The key gas pipeline deal between Pakistan and Iran has encountered multiple delays due to geopolitical tensions and international sanctions, leading Tehran to issue a final ultimatum to Islamabad.
The pipeline, which extends over 1,900 kilometers, has been stalled for an extended period. Iran has claimed to have invested $2 billion in constructing infrastructure on its side of the border.
The Gas Sales and Purchase Agreement (GSPA), established in 2009 under French law, designates the Paris Arbitration Court as the forum for dispute resolution, explicitly excluding U.S. sanctions from consideration.
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A revised contract signed in September 2019 stipulated that Iran would forgo international arbitration for delays if Pakistan completed its portion of the pipeline by 2024. Despite a 180-day extension, set to expire in September 2024, Pakistan has failed to meet its obligations. As a result, Iran has issued a final notice to Pakistan.
Should Iran fail to act by September 2024, it risks losing its right to legal recourse. In response, Pakistani officials are considering engaging international law firms to prepare their case for arbitration, citing U.S. sanctions as a significant barrier to progress.
