This first article in a three-part series considers recent decisions by the English courts on the enforcement of arbitral awards from Pakistan. Produced in collaboration with leading English law firm, Penningtons Manches Cooper, it examines the volatile nature of the energy sector in Pakistan, highlighting the risks arising from the termination of Power Purchase Agreements (PPAs) with the Government of Pakistan or its state-owned enterprises, in a period where the country is transitioning towards solar power and the contractual terms (including Take-or-Pay clauses) are proving to be financially unsustainable.
We focus on recent decisions of the English courts and London-seated arbitrations on disputes in the sector, in particular the recent decision of the Court of Appeal in Star Hydro Power Limited -v- NTDC.
Arbitration of PPAs in England & Wales
Arbitration is typically the forum selected for the resolution of disputes arising from the operation of PPAs. Similarly, Bilateral Investment Treaties (BITs) generally include a provision that disputes incapable of resolution between an investor and a state shall be submitted to international arbitration.
Arbitrations are well suited to resolve quarrels stemming from PPAs, and disputes in the energy sector more generally, for a number of reasons:
- proceedings are generally confidential which protects the commercial and politically sensitive subject matter of energy disputes;
- the parties can select the arbitrator(s), ensuring that candidates have the necessary experience and proficiency in the relevant industry;
- the arbitrator(s) should be entirely independent (indeed, arbitrators are often based outside the jurisdiction in which the dispute is centred);
- arbitrations can be concluded much quicker and arbitral awards can typically be enforced more efficiently than judgments handed down by courts; and
- the parties can agree the location of hearings (the seat of the arbitration) and the arbitral institutions that will administer the proceedings and whose rules will govern them.
London remains an extremely popular seat for arbitrations generally, and those involving energy disputes. In 2023, 9.5% of energy arbitrations were based there, placing it ahead of both Paris and New York City[1]. Reasons for its popularity include the integrity of its legal system, the expertise of legal professionals and arbitral bodies, the reputation of its judiciary, and London’s geographical location. English arbitral awards are directly enforceable in over 160 jurisdictions under the New York Convention (the Convention) and the impending implementation of the Arbitration Act 2025 (on 1 August 2025) will serve to reinforce London’s prominent position as a favoured seat for energy disputes and international arbitrations more broadly.
Recent decisions of the English courts on PPAs
Although arbitral proceedings benefit from confidentiality, they sometimes spill out into the domestic courts. This usually happens when a party seeks to appeal a tribunal’s award, or where issues concerning enforcement arise.
The English courts have considered several disputes arising from London-seated arbitrations concerning PPAs in recent years and these are considered below.
Anti-suit injunctions
Atlas Power
In Atlas Power Limited & Others -v- National Transmission and Dispatch Company Limited[2] a group of Pakistani IPPs successfully obtained an anti-suit injunction against the National Transmission and Dispatch Company (NTDC) of Pakistan in the English High Court. The injunction prevented NTDC from challenging an LCIA award elsewhere than the courts of England and Wales. The underlying dispute concerned sums NTDC owed to nine IPPs in respect of Pakistani law governed PPAs entered into between 2006 and 2008.
The matter was initially referred for determination by an expert who found that NTDC was liable to the IPPs (the Determination). The Pakistani Government went on to obtain an injunction from the Pakistani courts which prevented the parties from acting upon the Determination. However, following further jurisdictional challenges, the IPPs ultimately succeeded in obtaining a partial final award (the Award) from the London-seated arbitration. NTDC then applied to the Pakistani courts for an order to set aside the Award. The IPPs responded by successfully applying to the High Court of England for an anti-suit injunction. The High Court agreed that the Award had correctly held that the seat of the arbitration was London and that the English courts had exclusive supervisory jurisdiction over the LCIA arbitration.
The decision in Atlas Power emphasises the importance of parties clearly defining the seat of arbitration in a dispute resolution clause and the value of clear drafting where parties seek to tailor an arbitration clause. A failure to do so can, as in this case, lead to expensive delays in the form of satellite litigation.
Star Hydro
NTDC has more recently once again found itself a party to proceedings in the English courts where it has been resisting an application against it for an anti-suit injunction.
In Star Hydro Power Limited -v- NTDC[3], Star Hydro, the claimant, had been awarded various monetary sums against NTDC in 2024 following another LCIA arbitration. In not dissimilar circumstances to the dispute between Orient Power Company (Private) Limited -v- Sui Northern Gas Pipelines Limited (which will be covered in more detail in the second article in this series), NTDC brought proceedings in Lahore under the Convention seeking partial recognition of certain findings in the award and a declaration of non-enforceability of other parts (including on the basis that the tribunal’s findings were contrary to both Pakistani law and public policy). Crucially, the proceedings in Pakistan were issued prior to Star Hydro seeking to recognise the arbitral award in any jurisdiction. Star Hydro sought an anti-suit injunction to restrain the proceedings in Pakistan on the basis that they were a disguised challenge of the award. Star Hydro argued that the Pakistani proceedings breached an implicit ancillary agreement that such challenges should only be brought under English law as the curial law of the arbitration and in the English courts.
At a first instance hearing in November 2024 the High Court refused to grant an anti-suit injunction to Star Hydro and found in favour of NTDC[4]. It held that it must be assumed that a court will only recognise or enforce an award in compliance with the provisions of the Convention. Further, a losing party is not bound to bring any challenge to the arbitral award in the courts of the seat (in this case, England). Additionally, the right to resist recognition or enforcement of an award under the Convention is a right which may be asserted pre-emptively (i.e. where the successful party in an arbitration has not yet sought recognition or enforcement). Accordingly, NTDC was entitled to seek recognition of parts of the findings in the award in Pakistan. The court noted that it was up to the Pakistani courts to determine if parts of the award were unenforceable in Pakistan as a matter of Pakistani public policy.
However, Star Hydro appealed and the Court of Appeal overturned the High Court’s decision, granting the anti-suit injunction. In its judgment[5], the Court of Appeal held that it was the English court, as the supervisory court of the arbitration, which had exclusive jurisdiction over any challenges to the award. It characterised NTDC’s application in the Lahore proceedings as a ‘full-throated challenge’ to the award, brought in breach of the arbitration clause and the exclusive jurisdiction of the English court. The appeal court interpreted NTDC’s challenge to the award in Lahore as the same type of challenge injuncted in Atlas, where NTDC attempted to avoid the supervisory jurisdiction of the English court by arguing the Pakistani courts had concurrent supervisory jurisdiction. The Court of Appeal has now confirmed the significant obstacles to mounting a challenge to a London seated award in Pakistan. This may not represent the end of the story as an appeal to the Supreme Court by NTDC remains a possibility.
Parties to PPAs which contain clauses referring disputes to arbitration will await the conclusion of any further appeal with interest given the potential implications it will have for litigants post-award.
Appeals under the Arbitration Acts 1996 and 2025
The Arbitration Act 1996 (the predecessor to the Arbitration Act 2025 which comes into force on 1 August 2025) allowed a party on the receiving end of an unfavourable arbitral award to challenge it in the English courts. While the new Arbitration Act 2025 limits a party’s entitlement to a full rehearing of evidence heard by the original tribunal, it remains possible to challenge an arbitral award on the grounds that the tribunal did not have substantive jurisdiction. There have been two notable decisions in recent years involving attempts to challenge awards made in LCIA arbitrations relating to PPAs in Pakistan.
Sui Northern Gas Pipelines Limited -v- National Power Parks Management Company (Private) Limited[6] concerned two Gas Supply Agreements (GSAs) under which the claimant (SNGPL) agreed to supply and the defendant (NPPMCL) agreed to take or pay for gas to be used at two power plants it operated in Pakistan. A dispute arose between the parties concerning invoices issued by SNGPL. NPPMCL commenced LCIA arbitration proceedings in which it sought a declaration that SNGPL had not been entitled to issue the invoices. SNGPL counterclaimed, seeking arrears it alleged were owed to it by NPPMCL. The tribunal ultimately found in favour of NPPMCL.
SNGPL challenged the award in the English High Court under section 68(2) of the Arbitration Act 1996 on the basis of a serious irregularity in the arbitration proceedings. The challenge centred on the tribunal’s finding that each of SNGPL’s invoices had to be issued before the end of the relevant month. SNGPL argued that this had not been pleaded before the tribunal by either party and was a commercially unworkable interpretation of the GSAs. SNGPL also mounted a secondary challenge, arguing that the tribunal’s award of interest in favour of NPPMCL was too high.
The court found against SNGPL on both issues. First, it was held that SNGPL’s position concerning the tribunal’s finding as to the timing of invoices was not the true effect of the tribunal’s award. Second, SNGPL’s challenge of the rate of interest failed as the court found that the tribunal had discretion as to the rate of interest it awarded and had exercised this properly.
The judgment in Sui demonstrates the inherent difficulty in challenging an arbitral award on the basis of irregularity. This is especially so, as in this case, where the matters which form part of the challenge were in play during the arbitration. The new Arbitration Act 2025 will make it even more difficult to challenge an award for lack of substantive jurisdiction. Interestingly, in a judgment handed down by the High Court a year later, SNGPL successfully defended a s.68 challenge to an award made in its favour by a different LCIA tribunal, again in relation to a take or pay provision in a GSA[7].
Conclusion
The decisions considered above demonstrate the continued appeal of London-seated arbitrations for the resolution of disputes arising from the operation of PPAs in Pakistan. The attractiveness of London as a hub for international energy arbitrations looks set to continue. Where necessary, the English courts can go on to play an active role in resolving disputes that emanate following the issuing of arbitral awards – though successfully overturning awards under the Arbitration Act 2025 clearly remains a high hurdle to overcome.
Parties to IPPs would be well-advised at the drafting stage to ensure that dispute resolution clauses and arbitration agreements are thoroughly and clearly defined. This will help avoid surplus and costly litigation. Where parties to PPAs spot a dispute on the horizon they should swiftly seek local and, if appropriate, English advice to ensure best protection.
This article was co-authored by Kamran Rehman, Richard Raban-Williams and Harriet Campbell of Penningtons Manches Cooper.
