The Capital Development Authority (CDA) has challenged an arbitration award of more than Rs643 million granted to a contractor in connection with the long-delayed Parliament Lodges extension project.
The case was heard by Additional District Judge (West) Amir Zia, who reserved the matter after both sides concluded their arguments. The proceedings have been adjourned until September 19.
Representing the CDA, Advocate Kashif Ali Malik argued that the authority had effectively been turned from the aggrieved party into the one facing liability, despite the project remaining incomplete nearly 15 years after work began.
The dispute relates to the construction of 104 family suites for parliamentarians and 500 servant quarters at the Parliament Lodges. The contract, valued at around Rs2.73 billion, was awarded in 2011 with a completion deadline of November 2013. Despite multiple extensions and repeated opportunities, the contractor has yet to finish the project.
The CDA’s counsel contended that the arbitration agreement had limited the proceedings to eight specific disputes mutually referred to the sole arbitrator. However, he alleged that the arbitrator exceeded that mandate by entertaining a substantial financial claim that was neither included in the original statement of claim nor covered by the agreed terms of reference.
He further argued that while the CDA’s counterclaims—including recovery of advances, consultant fees, market rent and declarations regarding the contractor’s alleged contractual breaches—were dismissed without a detailed examination, the contractor was awarded nearly Rs640 million on a claim that, according to the authority, surfaced only during the recording of evidence.
Questioning the basis of the award, the CDA maintained that the arbitrator granted exactly half of the contractor’s claimed amount without appointing an auditor, consulting a chartered accountancy firm, obtaining an independent financial assessment or applying any recognised contractual or accounting methodology.
The authority also pointed to a written undertaking submitted by the contractor in 2014 while seeking an extension of time, in which it acknowledged the continuation of the project. The CDA argued that the contractor later sought compensation for the same extended period, describing the claim as contradictory and alleging that the arbitrator failed to address the inconsistency.
The authority also raised procedural objections, noting that the arbitration award had initially been filed before the trial court by the contractor’s lawyer rather than the arbitrator, which it said violated the Arbitration Act. Although the trial court initially accepted the objection and ordered the award to be refiled in accordance with the law, the matter took a complex legal course.
According to the CDA, the contractor challenged that decision before the Islamabad High Court. While the appeal was reportedly announced as dismissed, the written judgment later allowed it—an inconsistency that the authority said was acknowledged in the judgment itself. The dispute subsequently reached the Supreme Court before being remanded to the trial court.
After the trial court eventually made the arbitration award enforceable, the Islamabad High Court, in a judgment authored by Justice Inaam Ameen Minhas, overturned that ruling. The high court held that civil courts were legally required to independently assess whether an arbitral award suffered from clear legal defects.
Despite those observations, the trial court once again dismissed the CDA’s objections, upheld the award and granted interest under Section 29 of the Arbitration Act, prompting the authority to file the present appeal.
The contractor, however, maintained that the trial court had no legal authority to return the arbitration award for refiling. It argued that the Arbitration Act, 1940, sets no deadline for submitting an award before a court, making the trial court’s direction to refile it within 30 days unlawful.
