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Official Citation: 2025 CLD 695 | PLD 2025 Islamabad 219
Court / Jurisdiction: Islamabad High Court
Parties: Zaver Petroleum Corporation (Pvt.) Ltd vs Saif Energy Ltd
Ruling Summary: This decision was rendered by the Islamabad High Court, officially reported as 2025 CLD 695 | PLD 2025 Islamabad 219. In this matter between Zaver Petroleum Corporation (Pvt.) Ltd and Saif Energy Ltd, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
COURT: Islamabad High Court (Honourable Mr. Justice Miangul Hassan Aurangzeb) AUTHOR JUDGE: Honourable Mr. Justice Miangul Hassan Aurangzeb DECISION DATE: 24-OCT-2024 CASE NO: Civil Suit-1-2019 CITATION: 2025 CLD 695 | PLD 2025 Islamabad 219 PARTIES: Zaver Petroleum Corporation (Pvt.) Ltd VS Saif Energy Ltd LAW / SECTION: Section 3, 6 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 SUBJECT: Award, REMARKS: Petitioner filed civil suit U/S 3 of Recognition & Enforcement (Arbitraton agreements and foreign arbitral awards) Act, 2011 and further seeks direction to set aside the respondent's letter dated 31.10.19 issued by OGDCL and seeks direction to respondent saif energy ltd to withdraw the civil suit filed before the civil court, Kohat. ============================================================ JUDGMENT SHEET IN THE ISLAMABAD HIGH COURT, ISLAMABAD JUDICIAL DEPARTMENT C.S.No.01 of 2019
Zaver Petroleum Corporation (Pvt.) Limited Versus Saif Energy Limited
Dates of Hearing: 29.03.2023 and 22.10.2024. Applicant by: M/s Salman Aslam Butt, Taimur Tufail, Anique Salman Malik , Waleed Khalid Zainab Janjua and Salaar Khan, Advocates. Respondent by: Syed Ahmad Hassan Shah and Mr. Badar Iqbal Chaudhary, Advocates. Amici Curiae: Barrister Hassan Ali Raza and Barrister M. Usama Rauf
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MIANGUL HASSAN AURANGZEB, J :- Through this judgment , I propose to decide the following cases:- (i) Application (numbered and registered as Civil Suit No.01/2019) under Section 3 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (“the 2011 Act” ) filed by Zaver Petroleum Corporation (Private ) Limited (“Zaver Petroleum”) seeking inter alia a direction to the respondent, Saif Energy Limited (“Saif Energy”) to withdraw and not to pursue civil suit titled “ Saif Energy Limited Vs. Zaver Petroleum Corporation (Private) Limited etc. ” filed before the Court of the learned Civil Judge, Kohat and also not to institute any proceedings ai med at circumventing the arbitration agreement between the said parties. Along with the said application, Zaver Petroleum also filed an application for interim injunction under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure, 1908 ( “C.P.C.”) and other enabling provisions of the law to inter alia restrain Saif Energy from utilizing or disbursing in any man ner the sale proceeds from the Kohat Working Interest. (ii) Application ( Enforcement Petition No.02/2021) under Section 6 of the 2011 Act seeking the recognition and enforcement of the 2 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
arbitral award on jurisdiction dated 19.03.2021 rendered by George Burn of Bryan Cave Leighton Paisner LLP turning down Saif Energy‟s challenge to the jurisdiction of the Arbitral Tribunal and declaring that the seat of arbitration under the Letter Agreement dated 15.03.2018 (“the Letter Agreement” ) and the Farmout Agreement dated 19.04.2018 (“the Farmout Agreement”) is London, England; that the said agreements are governed by English law; that the governing law of th e arbitration agreements embedded in the said agreements is English law; and that the Arbitral Tribunal has jurisdiction in respect of matters in dispute between Zaver Petroleum and Saif Energy under the said agreements. (iii) Application (Enforcement Pet ition No.06/2021) under Section 6 of the 2011 Act seeking the recognition and enforcement of the arbitral award dated 05.11.2021 regarding costs on the award on jurisdiction whereby costs to the tune of US Dollars 78,000 plus US Dollars 12,220 and Rs.227, 084/- were imposed on Saif Energy. (iv) Application (Enforcement Petition No.01/2022) under Section 6 of the 2011 Act seeking the recognition and enforcement of the final arbitral award dated 24.03.2022 declaring inter alia that Saif Energy is contractually obliged to transfer its working interest in the Kohat Petroleum Concession Block to Zaver Petroleum under the terms of the Farmout Agreement and the Letter Agreement and that Saif Energy‟s failure to transfer such interest constitutes an actionable breach under the said agreements. Furthermore, the Arbitrator ordered Saif Energy to immediately perform its obligations under the said agreements and submit the executed Deed of Assignment to the Directorate General of Petroleum Concession ( “D.G.P.C.”) for approval. The Arbitrator also declared the initiation of proceedings by Saif Energy before Courts in Pakistan to be in breach of the arbitration agreement contained in the Farmout Agreement. 3 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
Additionally, Saif Energy was ordered to pay US Dollars 3,827,126 to Zaver Petroleum for breach of clause 2. 2 of the Farmout Agreement and clause 5 of the Letter Agreement; and US Dollars 100,000 and Rs.5,464,204/ - for a breach of the arbitration agreement in clause 4.3 of the Farmout Agreement.
2. Zaver Petroleum and S aif Energy are companies engaged in the business of oil and gas exploration. Saif Energy held working interest rights in three petroleum concession blocks namely, (i) Kohat Block, (ii) Sari South Block, and (iii) Bannu West Block. On 10.01.2018, M/s Saif H oldings Limited, the holding company of Saif Energy, entered into an agreement with Zaver Petroleum for the sale of Saif Energy‟s entire share capital in Saif Energy for a price of US Dollars 10 million. Subsequently, the parties to the said agreement decided to change the structure of the transaction from the acquisition of Saif Energy‟s share capital to the assignment of its working interest in the said Blocks to Zaver Petroleum. For this purpose, an agreement captioned as the Letter Agreement was executed between Zaver Petroleum and Saif Energy on 15.03.2018, whereby the latter agreed to assign its working interest in the said Blocks to the former. The effective date of the assignment of Saif Energy‟s working interest was agreed to be 01.01.2018. 3. The consideration for the assignment of Saif Energy‟s working interest in Sari South Block was agreed to be US Dollars 3.6 million. It is an admitted position that the transaction for the assignment of Saif Energy‟s working interest in Sari South Block to Zave r Petroleum has been completed without any dispute. 4. As regards the Kohat and Bannu West Blocks, clause 4 of the Letter Agreement provides that in the Farmout Agreement, Kohat Block shall be allocated consideration of US Dollars 6.2 million whereas the B annu West Block shall be allocated consideration of US Dollars 0.2 million. Furthermore, it was provided that Zaver Petroleum shall pay US Dollars 3.2 million upon execution of the Kohat Block Deed of Assignment along with reimbursement of cash calls paid by Saif Energy from the effective date; and that Zaver Petroleum shall pay US Dollars 3.2 million upon execution of 4 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
the Bannu West Block Deed of Assignment along with reimbursement of cash calls paid by Saif Energy from the effective date. It was Saif Ener gy‟s obligation to provide full access to the available data relating to the assigned working in terest to Zaver Petroleum upon submission of each Deed of Assignment.
5. The parties had agreed to resolve their disputes in accordance with clause 7 of the Letter Agreement which is reproduced herein below:- “This Letter Agreement shall be interpreted under English Law and any dispute thereunder shall, if not settled amicably within a period of ninety (90) days, shall be settled through arbitration at the Lond on Court of International Arbitration at London.”
6. Saif Energy along with Mari Petroleum Company Ltd., Oil and Gas Development Company Limited and Tullow Pakistan (Developments) Limited are parties to the Kohat Block concession documents comprising of an exploration licenc e, a petroleum concession agreement and a joint operating agreement. Saif Energy had 10% working interest in the Kohat Block. On 19.04.2018, the Farmout Agreement was executed between Saif Energy and Zaver Petroleum whereunder the form er agreed to assign its entire working interest in the Kohat Block to the latter. Clause 2.1 of the said agreement provides that Zaver Petroleum shall pay (as reimbursement of the expenditures incurred by Saif Energy till the effective date with respect to the Kohat Block) a lumpsum amount of US Dollars 6.2 million to Saif Energy within fifteen days of the execution of the Kohat Deed of Assignment. Furthermore, it was provided that in case the Bannu West Deed of Assignment is not executed simultaneously, Za ver Petroleum shall pay US Dollars 3.2 million upon execution of the Kohat Deed of Assignment and the remaining US Dollars 3 million upon the execution of the Bannu West Deed of Assignment. Clause 2.3 of the Farmout Agreement provides that in addition to t he payment of US Dollars 6.2 million, Zaver Petroleum shall also reimburse to Saif Energy all cash calls paid by Saif Energy from the effective date till the execution of the Kohat Deed of Assignment. It also provides that after the effective date, if the operator makes any cash call, Saif Energy will inform Zaver Petroleum of such cash call and the latter shall cause the required funds to be deposited in Saif Energy‟s designated 5 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
account for onward payment to the operator. Clause 2.7 of the said agreement o bligated Saif Energy to obtain prior written consent of Zaver Petroleum before approving any work programme commitment, budget, expense, cash calls, etc. 7. Clause 2.2 of the Farmout Agreement also makes it Saif Energy‟s obligation to obtain approval of t he Kohat Deed of Assignment from all the joint venture partners as well as the D.G.P.C. In furtherance of its obligations under the said clause, Saif Energy, vide letter dated 26.04.2018, applied to the D.G.P.C. for the Government‟s approval to the assignm ent of its 10% working interest in the Kohat Block to Zaver Petroleum. Saif Energy had also provided a draft of the Kohat Deed of Assignment to the D.G.P.C. Vide letter dated 16.11.2018, the D.G.P.C. conveyed to Saif Energy the Government‟s consent to the assignment of its entire 16.667% working interest in the Kohat Block to Zaver Petroleum with effect from 20.02.2018 in accordance with Rule 8 of the Pakistan Petroleum (Exploration and Production) Rules, 2001 (“the 2001 Rules”). Furthermore, the D.G.P.C. a lso approved the Kohat Deed of Assignment subject to the following conditions:- “a). In case of any miscommunication / misrepresentation, withholding of information and concealment of facts or any default thereof, the consent and approval shall render nul l and void and assignor and / or assignee shall be responsible for the same and will be liable to pay any penalty as decided by the Government / Authority.
b). The Government‟s revenue will not be adversely affected after said Assignment.
c). The Operator (OGDCL) of Kohat Exploration License and ZPCPL shall confirm in writing on judicial paper that the assigner has discharged all its applicable financial obligations i.e. Training, Social Welfare and Area Rentals with annual adjustments etc. in accordanc e with the provisions of the Petroleum Concession Agreement License and governing rules up till the effective date of the assignment.
d). Before execution of Deed of Assignment, M/s ZPCPL will provide Bank Guarantee from Bank of International Repute acc eptable to the Government against minimum financial commitment corresponding to its share‟s 16.667%, valid till days after the expiry of Exploration License.”
8. Clause 4.3 of the Farmout Agreement provides that the said agreement and the relationship be tween Zaver Petroleum and Saif Energy shall be governed and interpreted under English law and any dispute 6 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
thereunder shall, if not settled amicably within a period of ninety days, be settled through arbitration at the London Court of International Arbitrat ion, United Kingdom (“LCIA”). Clause 10.2 of the said agreement provides that it shall survive even after the execution of the Deed of Assignment.
9. Admittedly, the Bannu West Deed of Assignment was executed between the parties on 06.12.2018 and an amou nt equivalent to US Dollars 3 million was paid by Zaver Petroleum to Saif Energy. The Kohat Deed of Assignment has till date not been executed between the parties. However, Zaver Petroleum asserts that US Dollars 3 million that had been paid to Saif Energy had been “in accordance with the terms of the Kohat Farmout Agreement” whereas Saif Energy asserts that the said payment was in respect of the assignment of the Bannu West Block Working Interest and not for the Kohat Block.
10. The parties are also in dispute as to the consideration for the assignment of the Kohat Block. Zaver Petroleum asserts that an amount of US Dollars 2.7 million remains to be paid after the payment to Saif Energy of an amount equivalent to US Dollars 0.5 million through cheque da ted 28.05.2019 drawn on Standard Chartered Bank. Vide letter dated 30.05.2019, Saif Energy had acknowledged the payment of the amount equivalent to US Dollars 0.5 million as “partial payment against consideration of the Kohat Block # 3371 -10 for assignment of 16.67% working interest.” Saif Energy had also informed Zaver Petroleum that it was processing the execution of the Kohat Deed of Assignment. Saif Energy asserts that the remaining consideration exceeds US Dollars 2.7 million and continues to increase with the passage of time on account of the unpaid cash calls. CIVIL SUIT FILED BY SAIF ENERGY AGAINST INTER ALIA ZAVER PETROLEUM BEFORE THE CIVIL COURT AT KOHAT:-
11. On 28.08.2019, Saif Energy filed a civil suit (Suit No.868/I of 2019) for mandatory injunction and the cancellation of the Farmout Agreement dated 19.04.2018 against Zaver Petroleum and the D.G.P.C. before the Court of the learned Civil Judge, Kohat in the Province of Khyber Pakhtunkhwa. Along with the said suit, Saif Energy also filed an a pplication for interim 7 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
injunction to restrain Zaver Petroleum from asserting rights under the Farmout Agreement. In the said suit, it was pleaded inter alia that clause 4.3 in the Farmout Agreement providing for the resolution of disputes between the parti es by the LCIA is against the laws of Pakistan and unenforceable. No relief in the said suit had been sought against the D.G.P.C. 12. Vide ad -interim order dated 29.08.2019, the learned Civil Court directed status quo to be maintained until the next date of hearing. The operation of the said order was extended from time to time. 13. On 04.10.2019, Zaver Petroleum filed an application under Section 34 of the Arbitration Act, 1940 (“the 1940 Act”) praying for the proceedings before the Civil Court at Kohat to be stayed on the basis of the arbitration clause contained in clause 4.3 of the Farmout Agreement. Saif Energy contested the said application by filing a written reply. In the said reply, the position taken by Saif Energy was that the arbitration agreem ent embedded in clause 4.3 of the Farmout Agreement was illegal. Furthermore, it was pleaded that the application filed by Zaver Petroleum under Section 34 of the 1940 Act was misconceived since the parties had never agreed to any local arbitration and the re did not exist any agreement between the parties which was subject to the laws of Pakistan. On 16.11.2019, Zaver Petroleum filed an application before the Civil Court at Kohat for the withdrawal of the application under Section 34 of the 1940 Act by taki ng the plea that Saif Energy was correct in its assertion that the parties had never agreed to local arbitration. In the said application for withdrawal, it was also pleaded that since clause 4.3 of the Farmout Agreement requires arbitration proceedings to be held in London under t he rules of the LCIA, therefore the provisions of the 2011 Act would be applicable to the case. Vide order dated 16.11.2019 , the said application for withdrawal was allowed by the Civil Court at Kohat. 14. It ought to be borne in mind that at no material stage did Zaver Petroleum file an application under the provisions of the 2011 Act before the Civil Court at Kohat praying for the proceedings in the suit to be stayed. However on 16.11.2019, Zaver Petroleum filed an application u nder Order 8 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
VII, Rule 10 C.P.C. before the Civil Court at Kohat praying for the plaint in the respondent‟s suit to be returned inter alia on the ground that under Section 3 of the 2011 Act, the High Court had exclusive jurisdiction in the matter. The Civil Court at Kohat, vide order dated 08.12.2021, allowed Zaver Petroleum‟s application under Order VII , Rule 10 C.P.C. and returned the plaint to Saif Energy with the direction to approach the proper forum. The said order was assailed by Saif Energy in appeal (FAO No.220-P/2021) before the Hon‟ble Peshawar High Court. The said appeal was dismissed vide judgment dated 21.10.2022. The Hon‟ble Peshawar High Court, after making reference to Sections 3 and 4 of the 2011 Act, held that “in terms of Section 3 of the [ 2011 Act], only the High Court has the exclusive jurisdiction to adjudicate and settle matters related to or arising out from the provisions of the [2011 Act].” Reference in the judgment dated 21.10.2022 was also made to the case of Orient Power Company (P rivate) Limited Vs. Sui Northern Gas Pipelines Limited (PLD 2019 Lahore 607) , wherein it was held that the jurisdiction of ordinary Civil Courts and the High Court under the 2011 Act are not concurrent, and that the High Court had the exclusive jurisdictio n to recognize and en force foreign arbitral awards. By the time the said appeal (FAO No.220 -P/2021) was dismissed , the Arbitrator had already rendered the award. I am told that Saif Energy has assailed the said judgment dated 21.10.2022 before the Hon‟ble Supreme Court in Civil Petition No.4210 of 2022. CIVIL SUIT NO.01/2019 UNDER SECTION 3 OF THE 2011 ACT FILED BY ZAVER PETROLEUM AGAINST SAIF ENERGY BEFORE THIS COURT :-
15. Vide letter dated 31.10.2019, Saif Energy had informed the Oil and Gas Developmen t Company Limited (“O.G.D.C.L.”), which is the operator and one of the Working Interest Owners (“WIOs”) in the Kohat Block, that due to breach committed by Zaver Petroleum, Saif Energy had called off the deal for the sale of its interest in the said Block to Zaver Petroleum, and that Saif Energy had filed a civil suit against Zaver Petroleum before the Civil Court at Kohat. Saif Energy expressed its intention of retaining its working interest of 16.67% in the Kohat Block. 16. On 20.11.2019, Zaver Petroleum filed an application (C.S.No.01/2019) under Section 3 of the 2011 Act before this Court praying for the 9 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
recognition and enforcement of the arbitration agreement contained in the Letter Agreement and the Farmout Agreement. Zaver Petroleum had also sought an anti-suit injunction to restrain Saif Energy from pursuing the civil suit filed against Zaver Petroleum and the D.G.P.C. before the Civil Court at Kohat or from taking any steps which may circumvent or frustrate the arbitration agreement between the part ies. Zaver Petroleum also sought a direction to Saif Energy to deposit in this Court the sale proceeds from the Kohat Working Interest. It also sought the suspension of the respondent‟s letter dated 31.10.2019 to O.G.D.C.L. 17. On 15.01.2020, Zaver Petroleum filed an application (C.M.No.31/2020) under Order VI, Rule 17 C.P.C. for an amendment in its application under Section 3 of the 2011 Act seeking the addition of a prayer for referring the parties to arbitration in terms of the arbitration clauses contai ned in the Letter Agreement dated 15.03.2018 and the Farmout Agreement dated 19.04.2018. Vide order dated 22.01.2020, the said application was allowed. 18. By the time the said application was allowed, Zaver Petroleum had not filed its requests for arbitr ation. However, during the pendency of the proceedings before this Court, Zaver Petroleum, on 24.04.2020, filed requests for arbitration before the LCIA. With the filing of the requests for arbitration, Zaver Petroleum‟s prayer for referring the parties to arbitration was rendered infructuous. Even otherwise, there is no provision in the 2011 Act, similar in nature to Section 20 of the 1940 Act, empowering the Court to refer the parties to arbitration. The concept of arbitration with the intervention of the Court is not envisaged by any of the provisions of the 2011 Act and/or the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“NY Convention”).
PETITION FOR CONTEMPT OF COURT FILED BY SAIF ENERGY AGAINST ZAVER PETROLEUM BEFORE TH E HONORABLE PESHAWAR HIGH COURT:-
19. After Zaver Petroleum filed requests for arbitration before the LCIA, Saif Energy, on 27.04.2020, filed a petition before the Hon'ble Peshawar High Court for Contempt of Court under the provisions of Contempt of Court Ordinance, 2003 against Kamran Ahmed, Tauqeer Ahmad Nayyar and Hassan Hashwani, who are the Chief Executive Officer, Director and 10 C.S. No.01/2019, Enforcement Petition No.02/2021, Enforcement Petition No.06/2021 and Enforcement Petition No.01/2022
Officer, respectively of Zaver Petroleum . In the said petition, it was pleaded that Zaver Petroleum had co nducted itself egregiously and in utter contempt of the Civil Court at Kohat by filing a request for arbitration before the LCIA and by asserting its rights in respect of the Farmout Agreement. In other words, it was Saif Energy‟s assertion that the filing of the request for arbitration before the LCIA was in violation of the status quo order passed by the Civil Court at Kohat and for this the respondents arrayed in the contempt petition needed to be punished. In the said petition, Saif Energy had also pray ed for a declaration to the effect that the request for arbitration filed by Zaver Petroleum before the LCIA is without lawful authority and of no legal effect. Saif Energy also attempted to stop the arbitration proceedings from proceeding further by prayi ng for an order to suspend the operation of Zaver Petroleum‟s request for arbitration. 20. Vide order dated 27.04.2020, the contempt petition was dismissed on the ground that since the status quo order had been passed by the Civil Court at Kohat, a contem pt petition before the High Court was not maintainable in view of the law laid down by the Hon‟ble Supreme Court in the case of M.O. Ghani, Vice Chancellor University of Dacca Vs. Dr. A.N.M. Mahmood (PLD 1966 SC 802 ). Saif Energy did not stop at this. It f iled an Intra Court Appeal (ICA No.1 -P/2020) against the said order dated 27.04.2020. In the said intra Court appeal as well , Saif Energy had sought the suspension of Zaver Petroleum‟s request for arbitration submitted before the LCIA. Vide order dated 15. 07.2020, notices were issued to the respondents in the said appeal and the matter was adjourned to a date in office. Furthermore, it was ordered that “till then, no adverse action shall be taken against [Saif Energy].” Aggrieved by the said order, Zaver Pe troleum filed Criminal Petition No.1039/2020 before the Hon‟ble Supreme Court. Vide order dated 08.10.2020, the said petition was dismissed after the learned counsel for Zaver Petroleum stated that he would not press the petition and would approach the Hon ‟ble Peshawar High Court for an early hearing of the appeal. ARBITRATION PROCEEDINGS INITIATED BY ZAVER PETROLEUM AGAINST SAIF ENERGY BEFORE THE LONDON COURT OF INTERNATIONAL ARBITRATION:-…
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