RIAA Barker Gillette has secured the suspension of an injunction that threatened to disrupt coal offloading for Huaneng Shandong Ruyi (Pakistan) Energy, a 1320 MW imported coal-fired power plant central to Pakistan’s generation mix. The appellate court’s decision restored operational flexibility in a complex Pakistan energy dispute spanning multiple agreements, a foreign-seated arbitration clause, regulatory frameworks and port logistics infrastructure.
Background to the Pakistan energy dispute
The underlying contractual matrix was governed by foreign law and contained an arbitration agreement providing for dispute resolution at an offshore seat, raising threshold questions on the propriety of a domestic court granting interim relief that effectively pre-empted issues reserved for the arbitral tribunal. Notwithstanding the arbitration clause, the respondent obtained an injunction seeking to confine coal offloading to a single terminal arrangement, although no such restriction existed under the NEPRA tariff regime, the Power Purchase Agreement or the broader governing policy framework. The constraint was also commercially untenable, since the designated terminal could handle no more than 2.64 million tons of coal annually — well below the project’s annual requirement of 3.5 million tons.
The timing of the dispute magnified the stakes considerably. Regional conflict affecting the Strait of Hormuz had sharply reduced Pakistan’s LNG generation from its usual 6,000 MW capacity, and coal-fired generation had consequently assumed heightened strategic importance for national energy security.
Strategy and outcome
With seven vessels awaiting immediate unloading and a continuous monthly pipeline of shipments scheduled thereafter, any restriction on offloading capacity would have triggered demurrage exposure, contractual breach under the PPA and broader instability in the national power supply.
Nadir Altaf, Partner and lead counsel, advanced a layered case before the appellate court, addressing the limits of court intervention in matters subject to a foreign-seated arbitration agreement, the absence of any contractual or regulatory basis for the restriction imposed, and the disproportionate operational harm flowing from continued injunctive relief. The presiding Judge held both judicial experience and engineering qualifications, which enabled a practical appreciation of the operational realities and port-capacity constraints underlying the dispute.
“This case turned on a careful reading of the contractual and regulatory architecture governing fuel logistics, and on the well-established principle that interim relief should not extend beyond what the underlying agreements contemplate — particularly where the parties have chosen to resolve their disputes through international arbitration,” said Nadir Altaf, Partner at RIAA Barker Gillette. “We are pleased that the appellate court was able to restore the balance of convenience in a manner consistent with the project’s operational realities and the wider public interest.”
The court ultimately held that the balance of convenience favoured suspension, and the project resumed uninterrupted vessel unloading shortly thereafter, averting disruption to a critical piece of national energy infrastructure.
Implications
This Pakistan energy dispute illustrates how appellate intervention can preserve project bankability where injunctive relief from a domestic court threatens to disrupt established contractual architecture and pre-empt issues reserved for arbitration, with broader resonance for IPP sponsors, lenders and offtakers navigating cross-border dispute resolution in Pakistan’s energy sector.
Our team on this matter was led by Nadir Altaf (Partner – Pakistan).
For more information on energy sector disputes, contact Nadir Altaf today.
This article is not legal advice; it provides information of general interest about current legal issues.
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RIAA Barker Gillette is Pakistan’s premier law firm, with an on-the-ground presence in three major cities in Pakistan: Karachi, Islamabad and Lahore, and affiliated offices in Dubai (DIFC) and London.
The firm practices in all areas of corporate, commercial and dispute resolution law. Leading international legal directories consistently recognise the firm as a top-tier law firm in Pakistan.
RIAA Barker Gillette is the exclusive member firm in Pakistan for Lex Mundi, the world’s leading network of independent law firms with in-depth experience in over 125 countries worldwide.
