Mughals Pakistan secures Rs. 1.9 billion prolongation cost award

A two-member arbitral tribunal unanimously awards Rs. 1.9 billion in compensation to Mughals Pakistan arising out of a construction contract.

On 13 July 2021, ABS & Co secured a victory for Mughals Pakistan (Private) Limited, a leading construction contractor in Pakistan, in its dispute with the Employees Old Age Benefits Institute (EOBI) and Pakistan Real Estate Investment and Management Company (PRIMACO), arising from the construction of the EOBI Serena Hotel Project in Lahore.

The construction contract was signed back in 2011 with a time for completion of 30 months and was based on FIDIC’s 1999 Red Book. However, the project ran into multiple delays leading to the grant of two EOTs to the contractor extending the time for completion to 2014. Before that period expired, the project ran into further road-blocks when the Supreme Court of Pakistan took suo moto notice to investigate the affairs of EOBI in June 2013. Although no formal notice of suspension was ever issued by the Engineer, the Supreme Court’s scrutiny into the affairs of EOBI led to a virtual halt in the works because the Employer was unable to release payments against the IPCs and furnish Owner-Furnished Materials (OFMs) required to proceed with the works. During this entire time, Mughals Pakistan (Pvt) Limited remained mobilised on site.

A major chunk of the contractor’s claim was based on prolongation costs associated with additional staff salaries, plant and machinery, and office overheads that the contractor continued to incur during this period. ABS & Co successfully secured an award against prolongation and idling costs for the contractor.

ABS & Co’s team was led by Bakhtawar Bilal Soofi from the Lahore office.


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