d) failure by the tribunal to deal with all the issues that were put to it; … (3) If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may— (a) remit the award to the tribunal, in whole or in part, for reconsideration, (b) set the award aside in whole or in part, or (c) declare the award to be of no effect, in whole or in part. The court shall not exercise its power to set aside or to declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.”
“(1) The tribunal shall— (a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and (b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined. (2) The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it.”
“(3) A balance has to be drawn between the need for finality of the award and the need to protect parties against the unfair conduct of the arbitration. In striking this balance, only an extreme case will justify the court’s intervention. Relief under s 68 will only be appropriate where the tribunal has gone so wrong in its conduct of the arbitration, and where its conduct is so far removed from what could reasonably be expected from the arbitral process, that justice calls out for it to be corrected. (4) There will generally be a breach of s 33 where a tribunal decides the case on the basis of a point which one party has not had a fair opportunity to deal with. If the tribunal thinks that the parties have missed the real point, which has not been raised as an issue, it must warn the parties and give them an opportunity to address the point. (5) There is, however, an important distinction between, on the one hand, a party having no opportunity to address a point, or his opponent’s case, and, on the other hand, a party failing to recognise or take the opportunity which exists. The latter will not involve a breach of s 33 or a serious irregularity.” [Emphasis added]
“40. In relation to the first question of what is an issue, Akenhead J said the following in para 33(g): “(ii) There is a distinction to be drawn between 'issues' on the one hand and 'arguments', 'points', 'lines of reasoning' or 'steps' in an argument, although it can be difficult to decide quite where the line demarking issues from arguments falls. However, the authorities demonstrate a consistent concern that this question is approached so as to maintain a 'high threshold' that has been said to be required for establishing a serious irregularity (Petrochemical Industries v Dow[2012] 2 Lloyd's Rep 691 , para 15; Primera v Jiangsu[2014] 1 Lloyd's Rep 255 , para 7). (iii) While there is no expressed statutory requirement that the section 68(2)(d) issue must be 'essential', 'key' or 'crucial', a matter will constitute an 'issue' where the whole of the applicant's claim could have depended upon how it was resolved, such that 'fairness demanded' that the question be dealt with (Petrochemical Industries , at para 21). (iv) However, there will be a failure to deal with an 'issue' where the determination of that 'issue' is essential to the decision reached in the award (World Trade Corpn v C Czarnikow Sugar Ltd[2005] 1 Lloyd's Rep 422 at para 16). An essential issue arises in this context where the decision cannot be justified as a particular key issue has not been decided which is critical to the result and there has not been a decision on all the issues necessary to resolve the dispute or disputes (Weldon Plan Ltd v The Commission for the New Towns[2000] BLR 496 at para 21).” 42. Turning to whether the issue has been “put to” the arbitrators, Akenhead J continued in para 33(g) of the Raytheon case as follows: “(v) The issue must have been put to the tribunal as an issue and in the same terms as is complained about in the section 68(2) application (Primera at paras 12 and 17).”
“(vi) If the tribunal has dealt with the issue in any way, section 68(2)(d) is inapplicable and that is the end of the enquiry (Primera, at paras 40—41); it does not matter for the purposes of section 68(2)(d) that the tribunal has dealt with it well, badly or indifferently. “(vii) It matters not that the tribunal might have done things differently or expressed its conclusions on the essential issues at greater length (Latvian Shipping v Russian People’s Insurance Co[2012] 2 Lloyd’s Rep 181 , para 30). “(viii) A failure to provide any or any sufficient reasons for the decision is not the same as failing to deal with an issue (Fidelity Management v Myriad International[2005] 2 Lloyd’s Rep 508 , para 10, World Trade Corpn, para 19). A failure by a tribunal to set out each step by which they reach its conclusion or deal with each point made by a party is not a failure to deal with an issue that was put to it (Hussman v Al Ameen[2000] 2 Lloyd’s Rep 83 ). “(ix) There is not a failure to deal with an issue where arbitrators have misdirected themselves on the facts or drew from the primary facts unjustified inferences (World Trade Corpn, at para 45). The fact that the reasoning is wrong does not as such ground a complaint under section 68(2)(d) (Petro Ranger[2001] 2 Lloyd’s Rep 348 , Atkins v Secretary of State for Transport[2013] EWHC 139 (TCC) at [24]). “(x) A tribunal does not fail to deal with issues if it does not answer every question that qualifies as an “issue”
“Section 3.6 Diversion of Gas and Take or Pay (a) From and after the Commercial Operations Date GT1 and during a Month in the Delivery Period, the Buyer shall take and if not taken pay for the portion of the Firm Gas Allocation pertaining to that Month (the ‘Monthly Take-or-Pay Quantity’) divided by the number of days in that Month multiplied by the difference between the number of days in that Month and (i) the number of days (or fractions thereof) of Force Majeure Events declared by the Seller or the Buyer, (ii) the number of days (or fractions thereof) of non-delivery of Gas by the Seller in that Month for any reason, including a breach or default by the Seller or maintenance undertaken by the Seller pursuant to Section 12.1, and (iii) the number of days of Scheduled Outages in that Month notified to the Seller pursuant to Section 12.2 (in relation to the maintenance and scheduled outages, each to the extent not already catered for under the Firm Gas Order). (b) In case Monthly Take-or-Pay Quantity is not fully utilized by the Buyer in the Complex, the Buyer may request the Seller to divert any unutilized Monthly Take-or-Pay Quantity to any other power plants (after seeking their consent) and the Seller shall arrange for such diversion at the cost and risk of Buyer subject to available capacity in its pipelines. Any amounts received by the Seller from the other power plants in consideration of supply of the diverted Gas shall, after making deduction of any additional charges incurred by the Seller in arranging the sale, be paid by the Seller to the Buyer within 3 Business Days of receipt of such amounts (along with a copy of the invoice evidencing the selling price of the unutilized Monthly Take-or-Pay Quantity). If other power plants refuse or the Seller due to technical constraints or any other reasons is unable to supply the diverted Gas to the other power plants, the Seller shall have the right to supply such Gas to any of its consumers and the amounts recovered from those consumers shall, after making deduction of any additional charges incurred by the seller in arranging the sale, be paid by the Seller to the Buyer within 3 Business Days of receipt of such amounts (along with a copy of the invoice or any other document evidencing the selling price of the unutilized Monthly Take-or-Pay Quantity).”
“If the Respondent wishes to pursue this application it will need to do so tomorrow at the hearing, but I can assure the parties that the case will be decided on the pleadings as presented. If either party wishes to run a new case, not encompassed by the current pleadings, then they will have to make an appropriate application to amend their pleadings.”
“203. The claim advanced by the Claimant on the pleadings was for sums invoiced by the Claimant for the Take or Pay amount, with a credit being given for amounts realised by the diversion of the gas (and recovered by encashment of the security deposit). The claim is not advanced as a claim for damages suffered as a result of a breach of contract by the Respondent. This is evident from the relief claimed by the Claimant in the SOD set out above and repeated in the REP, albeit with the figures claimed having been adjusted. The Respondent, by its Statement of Case (e.g. [125]) and Reply to Defence and Defence to Counterclaim (e.g. [151(a)]) argued, inter alia, that the Claimant had to establish actual loss or damage suffered by it before it could claim amount amounts from the Respondent (and that the Claimant had failed to do so). 204. Although the Claimant's pleadings do refer to loss, in my view, the essence of the claim being advanced by the Claimant was clearly set out in the relief referred to above and also at paragraph 4 of the REP which provided as follows: “The issues in dispute are simple and straight forward. The Claimant arranged for the gas. The Respondent failed to take that gas. The Respondent also failed to take consent of the other power plants for the diversion of unutilized gas to them. Therefore, the unutilized gas was diverted to other consumers of the Claimant. The Claimant has a right under the GSA to divert the gas to any other consumer in such circumstances. The Claimant is now asking for the tariff differential and the additional charges it has incurred in arranging for the sale as mentioned in the GSA. .. “ 205. The Respondent had ample opportunity to, and did, set out its defences to the claim advanced by the Claimant. Further, in this case the Parties agreed that the Respondent should set out its case first and accordingly it (although the Respondent) served the SOC in which it, inter alia, asserted that the amounts claimed by the Claimant under Section 3.6(a) of the GSA amounted to a penalty which could not be recovered underSection 74 of the Contract Act 1872 (e.g. [127]). It is not surprising that in response the Claimant characterised the sums it was seeking under Section 3.6(a) as actual loss. 206. Accordingly, I reject the Respondent's application to strike out sections of the Claimant's written Opening. The Claimant's claim is for recovery pursuant to the GSA of the differential between the Take or Pay amount and any recovery made it from the diversion of the Gas to others (together with a credit for recovery against the security and a late payment surcharge).”
“SNGPL previously claimed that QATPL owed it certain sums relating to alleged failures by QATPL to comply with Section 3.6 of the GSA, a provision titled “Diversion of Gas and Take or Pay”
“SNGPL no longer contended that it was entitled to the amounts it was counterclaiming on the basis they represented its actual loss. Instead, SNGPL argued that it was entitled to the price of gas under Section 3.6 GSA regardless of whether it had suffered any loss. In particular, SNGPL now argued that the sums claimed were due and payable because QATPL’s failure to take the gas did not amount to a breach of the GSA and Section 74 was therefore wholly inapplicable (the “Price of Gas Case”). SNGPL further contended that the burden was on QATPL to establish that it was entitled to a credit arising from the diversion of its gas under Section 3.6(b) GSA and that if QATPL contended that insufficient credit had been given by SNGPL, QATPL would need to bring a claim against SNGPL for the shortfall.”
“The Disputes between the Claimant and the Respondent arise out of the GSA. They relate to certain claims of the Claimant made under Section 3.6 of the GSA. This provision is titled ‘Diversion of Gas and Take or Pay’. The Respondent disputes and denies the claims in their entirety.”
“On 24.05.2018, the Claimant completely volte-faced and out of nowhere, raised an invoice for the month of May 2017 and the period from November 2017 to March 2018, claiming certain amounts purportedly on account of self-assumed shortfall in utilization of the Monthly Take-or-Pay Quantity pursuant to Section 3.6(a) of the GSA (the “First Claim”)…”
“In the meanwhile, the Claimant continued to raise monthly claims for the period following COD. These claims were made for the months May and July to October in 2019, and March to June in 2020. This was done despite the fact that the unutilized Gas was utilized by other power plants for which payment mechanism had specifically been brought in line with that of the Billing Cycle under the GSA. In recognition of that, the Claimant has regularly made adjustments in subsequent claims thereby revising downwards its earlier claims on account of utilization by its consumers. However, surprisingly, and in utter violation of the terms of the GSA, it arbitrarily maintains that certain amounts still remain payable. The Claimant continues to hold this unreasonable position and withholds all information / documents / invoices necessary to corroborate any such claims. Accordingly, the Respondent has duly disputed all such illegal, unlawful, baseless and arbitrary claims.”
“Without prejudice to the foregoing, Section 3.6(b) of the GSA provides that in case the Monthly Take or Pay Quantity is not fully utilized by the Respondent in the Complex, the unutilized portion is to be diverted, firstly, to other power plants. In case the entire unutilized quantity is utilized by the other power plants, then the Claimant cannot effectively recover any amounts from the Respondent. This is because the other power plants are charged at the same rates as the Respondent. Resultantly, there would be no difference in price received from the other power plants and the price that the Respondent would have paid. In the event the other power plants refuse, or the Claimant due to technical constraints is unable to supply the unutilized gas to other power plants, then that Gas can be diverted to other consumers (including domestic consumers) by the Claimant.”
“Even otherwise, it is only in the event that the power plants refuse to accept delivery of unutilized Gas or the Claimant due to technical constraints or due to any other such reason is unable to deliver unutilized Gas to other power plants, that the right to supply such Gas to any of its consumers has been conferred on the Claimant. Hence, claim of take or pay invoices raised by the Claimant is contrary to record and the contractual framework, as (a) the unutilized Gas has been utilized by other power plants; (b) none of the other power plants refused to accept delivery of such unutilized Gas; and (c) the Claimant has not claimed any technical constraints etc. for its inability to supply such unutilized Gas.It is thus evident that the right to deliver any such unutilized Gas to any of its consumers had not crystallized and this position of the Claimant is in breach of Section 3.6(b) of the GSA. Furthermore, any and all claims raised by it with respect to take or pay invoices are liable to be declared illegal and unlawful.”
“19. In oil and gas contracts, a take or pay clause is a standard contract term worldwide. A take or pay clause binds the buyer to either take or pay for a minimum contracted amount of gas as agreed in the contractual framework. If the buyer fails to take that gas, it is required to pay for the minimum amount of contracted quantity not taken. … 21. … QATPL is invoiced on a weekly basis for supply of gas consumed, whereas the invoices for monthly take or pay quantity are generated for a particular billing month (the “take or pay invoice”) at the end of such month. SNGPL submits that take or pay invoices/netting off invoices (as explained in paragraph 14 above) are payable by the Respondent given the terms agreed in the GSA…”
“From COD of GT1, QATPL has an obligation to either take certain amount of gas or if not taken it must pay for that gas. Monthly take or pay obligation is contained in Section 3.6 of the GSA…”
“In light of these submissions it is submitted that take or pay clauses are legally valid and contractually binding. Further, QATPL is required to pay the same in compliance with the terms of the GSA. The Take or Pay clause contained in the GSA is not penal. It provides for a mechanism, whereby SNGPL can recover the actual loss it may suffer as a result of the diversion of the gas. Therefore, it is incorrect to say that the clause is penal. There is no element of penalty involved and the clause is just, fair and reasonable. It is based upon the basic principles of contract law that if any party suffers any loss because of the breach or fault of the other, the suffering party should be able to recover the actual loss suffered by it from the breaching party.”
“…SNGPL has acted in compliance with the commercial understanding reflected in Section 3.6 of the GSA. In fact, SNGPL is only seeking recovery of the differential amounts and not of the full take or pay amounts which QATPL was required to pay under the GSA. It is quite clear that SNGPL is entitled to such recovery.”
“…The Claimant raised invoices for the monthly Take or Pay quantity and demanded the net amount payable to it by QATPL after adjusting the amounts billed to other consumers in respect of sale of diverted gas (plus any additional charges incurred by SNGPL)…”
“The Respondent further equates the operation of a Take or Pay clause to the imposition of a penalty. It is submitted that the Take or Pay clause solely aims to reimburse the Claimant for the tariff differential in case of diversion to lower tariff sectors. It is also worth mentioning that the tariff differential has not been claimed for a number of months when unutilized RLNG was diverted on the same tariff.”
“Generally, the Take or Pay Clauses are upheld in different jurisdictions. The Claimant submits that the Take or Pay Clause is valid and binding. Further, the mitigation mechanism provided in the Take or Pay clause is also in tandem with the principles of contract law. Therefore, the clause must be upheld and enforced.”
“The Case law relied upon by the Respondent is not relevant and provisions of Section 74 of the Contract Act are not attracted. In Take or Pay Clause, the Respondent has agreed to either take or pay for the gas ordered.”
“29. In its SOC, the Respondent demonstrated that from a bare reading of Section 3.6(a) of the GSA, it becomes clear that: (a) the Respondent’s obligation to ‘take’ or if not taken ‘pay’ would have to be with respect to a specified quantity of Gas; (b) this obligation to ‘take’ or if not taken ‘pay’ a specified quantity of Gas is for a particular Month; and (c) the obligation to ‘pay’ could arise only if such specified quantity for a specified Month is made available by the Claimant and not taken by the Respondent. It follows that in case there is no such specified quantity for a specified Month, then take or pay regime as stipulated in Section 3.6(a) of the GSA cannot apply. 30. The Claimant expressly accepts this premise in its SOD and, therefore, the Parties are in agreement in that respect. The only point in dispute between the Parties is whether, on a proper construction of the GSA, the Respondent’s obligation to pay for the Monthly Take or Pay Quantity can be deemed substituted with an annual quantity of the Minimum Gas Order in the event no Firm Gas Order is in place. The Claimant’s position is that in the event the Respondent has not placed the Firm Gas Order, it cannot take benefit of its own failure and in such event, the Respondent is obligated to take and if not taken pay for the Minimum Gas Order. While making such assertion, the Claimant fails to point out a single provision of the GSA that permits such construction. Further, it does not even attempt to explain as to how such annual quantity would crystalize into an obligation to take and if not taken pay for the monthly quantity.”
“The Claimant accepts that delivery of Gas to the Respondent proceeded under interim arrangements till COD. The Claimant is therefore not entitled to the claims under Section 3.6(a) of the GSA for the Monthly Take-or-Pay Quantity. The Claimant seeks to resist this conclusion by alleging that regardless of such interim arrangement being adopted by the Parties, the Respondent was obligated to either take the Gas equivalent to the Monthly Take or Pay Quantity or pay for it in the event it was unutilized in the same tariff sector and the Claimant is not under any obligation / requirement to change ADP under the GSA.”
“From a plain reading of Section 3.6 of the GSA, it is evident that any claim on account of Diversion of Gas and Take or Pay has to be raised, established and corroborated with evidence as per the requirements of law. The Respondent has repeatedly requested for such record. The Claimant to date has failed to produce any document to evidence daily transmission to domestic consumers and its invoices of the unutilized Monthly Take or Pay Quantity. Therefore, in the absence of any clear evidence (as also detailed in Section VI and IX below), the Claimant is not entitled to claim any amounts whatsoever under Section 3.6 of the GSA.”
“151. In the sub-sections that follow, the Respondent demonstrates that the Claimant is not entitled to claim and recover any amounts pursuant to Section 3.6 of the GSA, i.e., ‘Diversion of Gas and Take or Pay’ for the following independent reasons: (a) First, in terms of the laws of Pakistan as well as the GSA, the Claimant had to establish actual loss or damage suffered by it before it could claim any amounts from the Respondent. For this, not only did the Claimant have to establish actual loss, but also that such actual loss was directly caused by the Respondent. The Claimant has miserably failed to do so… 153. For the reasons set out below, the Claimant’s claim, based on Exhibit C-31 attributing all supplies to the domestic sector on account of unutilization of the Monthly Take or Pay Quantity by the Respondent and based on such excel sheet, its claim for actual loss suffered by it to be recovered from the Respondent merits rejection. The position of the Claimant goes against the plain terms of that provision, the terms of GSA, as a whole, as well as commercial sense and the modalities placed for diversion and utilization of the Gas by the Parties. It also renders Section 3.6 of the GSA unconscionable, oppressive and penal. The Claimant has not suffered any loss on account of breach or fault of the Respondent. Similarly, the Claimant has neither claimed nor established the actual loss suffered by it on account of the Respondent.”
“The issues in dispute are simple and straight forward. The Claimant arranged for the gas. The Respondent failed to take that gas. The Respondent also failed to take consent of the other power plants for the diversion of unutilized gas to them. Therefore, the unutilized gas was diverted to other consumers of the Claimant. The Claimant has a right under the GSA to divert the gas to any other consumer in such circumstances. The Claimant is now asking for the tariff differential and the additional charges it has incurred in arranging for the sale as mentioned in the GSA. The Claimant is clearly following the provisions of the GSA and in doing the same, it has adopted a reasonable approach. There are clear instances where the gas was not taken by the Respondent and the Claimant was able to divert it to same tariff sector and resultantly no charges for diversion were payable by the Respondent. The submissions made hereunder would show that the Respondent has received a benefit of approximately Rs. 27.5 Billion. However, then there were instances where tariff differential along with additional charges were incurred for the diversion of gas as the gas was diverted in the lower tariff sector and the Claimant is claiming such amounts from the Respondent. The amount being claimed by the Claimant is approximately Rs. 6.9 Billion.”
“1. The case of the Claimant is that the main and material document is the GSA and that needs to be enforced between the parties. The submissions made by the Respondent are an attempt to wriggle out of the contractual provisions agreed between the parties in the GSA. It was agreed in the GSA that Respondent will take and if not taken will pay for the gas that is being arranged on the request of the Respondent. The Claimant failed to take the gas and also failed to pay for it. The dispute arises from the failure of the Respondent to abide by the contractual terms of the GSA. 2. A mechanism was also provided in the GSA whereby if the gas was not taken by the Respondent, the Respondent could arrange for any other consumer in the power sector (after taking consent of such power sector consumer) to off take the unutilized gas at the same tariff so no loss is suffered by any party. The Respondent even failed to arrange for such consent. Had the Respondent performed its part of the deal, the dispute would not have arisen…”
“…The Claimant is now asking for the tariff differential and the additional charges it has incurred in arranging for the sale as mentioned in the GSA. The Claimant is clearly following the provisions of the GSA and in doing the same, it has adopted a reasonable approach…”
“59. Take or pay clauses are legally valid and contractually binding. The Take or Pay clause contained in the GSA is not penal. It provides for a mechanism, whereby SNGPL can recover the difference or loss it may suffer as a result of the diversion of the gas. Therefore, it is incorrect to say that the clause is unconscionable, oppressive and penal. There is no element of penalty involved in the clause and the clause is just, fair and reasonable.” “62. It is submitted that the Claimant has shown herein below that the Respondent has to pay the Claimant. The Claimant arranged for the gas for Respondent. The gas was allocated to the Respondent. The Respondent failed to take such gas. The gas was sold to other consumers. In the months in which the gas was sold to lower tariff sector, the Claimant has raised Take or Pay invoices and charged the differential amount from the Respondent. The Claimant submits any such loss is the direct result of the actions of the Respondent. It is clear that the failure of the Respondent led to the entire situation. The failure of the Respondent to take gas and the failure of the Respondent to arrange consent of the other power plants for the diversion of the gas are the effective and dominant reasons for such loss.”
“64. The Claimant has attached with the Statement of Defence and Counterclaim, a diversion table showing the diversion of the unutilized gas of the Respondent. The Diversion Table is attached as Exhibit C-31. For the better understanding of the Diversion Table, the Detailed Diversion Table with the extended columns is being provided and is attached. The Diversion Table and Detailed Diversion Table is explained below and the supporting documents being relied upon by the Claimant are also being explained and referred below.”
“73. The Gas Reserve Bank mechanism did not work smoothly as the system gas in summer was insufficient to meet the shortfall occurred in winter due to diversion of RLNG, therefore, such loss has been claimed by the Claimant from the Federal Government and the Federal Cabinet has approved the same for recovery through price adjustment. However, the loss claimed from Government Power Projects, including the Respondent is separate from the loss claimed from the Government as this loss was suffered solely due to breach of the contractual obligation by the Respondent and not due to any directive issued by the Government.”
“76. The amount mentioned in the Statement of Case and Counterclaim included gross Take or Pay amount for the month of June and August, 2020. These amounts have been reversed and consequently, no amount is being charged as Take or Pay for the month of June and August 2020. As a result, the table provided as Exhibit C-32 has accordingly been updated and the same is attached. The updated table reflects the amount recoverable by the Claimant from the Respondent as at1st September 2020 .” “79. In light of the above-mentioned submissions, it is clear that the Claimant has clearly shown the diversion and provided supporting documents in this regard. Therefore, the arguments regarding Section 73 of the Contract Act have no force and are not relevant.”
“127. As at1st September 2020 , Respondent owes an amount of Rs. 8,532,321,095/-50 to the Claimant. This amount comprises a take or pay amount of Rs. 7,022,321,074/- (adjusted for amounts realized from other consumers and from encashment of security) plus late payment surcharge on outstanding amounts at the Delayed Payment Rate of Rs. 1,510,000,021/-. Further, Respondent is liable to provide the Gas Supply Deposit in accordance with terms of the GSA. 128. The first page of Table reflects the amounts payable to the Claimant as mentioned above. The second page of the Table provides for the breakdown of the amounts mentioned in the First Table. Supporting invoices are also provided.”
“26. From COD of GT1, QATPL has an obligation to either take certain amount of gas or if not taken it must pay for that gas. Monthly take or pay obligation is contained in Section 3.6 of the GSA, which is reproduced for reference: “Section 3.6 Diversion of Gas and Take or Pay (a) From and after the Commercial Operations Date GT1 and during a Month in the Delivery Period, the Buyer shall take and if not taken pay for the portion of the Firm Gas Allocation pertaining to that Month (the “Monthly Take-or-Pay Quantity”) divided by the number of days in that Month multiplied by the difference between the number of days in that Month and (i) the number of days (or fractions thereof) of Force Majeure Events declared by the Seller or the Buyer, (ii) the number of days (or fractions thereof) of non-delivery of Gas by the Seller for that Month for any reason, including a breach or default by the Seller or maintenance undertaken by the Seller pursuant to Section 12.1, and (iii) the number of days of Scheduled Outages in that Month notified to the Seller pursuant to Section 12.2 (in relation to the maintenance and scheduled outages, each to the extent not already catered for under the Firm Gas Order. (b) … (emphasis added) 27. It is absolutely clear from the underlined extract of Section 3.6 (a) that the obligation to pay a take or pay invoice starts from Commercial Operations Date GT1 i.e. 08.05.2017. COD of one of the GTs was achieved on 08.05.2017 and therefore, the Take or Pay Clause triggered from 08.05.2017.”
“In response to contents of Paragraph No. 51, it is submitted that the QATPL admits and accepts that Commercial Operation Date GT1 was achieved on 08.05.2017. It is the position of the Claimant that the take or pay payments triggered from the same date. The Respondent was not only obliged to make payment for the Gas delivered and consumed but was also liable to make the take or pay payment under Section 3.6 of the GSA.”
“59. On 24.05.2018, the Claimant completely volte-faced and out of nowhere, raised an invoice for the month of May 2017 and the period from November 2017 to March 2018, claiming certain amounts purportedly on account of self-assumed shortfall in utilization of the Monthly Take-or-Pay Quantity pursuant to Section 3.6(a) of the GSA (the “First Claim”).”
“SNGPL contended that these sums were recoverable (notwithstandingSection 74 of the Pakistan Contract Act 1872 (“Section 74”), which applies to penalty provisions) because the sums claimed were the loss actually suffered by SNGPL as a result of QATPL’s failure to take the “Take or Pay” quantity of gas under the GSA.”
“It thus follows that QATPL’s assertions from Paragraph 100 to 112 that all unutilized RLNG has been consumed by the power sector is baseless. Without prejudice to the foregoing, the table of consumption provided by the Respondent is unverified data and cannot be relied on. Moreover, the fact that power sector has its own demand and cannot just rely upon the unutilized gas of the GPPs mentioned hereinabove must also be taken into account. Details / Table [C-31] has been provided to show the diversion of the gas for relevant months.”
“64. The Claimant has attached with the Statement of Defence and Counterclaim, a diversion table showing the diversion of the unutilized gas of the Respondent. The Diversion Table is attached as Exhibit C-31. For the better understanding of the Diversion Table, the Detailed Diversion Table with the extended columns is being provided and is attached…”
“78. Lastly, a table [C-58] reflecting the month-wise position of the volumes and amounts charged and the benefit given to the Respondent for the amounts diverted to other consumers is also being provided.”
“The Respondent also asserts that, in part, unutilized Gas was in fact diverted to other power plants. If this is established, to the extent that the Claimant has failed to refund this amount, the Respondent would be entitled to bring a claim for refund based on amounts received from the other power plants. Again, this would not be a basis for the Respondent to fail to pay the relevant Take or Pay invoice. The Respondent would sue the Claimant for breach of the GSA in failing to give a refund of amounts received for unutilized Gas.”
“There is… an important distinction between, on the one hand, a party having no opportunity to address a point, or his opponent’s case, and, on the other hand, a party failing to recognise or take the opportunity which exists. The latter will not involve a breach of s 33 or a serious irregularity.”
“113. It is a matter of record that the Claimant did not issue any Monthly Take or Pay Invoices till May 2018. Then, in one go, the Claimant issued an invoice on 24.05.2018 for the period from May 2017 to May 2018. This was done despite the requirement of ‘monthly’ take or pay invoices in cases where there was an entitlement under Section 3.6(a), read with Sections 8.1 and 9.1 of the GSA. 114. During this period, the arrangements, as elaborated in paragraphs 43-46 above, were fully in place and were being implemented in pursuance of the consultative process adopted by the parties described in paragraphs 47-50. 115. The Claimant, through its actions, conduct and representations clearly led the Respondent to believe that there was no take or pay arrangement in place for the year 2017 or even if it were, any unutilized Gas was successfully being diverted to and utilized by other gas-based power plants. The Claimant also led the Respondent to believe that no action was required on its part in this regard. The Respondent fully relied on this. Had it not been the case, the Respondent would have acted otherwise to ensure that no financial liability would fall on the Respondent, assuming that was the case under the GSA (which is denied). 116. Keeping this in view, the Claim raised on 24.05.2018 is contrary to the Claimant’s earlier conduct and representations. The Claimant is therefore estopped and barred from raising this Claim. 117. Even otherwise, it was agreed in the GSA and expected that in case any amount was to be paid by the Respondent pursuant to Section 3.6(a) of the GSA, the same would be invoiced to the Respondent on a monthly basis. These arrangements, coupled with the extensive arrangements that were put in place for diversion of any unutilized Gas by NPCC and the Claimant, meant that in the absence of any claim or invoice after the month, the Respondent had the assurance that no amount was payable by it to the Claimant for the relevant month. This would also serve as confirmation that the mechanism set out in Section 3.6(b) of the GSA was being implemented to the benefit of all involved Parties. 118. Additionally, when no invoice for any unutilized Gas was raised by the Claimant for May, November and December of 2017 or for January, February or March 2018, it was confirmation that no take or pay liability had accrued to the Respondent for these months. Further, despite constant communication on various matters under the GSA from time to time during the year, the Claimant did not even once state or indicate in the slightest that any take-or-pay liability existed. In view of the above, the Claimant is estopped and barred from raising these Claims.”
“In response to contents of Paragraph No. 113 to 118, it is submitted that the position taken by QATPL is incorrect. The Respondent has refused to pay the take or pay invoices on the ground that invoices have not been generated for amounts due for billing month i.e. May 2017 to March 2018 in a timely manner. It is submitted that the GSA contains a standard no waiver clause and where the Claimant did not generate the take or pay invoice in a timely manner, this does not constitute a waiver and does not excuse the Respondent from its contractual obligations. Section 21.1 (b) of the GSA provides as follows: “Neither the failure by a Party to insist on any occasion upon the performance of any term, condition or provision of this Agreement nor any delay or other indulgence granted by one Party to the other shall act as a waiver of such breach or acceptance of any variation or the relinquishment of any such right or any other right hereunder.”
“The Claimant is estopped and barred from raising any claims for monthly take or pay quantity.”
“57. The Estoppel has its basis in the concept of waiver…”
“(i) Whether in the absence of Firm Gas Order, and consequently the Firm Gas Allocation and ADP, the Respondent is obligated to take or if not taken pay for the Minimum Gas Order from the Commercial Operations Date GT1 under Section 3.6(a) of the GSA? (ii) Whether the Firm Gas Order, Firm Gas Allocation and ADP were agreed and finalized for the year 2018 and if so, whether any change in RLNG supplies was possible for the Claimant? (iii) Whether the terms and conditions of the ITA are binding on the Parties? (iv) Whether the Claimant is estopped from raising any claims for the period up to the COD of the Complex.”
“34. In its SOC, the Respondent pleaded that the Claimant, through its actions, conduct and representations, clearly led the Respondent to believe that: (a) there was no take or pay arrangement in place for the year 2017; (b) even if it were, any unutilized Gas was successfully being diverted to and utilized by other gas-based power plants; and (c) and no action was required on its part in this regard. The Respondent fully relied on this. On this basis, the Respondent asserted that the Claimant is ‘estopped’ from raising any claims for the take or pay amounts for the period of 2017 and up till the COD. Interestingly, in its SOD, the Claimant, without addressing the basis of the Respondent’s plea, only relied on a ‘non-waiver’ clause in the GSA (Section 21.1) and on the basis of such reliance, simply asserted that ‘estoppel would not operate against it.’ 35. Apart for making such bald assertion that no estoppel operates against it, the Claimant failed to substantiate such assertion. Interestingly, the Claimant also failed to appreciate that issue in these proceedings is not whether actions and inactions of the Claimant amount to waiver. Rather, the issue is one of estoppel. This was also pointed out by the Respondent in its second set of pleadings i.e. SOR. However, even in its response to the SOR, the Claimant has reiterated its reliance on Section 21.1 of the GSA and yet again, failed to address the Respondent’s contentions on estoppel. Therefore, as things stand, other than a bare denial against estoppel, the Claimant has not pleaded anything either on law or facts.”
“We have also pleaded that for the period of 2017 and up until the May 2018, the first invoice that was issued was issued in one go and it covered seven months. Sorry, six months. So for that invoice we plead estoppel and I just identify why we talk about estoppel. Number 1, the contract envisages that a take or pay invoice has to be issued monthly. On May 2017, it should have been issued in June and so on and so forth. It didn't issue entire 2017, not in 2018. That is one, they didn't issue. Number 2, what they issued were weekly invoices and where it was shown to the honourable Tribunal this morning that in each invoice there was a column which said “take or pay” and it said “zero”
“The undisputed record in these proceedings reflects the following facts, which show that the Claimant intentionally, and in full knowledge, made several express and implied representations during the years 2017 and 2018: (a) The Claimant did not communicate at any time during the year 2017 that the Respondent was obligated to take or pay for any quantity of gas or the Minimum Gas Order in the absence of any Firm Gas Allocation. (b) The Claimant did not raise any invoice or claim for any loss by the Claimant for any month of 2017 during the year 2017 and for the months of January, February and March 2018 till May 2018. (c) Throughout 2017, the Claimant made supplies of gas to the Respondent on the basis of Day Ahead Notifications…”
“61. The submissions made on the facts above reflect that the Claimant through its actions and omissions, intentionally caused the Respondent to believe that no take or pay obligation was applicable on the Respondent throughout the year 2017 and up till COD of the Complex; and even if it were, the ITA operated, the diversion mechanism put in place by the Parties after extensive deliberations operated and the Respondent was not required to do anything to avoid any claims being made against it. The Claimant fails to provide any explanation as to the reason why the claims were not timely raised and what triggered the Claimant in May 2018 to raise its claims for six months at once beyond the contractually stipulated deadlines. It simply refuses to engage in this discussion. Rather, it takes meritless technical objections on the issue of estoppel to somehow justify its barred claims. 62. This is evident from the SOD, where the Claimant, without addressing the basis of the Respondent’s plea, only relied on a ‘non-waiver’ clause in the GSA (Section 21.1) and on the basis of such reliance, simply asserted that ‘estoppel would not operate against it.’ Apart for making such bald assertion that no estoppel operates against it, the Claimant failed to substantiate such assertion. Interestingly, the Claimant also failed to appreciate that issue in these proceedings is not whether actions and inactions of the Claimant amount to waiver. Rather, the issue is one of estoppel. This was also pointed out by the Respondent in its second set of pleadings i.e. SOR. However, even in its response to the SOR, the Claimant has reiterated its reliance on Section 21.1 of the GSA and yet again, failed to address the Respondent’s contentions on estoppel.”
“The purpose of this Post-Hearing Brief is to provide an overview of the Respondent’s position with respect to the issues raised in the titled Arbitration Proceedings, particularly in light of the arguments advanced by the Parties at the Final Hearing and the evidence presented by their respective witnesses. This is in addition to what has already been submitted and placed on record by the Respondent. These submissions may be read along with the earlier submissions of the Respondent, particularly the Respondent’s Pre-Hearing Brief.”
“Claimant Question 3: By not sending an invoice till May 2018 has the Claimant waived its entitlement to claim amounts owed by the Respondent for any prior period? Respondent Section 1(iv): Whether the Claimant is estopped from raising any claims for the period up to the COD of the Complex?”
“Whether there has been a failure by the tribunal to deal with an essential issue involves a matter of a fair, commercial and commonsense reading (as opposed to a hypercritical or excessively syntactical reading) of the award in question in the factual context of what was argued or put to the tribunal by the parties (and where appropriate the evidence) … The court can consider the pleadings and the written and oral submissions of the parties to the tribunal in this regard.”
“A tribunal does not fail to deal with issues if it does not answer every question that qualifies as an “issue”