KluwerArbitration

Document information
Dallah Real Estate and Tourism Holding Company v
Publication Ministry of Religious Affairs, Government of Pakistan,
International Journal of Second Partial Award, ICC Case No. 9987, 19 January 2004
Arab Arbitration P 371
P 372

Organization Section I Summary of Facts and Proceedings

International Court of 1- The Arbitral Tribunal issued a first partial award on June 26, 2001, which set forth and
Arbitration of the determined that:
International Chamber of (1) The “Ministry of Religious Affairs, Government of Pakistan” named as Defendant is
Commerce bound by the Arbitration Agreement contained in Article 23 of the Agreement with the
Claimant dated 10 September 1996. Therefore, an agreement to arbitrate under the
ICC Rules exists between the Claimant and the Defendant, and such Defendant is the
Case date proper Defendant party in this Arbitration.
19 January 2004 (2) The dispute submitted to the Arbitral Tribunal falls within the terms of Article 23 of
the Agreement of 10 September 1996 as it is a dispute arising out of such Agreement,
between the Claimant and the party, determined to be a contracting party to such
Agreement by the Arbitral Tribunal.
Case number
(3) The Arbitral Tribunal, consequently, has proper and valid jurisdiction in respect of
ICC Case No. 9987 the Defendant over the claims submitted by the Claimant in the present case.
2- A Summary of the facts of the case and a chronological history of the proceedings up to
June 26, 2001 were made in the first Partial Award and need not be repeated again in this
Parties Award.
Claimant, Dallah Real 3- By letter dated July 11, 2001, the Claimant proposed, in respect of the issues relating to
Estate and Tourism Holding the substantive claims, that the Tribunal hold a split trial on liability first and then on
Company quantum, to avoid the substantial time and expense involved in proving quantum without
Defendant, Ministry of a prior decision on liability.
Religious Affairs,
Government of Pakistan By letter dated July 12, 2001, the Tribunal addressed a copy of the Claimant's letter to the
Defendant's lawyer and requested their comments thereon as well as their views on the
next arbitration proceedings dealing with the merits.
Key words By letter dated August 20, 2001 and addressed to the ICC Secretariat, the Defendant's
lawyers, referring to the Claimant's letter dated July 11, 2001 and to other ICC letters, stated
ICC Case No. 9987 that in order to advise their client, they would like to carry out an inspection of the
Second Partial Award complete file pertaining to the case and to make copies of all such documents as are not
19 January 2004 presently in their possession. No reply was sent to the Tribunal, pursuant to its letter of July
DALLAH REAL ESTATE AND 12, 2001.
TOURISM HOLDING
COMPANY vs. THE MINISTRY The Secretariat of the ICC, by letter dated August 28, 2001, advised that it is unable to
OF RELIGIOUS AFFAIRS, authorize an inspection of the complete file pertaining to the above matter as requested
GOVERNMENT OF PAKISTAN by the Defendant and reminded the parties to send a copy of all communications and
Saudi Law Is the Law submissions directly to the other party for its information.
Applicable to the Merits of P 372
the Case P 373
Usages of Trade By letter dated February 7, 2002, the Tribunal wrote again to the Defendant's lawyers
Ministry Is the True Party inviting them to participate in the arbitration proceedings and advised them that while
and Bound by the Disputed the Arbitral Tribunal has decided in respect of the issues relating to the substantive claims
Agreement as defined in Para. 6.2. of the Terms of Reference, to split the trial on the issues of liability
Plea by Defendant that the and quantum, it expects from their client a clear and explicit response as to their
Agreement Is Void Because participation in the arbitration proceedings. The Tribunal clearly pointed out that failure
It Provides a Lease of 99 to respond within seven days shall be deemed as a confirmation of their client's refusal to
Years participate, and therefore informal submissions from their side shall no more be taken
Pleas Rejected into account by the Tribunal. Should their client decided to participate, the Tribunal
Unlawful Repudiation of requested their comments on the Claimant's procedural suggestions that were enclosed
the Agreement by with said letter.
Defendant Entailing Its Such letter remained also without any response from the Defendant.
Liability
Claimant Entitled to On February 27, 2002. the Tribunal issued Procedural Order N°2 whereby:
Compensation
it confirmed, in respect of the issues relating to the substantive claims as defined in
Paragraph 6.2 of the Terms of Reference, the split of the trial on the issues of liability and
quantum, and decided to address and settle separately, through a second partial award,
Link(s) to Case Note(s) the issue of the applicable law on the merits and the issues of liability.
Case note it determined the procedural rules to be followed in the next phase of the arbitration
proceedings for the submission of written pleadings and evidence by the parties
addressing the substantive claims arising in the Arbitration, and provided for a hearing to
1
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 addressing the substantive claims arising in the Arbitration, and provided for a hearing to
Bibliographic reference take place on a date to be determined following the receipt of submissions.
'Dallah Real Estate and On June 19, 2002, the Claimant submitted its written pleadings addressing the substantive
Tourism Holding Company issues set out in Procedural Order N°2, together with:
v Ministry of Religious – Chronology of Events.
Affairs, Government of
Pakistan, Second Partial – Core Bundle.
Award, ICC Case No. 9987, 19 – Agreements Bundle.
January 2004', International – Correspondence Bundle (in chronological order).
Journal of Arab Arbitration, – Factual witness statement of Mr. Shezi Nackvi with attachments.
(© International Journal of
Arab Arbitration; On July 1, 2002, the Claimant submitted the report of Mr. Yaseen Ghazzawi, expert on Saudi
International Journal of Law.
Arab Arbitration 2010, Thereafter, the Tribunal appointed Wednesday September 25, 2002 for the hearing at the
Volume 2 Issue 4) pp. 370 - offices of the ICC in Paris, and a notice of the hearing and its agenda was duly given to the
419 Claimant and the Defendant by September 4, 2002. The agenda of the hearing was:
– to hear the oral pleadings of the parties on the issues of the applicable law on the
merits and the issues of liability as defined in para. 6.2 of the Terms of Reference.
P 373
P 374
– to hear and examine the two witnesses that had submitted written witness
statements under the Claimant's submissions.
A letter dated September 23, 2002 written on the letter head of Mr. Saleem Sahgal and
signed by him “for Walker Martineau Saleem” was addressed to the three members of the
Arbitral Tribunal, though not to the Claimant or its lawyers. This letter included a
statement that the “Ministry of Religious Affairs, Government of Pakistan, has engaged me
with instructions to defend the interests of the Government of Pakistan in the captioned
matter which is stated to be fixed on 25 September 2002”, and continued by requesting, “in
the interests of justice” “a reasonable adjournment in order to enable me to prepare the
brief, enter appearance and render assistance before you on behalf of the Government of
Pakistan”.
As the members of the Tribunal were traveling to Paris for the hearing, the letter of Mr.
Saleem Sahgal was received too late to prevent the Tribunal and the Claimant from
assembling, as previously ordered, on 25 September 2002 for the scheduled hearing.
10- The first step when the Tribunal assembled as planned on September 25, 2002 was to
consider the request for adjournment contained in the letter of September 23, 2002. The
Claimant argued strongly that such request should be rejected, addressing several
arguments that were recorded in the Minutes of the Meeting and in Procedural Order N° 3
dated October 2, 2002. However, the Tribunal, though it saw great force in the Claimant's
submissions, decided, in consideration of the fact that the arbitration is concerned with a
very large claim, brought against an organ of a sovereign state, and that the Defendant had
shown itself willing to take part in the arbitration, that the interests of justice would best
be served by allowing the Defendant to do so, whilst taking care to keep the inevitable
further delay to a minimum.
Therefore, the Tribunal decided not to proceed with the hearing and to grant an
adjournment in accordance with a Procedural Order to be issued by the Tribunal.
11- On October 2, 2002 the Tribunal issued Procedural Order N°3, that was duly notified to
the parties, and whereby:
the Defendant was granted 30 days for the submission of its statement of Defence and
its Answer to the Claim, such submissions to address the substantive issues of the
applicable law on the merits and the issues of liability as defined in Para. 6.2. of the
Terms of Reference, and to include all factual and legal arguments in support thereof.
the Defendant was requested to submit to the Tribunal a duly notarized power of
attorney executed by the Defendant and authorizing the lawyers to represent and
defend the interests of the Defendant in the present arbitration case.
P 374
P 375
procedural rules and time limits were set for the submission of the Claimant's
Memorial of Reply, and the Defendant's final statement of Reply.
the fixing of a date for the adjourned hearing and the determination of the
procedural rules governing such hearing were left to be decided by the Tribunal after
consultation with the parties, following the filing by the Defendant of its Answer to the
Claim.
12- On November 4, 2002, the Defendant submitted an Interim Reply whereby, without
addressing any issue relating to the merits, it requested merely the adjournment sine die
of the arbitration proceedings until the settlement of the judicial cases pending before the
Courts of Pakistan. In this respect, the Defendant submitted that there are two questions
pending determination before the Court in Pakistan, namely:
Whether Pakistan is a party to the arbitration agreement dated September 10, 1996,
And

2
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Whether, in view of the allegations of collusion etc, the agreement is or is not void ab
initio and therefore disputes arising out of it are not arbitrable?
The Defendant concluded that it is out of respect for the Tribunal that it prays that the
Tribunal stay its hands and postpone the hearing until after the final decision of the
questions noted above by the Courts in Pakistan, as this course will avoid the unenviable
consequence of the award by the Tribunal, if any, being futile and ineffective.
The Defendant also requested that it be afforded an opportunity to have a hearing on its
request to stay the proceedings, adding that nothing said or done is to be treated as
submission to the jurisdiction of the Tribunal, and reserving its right to file its written
defence to the Claim on its merits.
On November 6, 2002, and as requested by the Tribunal under Procedural Order N°3, the
Defendant's lawyer addressed by fax to the ICC Secretariat a copy of the duly notarized
Power of Attorney executed on his behalf by the Defendant for the present arbitration
Case.
On December 2, 2002, the Claimant submitted its reply to the Interim Reply of the
Defendant dated November 4, 2002, together with a summary of the current status of the
Pakistani proceedings and a letter dated 12 November 2002 by ORR DIGNAM and Co.,
advocates, on the subject matter, and requested the dismissal of the Defendant's reply as
irrelevant, misconceived, misleading and without merit, and not in compliance with the
order of the Tribunal that the submissions should be a statement for defence and an
answer to the Claim. In particular, the Claimant contended that the Defendant's
P 375 submissions seek to re-open the issue of jurisdiction, which the Tribunal already settled,
P 376 and developed the following arguments:
The allegation relating to collusion has been abandoned before the Pakistani Court.
The allegation of collusion is no more than a bold assertion unsupported by any
particulars or evidence.
The issue of section 33 application was before the Arbitral Tribunal when it made its
decision on jurisdiction, and are any how irrelevant to its jurisdiction. Moreover, the
Pakistani Courts have not sought to stay the arbitration proceedings.
By putting an Interim Reply, the Defendant has submitted to the jurisdiction of the
Tribunal.
The issue of enforcement is irrelevant to the question of the Tribunal's jurisdiction, a
matter on which it has already ruled. All arguments which could, pursuant to Pakistan Law,
vitiate an Award are required to be raised at the proper time and before the proper forum
when the Claimant seeks to enforce the Award, and are presently extraneous to the
arbitration proceedings at hand.
The Claimant concluded by asking the Tribunal to fix a date for the resumed hearing of the
arbitration on the issue of liability.
On December 18, 2002, the Defendant submitted by fax (also received on December 20, by
courier) a Rejoinder to the Reply of the Claimant to the Interim Reply of the Defendant.
The Defendant reiterated its allegations and requests and emphasized that the issue of
jurisdiction of the Tribunal is wholly different from the issue of the dispute being
arbitrable or not, and denied the Claimant's allegations, namely that the request for
adjournment is a tactical ploy to delay the hearing, that the Defendant seeks to re-open
the issue of jurisdiction. Defendant also denied that the allegation of collusion has been
abandoned, or that the filing of the Interim Reply is to be treated as submission to the
jurisdiction of the Tribunal.
The Defendant concluded by requesting that it be afforded a hearing in support of its
prayer for an adjournment sine die of the arbitral proceedings.
On February 18, 2003, the Arbitral Tribunal issued Procedural Order N°4 whereby the
Tribunal, in respect of the Defendant's request, and on the basis of the parties'
submissions, stressed the following:
P 376 The adjournment granted to the Defendant under Procedural Order N°3 was
P 377 motivated by the desire to give the Defendant a last opportunity to submit its
defence on the merits and was decided in spite of legitimate concerns as to the
delays resulting therefrom. These concerns appear clearly in the Reasons for Order
N°3 (p.2 of the Order).
Para (2) of the Order provides explicitly that the submission of the Defendant should
address the issues of the applicable law on the merits and the issues of liability as set out
in Para. 6.2 of the Terms of Reference, and should include all factual and legal arguments
in support thereof.
The Defendant failed to abide by the provisions of said Order, and instead, submitted a
Reply which it qualified as “interim” and whereby it limited its submission to a request for
sine die adjournment of the arbitration proceedings till the decision on the matters
pending before the Courts of Pakistan.
The issues raised by the Defendant have been raised previously in its letters of August 15,
1998 and January 7, 1999, they have been indicated in the Terms of Reference and were

3
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 1998 and January 7, 1999, they have been indicated in the Terms of Reference and were
discussed in the submissions that were filed prior to the Tribunal's Partial Award dated
June 26, 2001.
The Tribunal, in its Partial Award, has decided, on the basis of the basic legal rule of the
autonomy of international arbitration agreements, that the Arbitration Agreement in the
present case is not to be assessed as to its existence, validity and scope, under the laws of
Saudi Arabia or under those of Pakistan, but only by reference to those transnational
general principles and usages reflecting the fundamental requirements of justice in
international trade and the concept of good faith in business.
In consequence, the Arbitral Tribunal has already dismissed, in said Partial Award (p.37)
the matters raised in respect of Pakistan Arbitration law, and more specifically the matter
relating to the applicability of the Pakistan Arbitration Acts to the present Arbitration and
the matter relating to the enforceability of an ICC award in Pakistan.
Following all the above developments, the Defendant's request for adjournment sine die of
the arbitral proceedings, submitted surprisingly at such a late stage of the present
proceedings, does not seem to be factually and legally justified, based on the grounds and
reasons indicated above.
However, the Tribunal, for the same considerations that have led to the postponement of
the hearing on the merits that was scheduled on September 25, 2002 (p. 2 para. 6 of
Procedural Order N°3) and in the sole interest of justice, is willing, before deciding on the
issue of adjournment, to grant the Defendant the opportunity to present its point of view in
P 377 support of its prayer for an adjournment sine die of the arbitral proceedings, at a hearing
P 378 that shall consider at the same time, in order to avoid any further delay in the conduct
of the arbitral proceedings, and without prejudice as to the Tribunal's final decision on the
adjournment, the issues that formed the agenda of the hearing of September 25, 2002, i.e.
the issues of the applicable law on the merits and the issues of liability as stated in Para.
6.2 of the Terms of Reference.
Therefore, the Tribunal decided:
Reserving its final decision on the Defendant's request for adjournment sine die
of the present arbitral proceedings, to invite the Claimant and the Defendant
parties in the present case to a hearing to be held on Thursday April 24, 2003 at
10.00 a.m. at the offices of the International Chamber of Commerce in Paris.
to determine the agenda of the meeting as follows:
To hear the oral pleadings of the Defendant Party in support of its prayer for an
adjournment sine die of the arbitral proceedings, and the comments of the Claimant
Party thereon;
To hear the oral pleadings of the parties on the issues of the applicable law on the
merits and the issues of liability as set out in para. 6.2 of the Terms of Reference, in
accordance with Procedural Order N°2 issued on February 27, 2002;
To hear and examine the witnesses that have submitted written witness statements
under the Claimant's submissions.
Any other matters properly raised by the parties and /or the Arbitral Tribunal.
Such hearing to be governed by the procedural rules determined in Procedural Order N°2
dated February 27, 2002 as well as by any other rules determined by the Tribunal before or
during the heaving.
On April 4, 2003, i.e. more than 6 weeks after the date of Procedural Order N°4, the
Defendant's lawyer sent a letter asking very humbly for an adjournment of the hearing
scheduled on April 24 to some other date i.e. 6 weeks thereafter, arguing that such request
has been necessitated by the fact that the prior professional commitments fixed on April
24, 2003 could not be readjusted despite their best efforts.
By letter dated April 7, 2003, the Claimant objected to the Defendant's request for
adjournment.
P 378 By letter dated the same day, the Tribunal dismissed the Defendant's request for
P 379 adjournment and advised it that no adjournment is possible, due to the extensive
professional commitments of the members of the Tribunal for the coming months. At the
same time, the Tribunal reminded the Defendant's lawyer that Procedural order N°4 was
faxed to his office on February 18, 2003, was later confirmed to him by special delivery
courier, and that no objection was raised until April 4, 2003. The Tribunal invited him to
seize the opportunity to present his client's point of view at the coming hearing.
On April 12, 2003, a new letter was received from the Defendant's lawyer requesting an
adjournment of the hearing, on the basis of an enclosed letter received by him from the
Defendant whereby this latter expresses its inability to arrange for his visa on time in view
of the Iraq war and prevailing geo-political situation in the world.
By letter dated April 14, 2003 the Claimant submitted that the Defendant's legal
representatives have had ample time to arrange visas since notification of the hearing
date and requested that the hearing proceeds.
By letter dated April 14, 2003, the Tribunal rejected the new request for adjournment, on

4
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 By letter dated April 14, 2003, the Tribunal rejected the new request for adjournment, on
the basis that visa problems, besides being personal problems that do not constitute a
valid excuse for the adjournment of arbitral hearings involving a number of other persons,
could have been arranged had such requirement been attended to by the Defendant since
the date of notification of the hearing date i.e. since February 18, 2003.
On April 24, 2003, date of the hearing, the Claimant Party attended, but the Defendant
Party did not attend or appear nor was represented at the hearing, although the previous
hearing held on September 25, 2002 was adjourned upon its specific request.
The Arbitral Tribunal, after deliberation on the subject matter, considered that the
Defendant has missed the opportunity that was offered to it under Procedural Order N°4 to
appear and submit its oral pleading in support of its prayer for an adjournment sine die of
the arbitral proceedings until the settlement of the judicial cases pending before the
Courts of Pakistan. On the basis of the foregoing, the Tribunal decided to dismiss the
Defendant's request for adjournment for the reasons indicated in Procedural Order N°4
and empowered the Chairman to issue Procedural Order N°5 for this purpose.
Thereafter, the hearing proceeded, in the absence of the Defendant.
The Claimant made an oral presentation of its position on the substantive issues of the
applicable law on the merits, the identity of the Defendant party to the Agreement and the
issues of liability for the repudiation of the Agreement, confirming and developing the
arguments submitted in its written Memorial. The Claimant replied to the questions and
queries put on by the members of the Tribunal.
P 379
P 380
Thereafter, the Claimant's witness, Mr. Shezi Nackvi was heard and examined. He
confirmed his written witness statement and replied to the queries of the Tribunal.
20- At the end of the hearing and there being no further business on the agenda, the
Tribunal declared the proceedings closed pursuant to Article 22 of the Rules.
21- On May 15, 2003. and in accordance with the Tribunal's decision taken during the
hearing of April 24, 2003, the Chairman issued Procedural Order N°5 whereby it was
decided “that the Request submitted by the Defendant in its Interim Reply of November 4,
2002 for the adjournment sine die of the present arbitration proceedings until the
settlement of the judicial cases pending before the Pakistani Courts is unjustified in fact or
in law and is therefore hereby dismissed”.
22- It is to be noted that the Court has granted successive extensions of time to the
Tribunal for the rendering of the final award in this matter, as follows:
Extension until December 31, 1999, at the Court's session dated September 1, 1999.
Extension until March 31, 2000, at the Court's session dated December 2, 1999.
Extension until June 30, 2000, at the Court's session dated March 8, 2000.
Extension until September 30, 2000, at the Court's session dated June 14, 2000.
Extension until December 31, 2000, at the Court's session dated September 13, 2000.
Extension until March 31, 2000, at the Court's session dated December 13, 2000.
Extension until June 30, 2001, at the Court's session dated March 16, 2001.
Extension until September 30, 2001, at the Court's session dated June 15, 2001.
Extension until December 31, 2001, at the Court's session dated September 14, 2001
Extension until March 31, 2002, at the Court's session dated December 14, 2001.
Extension until June 30, 2002, at the Courts' session dated March 7, 2002.
Extension until September 30, 2002, at the Court's session dated June 14, 2002.
Extension until December 31, 2002, at the Court's session dated September 13, 2002.
Extension until March 31, 2003, at the Court's session dated December 13, 2002.
Extension until June 30, 2003, at the Court's session dated March 14, 2003.
Extension until September 30, 2003, at the Court's session dated June 13, 2003.
Extension until December 31, 2003 at the Court's cession dated September 12, 2003.

Section II SUMMARY OF THE PARTIES' POSITIONS IN RESPECT OF THE ISSUES

TO BE DETERMINED
23- The issues to be determined by this Second Partial Award are, as per Procedural Order
N°2 dated February 27, 2002, those issues relating to the merits of the case to the exclusion
of the issue relating to the specific quantum of possible damages.
P 380
P 381
I Summary of the Claimant's Position
In support of its general position, the Claimant's written submissions and pleadings refer
to points of fact and law that are, in Claimant's opinion, relevant to its case and which can
be summarized as follows:
A/ Summary of factual background

5
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 A/ Summary of factual background
The Claimant starts its written submissions by giving a summary of the factual background
of the case and a description of the project. It relates the events that occurred from the
conception of the project up to the repudiation of the contract relating thereto. In
particular, the Claimant states that:
The Claimant is part of the Dallah Group in Saudi Arabia that has been involved
in the promotion of the Holy Places and are experienced in the provision of
services to Pilgrims wishing to visit them. The Claimant was used as a vehicle to
undertake the Mecca housing project aiming at providing housing facilities to
Pakistani Pilgrims performing Hajj.
Following various discussions with the Pakistan Government a Memorandum of
Understanding (MOU) was signed on July 24, 1995 between the Claimant and the
Government of Pakistan (GOP).
Under this MOU, the Claimant was required to acquire those lands specified in the
accompanying schedule and develop, construct and complete the housing facilities, for a
total cost of USD 242,000,000. Upon completion, such facilities would be leased to GOP for
99 years subject to the Claimant arranging suitable financing provisions for GOP against a
guarantee from GOP.
Pursuant to the MOU, a copy of the proposed lease and the financing proposal, as well as
detailed specifications and drawings were sent to the Ministry of Religious Affairs, on
August 17, 1995. The design was clearly approved by the said Ministry with a small number
of minor modifications on September 19, 1995.
On November 18, 1995, Claimant acquired a plot of land of 43.000 square meters at Al
Misfala in Mecca.
By Ordinance of January 31, 1996, the GOP established the Awami Hajj Trust (“Trust”) to
mobilize savings from Pilgrims desirous of performing Hajj and provided for the
appointment of a Trustee Bank for the collection of savings, maintenance of accounts of
members and investments of the funds.
P 381
P 382
Thereafter, the parties agreed that a larger area of land would be used for more housing to
be provided, with a consequent increase in the overall cost to USD 345,000,000 while
negotiations continued as to the financing of the Project.
The Project was finally approved at a meeting attended by the Prime Minister on July 16,
1996, where the terms of the lease and the plans, specifications and drawings were
formally approved as was the arrangement for the foreign currency loan, as confirmed by a
subsequent letter of July 30, 1996.
Further, the Al Baraka Islamic Investment Bank was appointed Trustee Bank with
permission to use its Pakistani subsidiary Al Towfeek.
On September 10, 1996, the agreement, subject of this dispute, was signed between the
Claimant and the Trust (The Agreement).
Following such signature, the Claimant was prevented from syndicating the Financing
Facility because of the unusually long duration of the ANZ Bank clear market mandate,
which did not expire until October 22, 1996. The Claimant was made aware of this duration
shortly after signature of the Agreement by an official of the Defendant who further agreed
that the Claimant would wait until October 22, 1996 to recommence the arranging of the
Financing Facility.
On October 22, 1996, the relevant loan documents were submitted to the Defendant, but, as
a result of the change of government on November 6. 1996, the financing was not agreed
and no guarantee was provided by the Defendant against which the financing was to be
raised.
By letter dated January 19, 1997, the Defendant purported to terminate the Agreement
contending that Claimant had not arranged the financing within 30 days of the execution of
the Agreement as provided for in Clause 2 of the Agreement so that the Agreement had not
come into effect. The Defendant also contended that the Claimant's alleged failure to
provide the drawings and specifications and obtain approval within 90 days of the
execution of the Agreement was a repudiation thereof.
For more details concerning the facts, the Claimant relies on the statement and its Exhibits
of Mr. Shezi Nackvi who has been at all times authorized to act on behalf of the Claimant in
all matters related to the Project, and who submitted a witness statement and was
examined by the tribunal during the hearing of April 24, 2003.
P 382 In the light of the above-mentioned factual background, the Claimant deals with its case
P 383 on liability and the issues involved therein, but before developing such issues, the
Claimant addresses the issues of the applicable law, the identity of the Party to the
Agreement and the validity of the Agreement as a result of the existence of a 99 year lease.
B/ The applicable Law
The Claimant submits that the Agreement is silent as to the proper law, and that in such a
6
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The Claimant submits that the Agreement is silent as to the proper law, and that in such a
case Article 17 of the ICC Rules applies and it is for the Tribunal to apply “the rules of law
which it determines to be appropriate” taking account of the provisions of the contract and
the relevant trade usages.
In this respect, the Claimant contends that the applicable law is the law of Saudi Arabia as
being the substantive national law with which the Agreement has its closest and most real
connection.
In support of its contention, the Claimant relies essentially on the following six features of
the Agreement:
Substantial performance of the contract was to have taken place in Saudi Arabia, as
it relates to the building and leasing of housing facilities in Saudi Arabia.
Article 12 of the lease Agreement to be entered into upon completion of the building,
provides for the obligation of the lessee to comply with local Saudi Arabian laws
applicable to the occupation of the premises.
The Agreement provides for on-going responsibilities on the Claimant in relation to
the Housing situated in Saudi Arabia (Clauses 14-15 of the Agreement).
The Trustee Bank is a bank incorporated in Bahrain, Saudi Arabia.
Advance Payment as well as the balance of funds were to be paid in U.S. Dollars, but
out of funds existing outside Pakistan, and payment was to be made in Saudi Arabia.
All notices to the Trust were to be sent to the Managing Trustee of the Pakistani
Embassy in Riyad, Saudi Arabia and not directly to Pakistan.
Moreover, the Claimant contends that there is no substantial connection with Pakistan or
any other national law except that one of the parties is from Pakistan and the Agreement
was executed in Pakistan.
It is also important to note that the MOU provided for the contract to be governed by Saudi
Law, and that according to the opinion of the Saudi lawyer Mr. Yaseen Ghazzawi, such MOU
would be regarded under Saudi law as a binding document to which the Agreement is a
supplement, which constitutes a further reason to have the Agreement governed by Saudi-
Law.
P 383
P 384
Furthermore, the Claimant contends that the Tribunal is entitled, in an international
contract, to look at Saudi law in the context of transnational law and that the principles of
Saudi law relied on are consonant with general principles of transnational law, and this
constitutes another consideration in favor of Saudi law.
Finally, the Claimant concludes that should transnational law be the appropriate law, the
result would be the same.
C/ The identity of the Parte to the Agreement
28- In its written submissions and its oral pleadings, the Claimant submits that, whether
under Saudi law or transnational law, the Defendant is a party to the Agreement.
In support of its position, the Claimant puts forward several arguments which may be
summarized as follows:
Under Saudi law the MOU is a binding agreement and the Agreement is a
supplement thereto. Thus, the Defendant is not only a party to that MOU, but
also a party to the Agreement.
The Claimant relies upon the reasoning in pages 23-35 of the first Partial Award where it
was found by the Tribunal that the Defendant is the true party to the Arbitration
Agreement, to contend that such reasoning applies equally to the Agreement.
The Claimant reiterates that the structure of the Trust showed the involvement of various
officials of the GOP, that the Trust was dependent in its existence and its role, financially
as politically, on the GOP, and was in fact controlled by the GOP. The Trust was a savings
scheme for the Pilgrims. It was not the contracting authority to sign with the Claimant.
The Claimant relies also on the statement of Mr. Shezi Nackvi and its attachments which
show that:
Immediately after the MOU, all designs and specifications, as well as all
financial proposals, were submitted to and discussed with the Defendant. Four
ministries were involved in the negotiations of the Agreement after the MOU.
At a time when the Trust was established and it was clearly contemplated that such Trust
would be involved in the Project, a letter was sent to the Claimant by the Defendant: the
P 384 Ministry of Religious Affairs, G.O.P. on July 30, 1996 confirming the approval of the plans and
P 385 the terms of the lease, and setting out as one of the terms of the proposal “land as well
as buildings are leased to Government of Pakistan / Awami Hajj Trust for 99 years”.
It was always intended that the Defendant be the real party to the Agreement.
All correspondence and all dealings, even after the Trust was formed, remained with the

7
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 All correspondence and all dealings, even after the Trust was formed, remained with the
Defendant and even with officials not involved in the Trust. No dealings were made with
the Trust as such which remained a bare shell.
The Defendant's participation in the Pakistani Court proceedings confirms that the
Defendant considers itself as the true party to the Agreement, and is inconsistent with the
Defendant's position in this Arbitration that it is not a party to such Agreement.
In such a transnational deal, government involvement is a condition for the continuation of
the project, and Claimant was entitled to rely on the commitment of the Defendant as the
consideration for entering into the Project and part performing its contractual obligations
on the basis of the MOU: purchase of land for substantial sums, preparation of drawings
and financial proposal, etc…. Concepts of justice and fairness require that the party to an
international commercial contract be an enduring entity.
D/ The liability for repudiation of the Agreement
29- The Claimant submits that it entered into the Agreement in good faith in the full
expectation that the Defendant would perform its side of the bargain. While the Claimant's
principal obligation was to construct the housing and to lease it, together with the land, to
the Defendant, the Defendant's principal obligation was to pay for the housing and the
land by means of an initial down-payment of USD 100,000,000, (the Advance Lease
Payment ALP) within 30 days from the date of execution of the Agreement and the balance,
by means of lease payments. However, as the Defendant could not make the ALP without
raising the USD 100,000,000 by means of a Financing Facility, the Agreement provided for
the Claimant to arrange this Facility for the Defendant against a guarantee from the
Defendant.
As explained under para. A here above, the Claimant was prevented from syndicating the
Financing Facility within the time limit because of the unusually long duration of the clear
market mandate given to AZN bank. When that mandate expired, the Claimant submitted
the relevant loan documents but, pursuant to the change of government, the financing was
not agreed and no guarantee was provided by the Defendant.
P 385
P 386 On the basis of the foregoing, the Claimant states that the Defendant failed to comply
with its obligations under the Agreement, and that the letter of January 19, 1997 by the
Defendant contending on the one hand that the Claimant had failed within 90 days of the
Agreement to get detailed specifications and drawings approved by the Defendant, and on
the other hand that its failure to arrange for the financing facility within 30 days of
execution of the Agreement, prevented the Agreement from becoming effective, amounts
to an unlawful repudiation of the Agreement by the Defendant, for which it is liable, while
the Claimant has complied with all its obligations.
In support of its position, the Claimant submits the following arguments:
(i) The Agreement did not become ineffective pursuant to clause 3 thereof as a result of
the failure of the Defendant to pay the defined above ALP and/or the failure of the
Claimant to submit the Performance Bond within 30 days of the execution of the
Agreement.
the 30-day period provided for in Clause 2 is not of the essence. It is inserted for the
benefit of the Claimant, in order to give this latter some security as to payment after
having incurred significant costs for the purchase of the land and before incurring further
costs in starting construction. It was never intended that the project be jeopardized over a
short delay which was not critical to the continuance of the project and the relationship
between the parties.
The delay in any event was not attributable to the Claimant's negligence or laxity hut was
beyond its control, as it was prevented from arranging the Financing Facility within the 30
days period by the long clear market mandate given to ANZ bank and as the Defendant
failed to inform the Claimant prior to the signing of the Agreement that such mandate
would not expire until October 22, 1996.
The Defendant agreed to the delay in the commencement of arranging the financial facility
until October 22, 1996, and no objection was made to the delayed submission of the loan
documents on October 22, 1996.
The Financing Facility did not materialize because the Defendant, following a change of
administration, failed to agree to it or to provide the guarantee which was a condition of
the provision of the financing and not through any fault on the part of the Claimant.
Clause 3 does not make the obligation to pay the ALP within 30 days a condition precedent
to the coming into force of the Agreement. By stating that the Agreement shall come into
effect on the date that the Claimant receives the ALP, it means that the Agreement comes
into effect to impose obligations on the Claimant to construct and complete the housing
P 386 and counter obligations on the Defendant to pay the balance of the monies. Thus, the
P 387 obligation to pay the ALP in 30 days is a contingent or suspensory condition to further
performance. Moreover, no clause entitles the Defendant to repudiate the Agreement as a
result of failure to arrange payment within the prescribed time limit.
As for the Performance Bond, it was agreed as to form and only required a signature that
would have been forthcoming if the Defendant had agreed the Financing Facility.
The contention that the Claimant failed to get the detailed specifications and drawings
8
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The contention that the Claimant failed to get the detailed specifications and drawings
approved within 90 days is misconceived because such detailed specifications and
drawings were submitted in August 1995, and approved by letter dated September 19, 1995
sent by the Defendant to Mr. Nackvi, and because the Defendant's approval of the plans
was confirmed by the Prime Minister at a Government Cabinet Meeting dated July 16, 1996
and attended by Nackvi.
Anyhow the obligation under the Agreement to approve the detailed plans and
specifications rested on the Defendant, while there was no specific obligation on the
Claimant to supply such detailed plans and specifications, those having been supplied
prior to the Agreement pursuant to the Claimant's obligation under the MOU.
If time was of the essence in relation to the obligation of the Claimant under Clause 2
and/or 4, under Shari'a law, the failure of the Defendant to notify the Claimant of the
duration of the clear market mandate would be an untrue statement which would
invalidate the 30 day provision in any event.
Under Shari'a law also, a party cannot by its own action and conduct prevent the
realization of a contractual condition, such condition being binding on the agreement
being made, in order to prevent the Agreement from coming into effect.
E/ The validity of the 99 year lease
30- The Claimant contends that under Saudi Law the owner has the right to lease its asset
for a known period, short- term or long-term, provided that the asset shall not cease to
exist meanwhile, so that if the land is leased for a period of hundred years, this is in order.
However, restrictions may be imposed by specific regulations if they are dictated by
circumstances, and exemptions from the application of such regulations may be given by
the competent authority which grants the necessary permits. This principle applies to
leases to non-Saudis in the Mecca Region where the leases are made for one year
renewable annually and where the normal procedure is to submit the leases which provide
for a long-term period to the Ministry of Hajj for approval.
P 387
P 388 Therefore, the signing of an agreement providing that the Claimant shall develop a
property in Mecca in accordance with certain specifications in consideration of the other
party undertaking to rent the property for 99 years with a provision requiring the Claimant
to obtain the necessary approvals and consents is not in breach of the law, but is a binding
agreement and is effective in its application unless the Claimant fails to obtain the
necessary consents.
Since the contract provides for the requirement to obtain an exemption and a permit, the
contract is valid and binding upon both parties on condition that the necessary permit
shall be obtained. Consequently, the tenant cannot regard the lease as being in breach of
the law as such.

II Summary of the Defendant's position

31- It is to be noted that the Defendant had, in all its written letters, submitted that it does
not and shall not submit to the jurisdiction of the Arbitral Tribunal because of the alleged
absence of an arbitration agreement between the Claimant and the Defendant, and in
support of this contention, has filed, prior to the First Partial Award, a number of written
letters outlining its arguments on the subject.
Following the First Partial Award of the Tribunal dated June 26, 2001 which adjudged that
an agreement to arbitrate under the ICC Rules exists between the Claimant and the
Defendant and that the Tribunal has proper and valid jurisdiction in respect of the
Defendant over the claims submitted by the Claimant in the present case, the Defendant
continued to ignore the Tribunal's invitations to submit to the jurisdiction of the Tribunal
and to file its written pleadings on the merits and on the issues relating to the substantive
claims. No attendance or appearance was ever made by the Defendant in any of the
meetings scheduled in this Arbitration, in spite of the fact that all documents, letters and
notices exchanged during the arbitral proceedings were duly notified to its lawyers.
It is to be noted also that the Defendant made an attempt to participate, by letter sent on
September 23, 2002, two days prior to the hearing scheduled on September 25, 2002.
The details and outcome of such attempt are exposed in detail under Section I of this
Award. In particular, while the Defendant was granted a new period of time to submit its
written pleadings on the merits of the case and while its lawyer, Mr. Saleem Sahgal, filed a
duly executed power of attorney authorizing him to represent the Defendant in this
Arbitration, the Defendant did not address any of the issues on the merits, and simply
submitted an interim reply whereby it requested the adjournment sine die of the arbitral
proceedings until the settlement of the pending Pakistani Court cases, and the fixing of a
P 388 hearing to listen to its pleadings on this adjournment request, continuing to reassert that
P 389 such submission is not to be deemed as a submission to the jurisdiction of the Tribunal
in this Arbitration case.
Finally, although the Tribunal granted the Defendant by Procedural Order N°4, the
possibility to plead orally for the adjournment on April 24, 2003, the Defendant did not
attend, after having attempted by two times to postpone the hearing:
the first time, through a request made by the Defendant's lawyer, on April 4, 2003 i.e.
9
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the first time, through a request made by the Defendant's lawyer, on April 4, 2003 i.e.
more than 6 weeks after said Procedural Order, alleging that its prior professional
commitments fixed on April 24, 2003 could not be readjusted; and
the second time, following the dismissal of the first request by the Tribunal, through a
request made by the Defendant's lawyer on April 1, 2003 alleging that the Defendant
could not arrange an entry visa to France for its lawyer, which reason was dismissed
and deemed by the Tribunal as an invalid excuse.
Therefore, the Defendant's position on the issues to be determined shall be based on the
few observations made in those letters that were submitted prior to the First Partial Award,
namely its letters of August 15, 1998, January 7, 1999, August 11-16, 1999 and November 17,
1999.
A/ The applicable law
32- The Defendant submits that the Agreement, for the period during which it remained in
force, is governed by the laws of Pakistan. In this connection, the Defendant refers to the
following points:
Pakistan is the place where the Agreement was executed.
Pakistan is the place where the fundamental conditions under clause 2 (supply of a
financing facility and a performance bond by the Claimant to the Trust) and Clause 4
(Approval of the detailed drawings by the Trust) of the Agreement were required to
be performed.
The phase of construction in Saudi Arabia did not come as the Agreement had not yet
become effective due to the Claimant's failure to fulfill fundamental conditions of the
contract.
In the absence of any contrary express agreement, the proper Law of the Arbitration
Agreement shall be the same as that which is applicable to the Main Agreement, such law
being the Law of Pakistan which is the law that has the closest connections/nexus with the
agreement, where it was executed, where the alleged cause of action accrued, where one
of the parties used to carry on its business, and where the fundamental conditions of the
Agreement were required to be fulfilled.
P 389
P 390
B/ The identity of the Party to the Agreement
33- The Defendant had contended prior to the First Partial Award of the Tribunal that there
was no contract or any Arbitration Agreement between the Defendant and the Claimant,
that the contract and Arbitration Agreement referred to by the Claimant were entered with
the Trust which had already ceased to exist, and that therefore the Defendant is not the
true party to the Arbitration Agreement nor to the contract constituting the Main
Agreement.
Following the Tribunal's Award dated June 26, 2001 which has determined that the
Defendant is the true party to the Arbitration Agreement, the Defendant did not submit any
further contentions in respect of the identity of the party to the Agreement.
However, it follows from the Defendant's previous reasoning, that the Defendant does not
make any distinction between the contract (the Main Agreement) and the Arbitration
Agreement inserted therein, so that the proper law applicable to the Arbitration
Agreement is the same law that is applicable to the Main Agreement, and that the party
determined to be the party to the Arbitration Agreement is therefore at the same time the
party to the Main agreement.
C/ Liability
The Defendant submits that the Agreement never became effective or operative because
none of the following fundamental conditions set forth for the Agreement to become
effective were fulfilled by the Claimant: (1) arrangement of Financing Facility of USD
100,000,000 within 30 days of the execution of the Agreement, (2) submission of
Performance Bond and (3) submission of detailed specifications and drawings within 90
days of execution of the Agreement.
D/ Validity of the 99 year lease
In one of its written observations to the Arbitral Tribunal dated September 16, 1999, the
Defendant submits that the Agreement is void because it provides for a leasing period of
99 years, which is not permissible, under the laws of Saudi Arabia to non-Saudis in the
Mecca Area.
In support of its contention, the Defendant submitted a Legal Opinion by Messrs. Hamad
and Al Mehdar, a Saudi Law Firm, dated September 13, 1999.
The Defendant however never followed up on this issue thereafter.
P 390
P 391

Section III Analysis and Discussion Reasons for Award

10
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 36- After having settled in its First Partial Award dated June 26, 2001 the preliminary issues
regarding its jurisdiction, and having decided that it has proper and valid jurisdiction in
respect of the Defendant over the claims submitted by the Claimant in the present case,
the Tribunal will have to determine, by this Second Partial Award, and on the basis of the
respective positions and arguments of the parties indicated under Section II of this Award,
the following issues:
I- The law applicable to the merits of the case.
II- The identity of the true party to the Agreement.
III- The liability for termination of the Agreement.
IV- The validity of a 99 year lease contract.

I Determination of the law applicable to the merits of the case

37- Article 17 (1) of the ICC Rules provides for the freedom of the parties to agree upon the
rules of law to be applied by the Arbitral Tribunal to the merits of the dispute. It adds that:
“… In the absence of any such agreement, the Arbitral Tribunal shall apply the
rules of law which it determines to be appropriate”.
The Agreement dated September 10, 1996 is silent as to the applicable law, and does not
contain any provision reflecting the parties' explicit or implicit agreement on the
applicable rules of law. Therefore, it belongs to the Arbitral Tribunal to determine and
choose directly the rules of law that it deems appropriate to be applied to the merits.
In this respect, it is well established as a basic legal rule of international arbitration that
the Arbitral Tribunal may apply the rules of the legal system which is the most closely
connected with the situation.
While the Claimant contends that the law having the closest connection with the
Agreement is the Saudi Arabian law, the Defendant submits that the Agreement, for the
period during which it remained in force, was mostly connected with Pakistani law.
In fact, on the basis of the factual and contractual elements of the case, the following
features appear clearly:
P 391 39.1- The Agreement's connection with Pakistan is based on three elements only whereby
P 392 Pakistan is:
the place of signature of the Agreement.
the place where one of the contractual parties belongs and carries on its business.
the place where some of the fundamental conditions were required to be fulfilled,
and namely the supply of a financing facility and of a performance bond by the
Claimant to the Trust.
39.2- The Agreement's connection with Saudi Arabia is based on numerous features and
contractual provisions which show that Saudi Arabia is the place of performance and of
implementation of the main obligations provided for in the Agreement: acquisition of land,
in Mecca, construction of housing facilities, leasing of same for 99 years and continuous
annual implementation of such lease agreements.
All such obligations create an interest in land which strengthens the ties linking the
Agreement to the country where such land is located. Moreover, Saudi law is the law
provided for as the applicable law in the contractual document dated July 24, 1995 and
called Memorandum of Understanding (MOU) between the Claimant and the Defendant.
39.3- During the period where the Agreement remained in force, the land was acquired in
Saudi Arabia, plans and drawings were prepared, but no construction started however, and
therefore no lease activities as well.
In view of the above, the Tribunal believes and determines that it is the Law of Saudi
Arabia that has the closest connection with the substance of the Agreement and that is
therefore the substantive law governing such Agreement.
Moreover, it is to be noted that for the purpose of determination of the liability issues, the
Tribunal believes that such issues require for their determination an ascertainment of the
facts of the case and an interpretation of the provisions of the Agreement, that may best
be made by seeking the intentions of the contractual parties from the context and the
language used in their agreement. Under this approach, it does not matter really which
system of law applies since the answer is given by the facts of the case and the terms of the
Agreement, despite the fact that the Tribunal has determined the Law of Saudi Arabia as
the applicable substantive Law.
In particular, the principles of contract interpretation under Saudi law as shown in Mr.
Yaseen Ghazzawi's expert opinion do not differ in any substantial way from the general
principles that are applicable to contract interpretation under Pakistan law, common law
or continental European systems.
P 392
P 393 Article 17 (2) of the ICC Rules impose on the Arbitrators to take into account, in all cases,
the provisions of the contract existing between the parties, as well as the usages of trade.

II Determination of the identity of the true party to the Agreement

11
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 II Determination of the identity of the true party to the Agreement
The Arbitral Tribunal has to determine, within the framework of these arbitration
proceedings, two different questions relating to the identity of the Defendant Party.
The first one was: who is the Party to the autonomous Arbitration Agreement? The Arbitral
Tribunal, in its First Partial Award dated June 26, 2001, decided that it is the Defendant:
“the Ministry of Religious Affairs, Government of Pakistan”, who is the true party to the
Arbitration Agreement with the Claimant and therefore the proper party to this dispute
and to these arbitration proceedings, and furthermore it decided that it was indifferent
which law applies, as such Agreement was not to be assessed, in its scope, neither under
the laws of Saudi Arabia nor under those of Pakistan, nor under the rules of any other
specific local law, but was to be determined by reference to transnational general
principles and usages reflecting the fundamental requirements of justice in international
trade and the concept of good faith in business.
The second question is: who is the true party to the Agreement? The Arbitral Tribunal, here
also, believes and concludes that the Defendant: “Ministry of Religious Affairs, Government
of Pakistan”, is the true Party, not only to the Arbitration Agreement, but to the Agreement
in itself, although not named in it expressedly.
This conclusion is valid under Saudi law which is the substantive law determined to be the
applicable law to the merits of the case; it is valid as well under the general principles of
law that were applied by the Tribunal in its first Partial Award of June 26, 2001 and that are
consistent and in conformity with the general principles of Saudi law.
In this respect, it is relevant to point out that an MOU dated July 24, 1995 was signed with
the Defendant pursuant to negotiations that were conducted with said Defendant. Such
Defendant has been in actual fact the party that was involved with the Housing Project
from the first day that such Project was contemplated.
The said MOU contained binding commitments whereby the Claimant purchased the land
in Mecca, and then submitted designs and specifications to the Defendant for approval,
before the signature of the Agreement.
P 393 Under Saudi law which is explicitly provided for as applicable to the MOU, as reflected in
P 394 Mr. Yaseen Ghazzawi's legal opinion, such MOU constitutes a binding agreement, and
the Agreement dated September 10, 1996 is a supplement thereto and a vehicle for its
implementation. As such, the MOU and the Agreement are parts of a one and single
transaction, and the Defendant, which is a party to the MOU, continues being such a party
and is therefore the true party to its supplement, the Agreement of September 10, 1996.
This conclusion is confirmed by the role, conduct and involvement of the Defendant
through all the stages relating to the Agreement which reflect, under the general principles
governing contract interpretation, the common intention of the parties to consider the
Defendant as the true party to the Agreement.
It is to be noted firstly that under the Ordinance dated January 31, 1996 instituting the
Awami Hajj Trust:
46.1. The Trust is established by the Government as a body corporate having perpetual
succession with power to acquire, hold and dispose of property, and may by its name, sue
and be sued. (Art. 3-2). The Trust, thus, is formed as an entity having its own and
Independent legal personality.
46.2. The general direction and administration of the Trust and its affairs is entrusted to a
Board of Trustees formed of government ministers and public officers as follows:
Federal Minister For Religious Affairs- Chairman.
Federal Minister For Finance.
Chairman of the Council of Islamic Ideology.
Deputy Chairman of the Planning commission.
Secretary, Ministry of Finance.
Secretary, Religious Affairs Division, Government of Pakistan.
Chairman of the Pakistan banking Council.
Managing Trustee.
(Art.5)
46.3. The Managing Trustee is appointed by the Government and unless otherwise decided,
is always the Secretary, Religious Affairs Division, Government of Pakistan. (Art. 2 (e)).
46.4. Furthermore, the Government determines where the Trust may establish its regional
offices (Art. 3.3); the Managing Trustee shall submit reports about its activities as and when
the Board or the Government may direct (Art.11); the rules made by the Board must have
the prior approval of the Government (Art. 12.1).
P 394
P 395 The afore-mentioned rules and regulations provided for in the Awami Hajj Trust
Ordinance, prove undoubtedly that the Trust is a public state-owned entity which is
moreover largely controlled by the Government, but which has its own distinct legal
personality. They do not contain sufficient evidence that would permit to disregard the
Trust's legal entity and to consider that the Trust and the Government are one such entity.
12
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Trust's legal entity and to consider that the Trust and the Government are one such entity.
In particular, the rules relating to the composition of the Board of Trustees and to the
powers of the Government are fully consistent with the general features of the regulations
of public entities and with the control that such regulations normally give to the
government over such public entities and that may be, in some cases, far stricter than what
is provided for under the Ordinance. Such control of the Trust by the Government is not, in
itself, sufficiently pertinent to impair the distinct legal personality enjoyed by the Trust or
to lead to the disregard of such personality. When the Government has not signed the
Agreement signed only by the independent state-owned legal entity, the control of that
entity by the Government or the close organic relationship between that entity and the
Government is not sufficient to imply the intention of the Government to become a party to
that Agreement.
48- In fact, any proper address of the present issue required a close scrutiny of the conduct
and of the actions of the parties before, during and after the implementation of the
Agreement in order to determine whether the Defendant may be, through its role in the
negotiation, performance and termination of such Agreement, considered as the true party
thereto.
49- The control exercised by the Government over the Trust becomes, within that
framework, an element of evidence of the interest and the role that the party exercising
such control has in the performance of the Agreement signed by the Trust, and provides the
backdrop for understanding the true intentions of the parties.
50- In the light of the foregoing, the Arbitral Tribunal will look into the actions of the
Defendant and the role it has exercised through all stages relating to the Agreement:
during the period prior to the signature of the Agreement.
at the time of signature of the Agreement.
during the period of performance of the Agreement.
during the period following the elapse of the Trust.
(a) The conduct of the Defendant prior to the signature of the Agreement
51- The project of construction of housing facilities in Makkah, Saudi Arabia for the
P 395 Pakistani pilgrims was initially, and from the first day, negotiated and decided upon by the
P 396 Defendant identified as the Ministry of Religious Affairs, Government of Pakistan (GOP).
The preliminary negotiations were concluded on July 24, 1995 by an agreement designated
“Memorandum of Understanding (MOU)” that was signed with the Claimant by the
Defendant itself acting through the highest ranking official of Pakistan, the President of the
Republic and that was considered under Saudi Law as a fully binding agreement. In that
Memorandum, the Defendant appeared to be, as intended, the proper contractual party
that is to be bound by the undertakings provided for in the MOU towards the Claimant.
No mention, express or implied, was made in the MOU as to any Trust or other public entity
that would have to be established in respect of the housing Project in Makkah.
52- In so far as the subject matter of the MOU concerns housing facilities to be constructed
in the holy city of Makkah for the welfare of the Pakistani pilgrims, such subject matter falls
within the functions of the Defendant: the Ministry of Religious Affairs. Government of
Pakistan, entrusted with all matters relating to “Pilgrimage Beyond Pakistan” and to “the
Welfare and safety of pilgrims” under Schedule II. Rule 3 (3) and Paragraph 29 (1) and (3) of
the Rules of Business 1973.
Consequently, the Defendant, by signing the MOU, was conducting an activity that falls
normally within the functions entrusted to it by the applicable Rules.
53- Thereafter, it was the Defendant that. by an act of sovereignty, took the decision to
establish the Trust on February 14, 1996 pursuant to section 3 of the Awami Hajj Trust
Ordinance promulgated by the President of the Republic on January 31, 1996 in exercise of
the powers conferred by clause (1) of Article 89 of the Constitution which empowers the
President to promulgate an ordinance when the National Assembly is not in session and
when he is satisfied that circumstances exist which justify such promulgation.
It was the Defendant that defined the objects of the Trust and determined the functions
that were to be delegated to it, and that included the function of adopting measures for
facilitating the performance of Hajj by members (Section 4 (d)) as well as measures for
promotion and welfare of the Hujjaj during Hajji operations (section 6 (e)).
Such functions are governmental functions that form part of the Defendant's functions as
defined in the aforementioned Business Rules of 1973 and that the Defendant decided to
delegate on a non-exclusive basis to the Trust, construed as a more appropriate vehicle
and an instrument for the implementation of the government's policy on Hajj matters, in
addition to the delegation of some other specifically financial functions such as mobilize
P 396 savings from members, invest such savings in appropriate schemes yielding maximum
P 397 returns and credit profits, and defray the expenses of Hajj of individual members out of
their savings and profit accrued thereon.
Furthermore, the functions of the Trust covered, under section 6 (f) of the Ordinance, such
other functions as may be assigned to it by the Federal Government for the purposes of the
Ordinance. By this provision, the Defendant reserved for itself the discretionary right to use
13
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Ordinance. By this provision, the Defendant reserved for itself the discretionary right to use
the Trust for any other function relating to pilgrimage, confirming thereby its continuous
involvement in the activity and performance of the Trust.
54- The organic control of the Defendant over the Trust, resulting from the Ordinance
provisions regarding the composition of the Board of the Trust and the government's
prerogatives as to certain functions of the Trust, though insufficient to lead to the disregard
of the separate legal entity of the Trust as explained earlier here above, constitutes
nevertheless an element of evidence as to the true intention of the Defendant to run and
control directly and indirectly the activities of the Trust, and to view such Trust as one of
its instruments.
In particular it is very relevant in this respect to note that the Chairman of the Board of
Trustees is the Federal Minister for Religious Affairs (Section 5 of the Ordinance), and that
the Managing Trustee, entrusted with the executive authority, is always and de jure (by
operation of law) the Secretary of the Ministry of Religious Affairs, unless the government
decides to appoint somebody else. By having the Minister of Religious Affairs and the
Secretary of such Ministry acting respectively as Chairman of the Board and as Managing
Trustee, the Trust appears to be with regard to the Defendant, under more than the mere
control normally exercised by the State over one of its legally independent state-owned
entities, and appears rather much closer to a division or at the best an instrument of the
Defendant, used by this latter for the implementation of its policies, and whose legal
personality, though existing in law, does not have a serious and substantial content.
55- This conclusion is confirmed by the continuous involvement of the Defendant in the
negotiations with the Claimant, despite the establishment of the Trust. In fact, before the
signature of the Agreement, and in spite of the recent establishment of the Trust on
February 14, 1996, all correspondence concerning the finalization of the pending matters in
the project continued to be exchanged with the Defendant itself, Ministry of Religious
Affairs (MORA), or Ministry of Finance, and not with the Trust.
P 397
P 398
Reference may be made for example to the following letters:
– Letter of March 20, 1996 addressed by Mr. Shezi Nackvi to the Government of Pakistan,
Attn: Minister for Religious Affairs.
– Letter of April 4, 1996 addressed to Mr. Nackvi by the Joint Secretary (Hajj) of the
Ministry of Religious Affairs.
Letter of April 4, 1996 addressed by the Defendant, Ministry of Religious Affairs,
Government of Pakistan, to the Presidents of several banks, and containing invitation
for expression of interest in acting as Trustee Bank under Section 8 of the Awami Hajj
Trust Ordinance. The letter clearly states that the Government wishes to appoint a
bank as Trustee Bank.
– Letter of April 23, 1996 addressed to Mr. Nackvi by the Joint Secretary (Hajj), Ministry
of Religious Affairs, Government of Pakistan, and acknowledging receipt of offer to act
as Trustee Bank for the Trust.
– Letter of April 25, 1996 from Mr. Nackvi to the Government of Pakistan concerning the
proposed operation of the Haj fund.
– Telex reply to Mr. Nackyi from Finance Division, Government of Pakistan.
– Letter dated May 6, 1996, from MORA. GOP to :Mr. Nackvi
– Letter dated May 12, 1996 concerning Haj fund addressed to the Ministry of Finance
and to the Ministry of Religious Affairs (MORA).
– Letter of reply dated May 13, 1996 addressed by the Ministry of Finance.
– Letter dated May 14, 1996 addressed by Mr.Nackvi to the Ministry of Finance
concerning the fund Management for Hajj Trust.
– Letter dated September 9, 1996 addressed to Mr. Nackvi by the Joint Secretary (Hajj)
of MORA, GOP.
57- Moreover, it appears from the witness statement of Mr. Shezi Nackvi that, after the
signature of the MOU:
– All designs and specifications, and all financial proposals, were discussed with the
Defendant, and various ministries were involved in the negotiations leading to the
Agreement after the MOU.
– even after the institution of the Trust, it is the Defendant which continued to discuss
and negotiate with Claimant, all correspondence remained with Government officers
not involved with the Trust; agreement on all contractual terms was reached with the
Defendant on July 16, 1996, and it is a letter by the Defendant which confirmed on July
30, 1996, the approval of the plans and of the terms of the lease, with the Defendant
being named as the lessee.
– Several documents attached to Mr. Nackvi's statement also show that it was intended
that the Defendant be the real party, with another entity being contemplated as the
borrower. No dealings were made with the Trust as such.
P 398
P 399

14
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (b) The conduct of the Defendant at the time of signature of the Agreement
58- It is the Defendant that decided to delegate to the Trust the finalization, signature and
in implementation of the Agreement which the Defendant had negotiated pursuant to, and
implementation of, the MOU of July 24, 1995.
Such Agreement was signed on September 10, 1966 by the Minister of Religious Affairs
acting as Chairman of the Board of the Trust, pursuant to two successive repromulgations of
the Awami Hajj Trust Ordinance, namely on May 2, 1996 and August 12, 1996. in the light of
Article 89 (12) of the Constitution which provides for the repeal of such Ordinance at the
expiration of four months from its promulgation if it is not laid before and approved by the
National Assembly.
The Defendant was contractually involved in the Agreement, as the Government was bound,
under Article 2 thereof, to give its guarantee for the financial facility to be raised by the
Claimant.
Moreover, under Article 27 of the Agreement, the Trust was authorized to assign its rights
and obligations under the Agreement to the Government of Pakistan. i.e. to the Defendant,
without the prior approval of the Claimant. Such Clause is normally used only when the
assignee is very closely linked to the assignor or is under its total control through
ownership, management or otherwise.
(c) The conduct of the Defendant during the period of performance of the Agreement
59- During the lifetime of the Agreement, the Defendant continued itself to handle matters
relating to the Agreement signed by the Trust, and to act and conduct itself in a way that
confirmed that it regarded the Agreement as its own.
Besides the exercise of the regulatory powers vested in the Defendant under the
Ordinance, and the involvement of the Defendant pursuant to the financial contractual
commitments undertaken therein, officials of the Defendant continued to be actively
involved in the implementation of the Agreement as they were previously in its
negotiation. This is evidenced by the letters dated 26.9.96 and 4.11.96 respectively
addressed to the Claimant by the Section officer (Ha -1) and the Deputy Secretary (Hajj-II)
who were officials of the Defendant but had no other role vis-a-vis or within the Trust. Both
letters relate to the appointment of Al-Baraka Islamic Investment Bank as Trustee Bank in
respect of the Trust and deal with proposed saving schemes for Hajj to be sent to the
Ministry of Religious Affairs for consideration. Exchanges of letters continued to be made
P 399 between the Claimant and the Defendant and not with the Trust, although such Trust was
P 400 in existence and operation and, having signed the Agreement was responsible for its
implementation.
– Although the Trust enjoyed, under the Ordinance, legal and financial independence
and capacity to own property and assets and to dispose thereof; it does not appear,
from the actual facts as submitted by the parties, that the Trust effectively had any
funds or assets of its own during its short lifetime. There is no evidence of any
schemes or plans made to raise funds and to mobilize pilgrims' savings, nor of any
transactions made and implemented by the Trust for the purpose of generating funds
to finance its activities. Apparently, it seems as if the only activity conducted by the
Trust was the signature of the Agreement with the Claimant, with the implementation
being followed up by the Ministry of Religious Affairs itself, and as if the Trust was not
given the human and financial means that could have enabled it to exercise fully its
functions as an autonomous legal entity, and has therefore remained as an empty
cell with all effective powers being exercised by the Defendant itself.
– It was the Defendant itself which decided, by a discretionary act or omission, not to
repromulgate the Awami Hajj Trust Ordinance at the end of the four months from the
date of its second repromulgation, and therefore to put an end to the Trust on
December 12,1996, pursuant to the repeal of the Ordinance as a result of its
nonrepromulgation. The very existence of the Trust appears thus to have been
depending merely on an attitude of non-action by the Defendant, demonstrating the
fragile existence of the Trust and its complete dependability upon the Defendant,
even for its own life.
– All documents relating to the Trust show that such Trust was dependent financially
and politically on the Defendant, that its functions were as may be assigned by the
Defendant and that it was under the control of the Defendant. It could not therefore
be the true contracting party with the Claimant.
(d) The conduct of the Defendant during the period following the elapse of the Trust
– On January 19, 1997, the Defendant: “Government of Pakistan, Ministry of Religious
Affairs, Zakat and Ushr and Minorities Affairs”, addressed to the Claimant a letter that
was written on the letterheads of the Defendant and signed by the Secretary of the
Defendant, Mr. Lutfallah Mufti. Such letter did not make any reference to the Trust,
and its subject was clearly indicated as “the Agreement dated 10.09.1996”.
P 400
P 401
In that letter, the Defendant alleged a breach of the Agreement on the part of the Claimant
which tantamounts to a repudiation of the whole Agreement, and declared that such
repudiation is hereby accepted; alternatively, it alleged that the Claimant prevented the
15
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 repudiation is hereby accepted; alternatively, it alleged that the Claimant prevented the
Agreement from becoming effective and so there was no agreement in law.
Such letter is very significant because it confirms in the clearest way possible, that the
Defendant, after the elapse of the Trust, regarded the Agreement with the Claimant as its
own and considered itself as a party to such Agreement, and as such, was entitled to
exercise all rights and assume all responsibilities provided for under such Agreement.
It is significant also to note in this respect that the Defendant's position in these
Arbitration proceedings regarding the letter of 19.1.97 did not deal with the substance and
contents of such letter, but was rather limited to a formal and very general challenge of the
validity of said letter, on the ground that such letter was absolutely unauthorized, illegal
and of no legal effect because all office bearers of the Trust, including the Secretary, had
ceased to have any authority to act for the defunct Trust. Such challenge is however
completely unfounded as the signatory of the letter of 19.1.97, Mr. Lutfallah Multi did not
sign such letter in his capacity as official of the Trust, to which anyhow the letter makes no
reference at all, but in his capacity as Secretary of the Defendant i.e. the Ministry of
Religious Affairs which is an integrant part of the Government of Pakistan. As such, the
signatory of the letter engages and binds the Government, as he has continued to bind it
during the whole previous period where the Trust was in existence.
In consequence, the signature of the said letter by the Secretary of the Defendant may only
be explained and construed as another evidence and confirmation that the Defendant
considered itself a party to the Agreement, exercising the rights and assuming the
responsibilities there under.
The fact is the more significant because, after the elapse of the Trust, the Defendant could
have remained silent and have abstained from any involvement with regard to the
Agreement signed with the Claimant, on the ground that it was not a party to such
agreement and therefore was not concerned by it. But, the Defendant, on the contrary, took
the initiative, after the elapse of the Trust, and wrote a letter in its name to the Claimant
involving itself as a party to the Agreement and treating such agreement as repudiated.
Such conduct of the Defendant clearly confirms that this latter was acting as a contracting
party to the Agreement in a quite unequivocal way.
64- Subsequently after the letter of repudiation, the Defendant continued to consider
itself as a party to the Agreement and instituted proceedings before the Pakistani Courts,
P 401 well before the notification of the Request for Arbitration by the Claimant. Under such
P 402 judicial proceedings, the Defendant, in the second set of proceedings (The June 1998
suit) while alleging that the Agreement with the Claimant was no more binding because it
had been repudiated, admitted thereby that it was a party to such Agreement and that it
could accept repudiation of the Agreement by the Claimant.
At the same time, the Defendant wrote to the Arbitration Court of the ICC, in reply to the
Request for Arbitration that was just filed, contending that the present arbitration could
not proceed because of the existence of the Pakistan proceedings, and requesting a stay
from the arbitration proceedings.
The Defendant did not say in its letter that arbitration could not proceed because it is not
a party to the Agreement and because the tribunal lacks jurisdiction, but rather that such
arbitration could not proceed because of the Pakistan proceedings that it had instituted in
order to seek confirmation of the repudiation of the Agreement, confirming thereby that it
was a party to the Agreement and therefore could accept its repudiation.
The Defendant's admissions verified on oath in the Pakistan proceedings, and in particular,
in the second set of proceedings, provide thus another piece of evidence to be added to
the other pieces, as to the fact that the Defendant has always been - and has considered
itself - a party to the Agreement.
– From the aforementioned close scrutiny of all the factual elements relating to the
conduct of the Defendant with regard to the negotiation, signature, implementation
and termination of the Agreement as well as with regard to the establishment,
operation and expiry of the Awami Hajj Trust, it is clearly established that:
65-1. The Trust, established by the Defendant, was assigned an object that formed part of
the functions of the Defendant, and was organically and operationally under the strict
control of the Defendant. Moreover, its financial and administrative independence was
largely theoretical as it did not have any funds or assets of its own, and as all that
concerned the Agreement with Claimant, whether before or after signature, continued to
be performed by the Defendant concurrently with the Trust. Following the elapse of the
Trust, the Trust functions, that were originally discharged by the Defendant, reverted back
logically to this latter, with all rights and obligations of the defunct Trust.
The Trust, in spite of its distinct legal personality in theory, appears thus in fact and in
conduct to have been considered - and to have acted - as a part and a division of the
Defendant to which it is fully assimilated, a temporary instrument that has been created
by a political decision of the Defendant for specific activities which the Defendant wanted
P 402 to perform, and which was cancelled also by a political decision of the Defendant.
P 403 Therefore, the Trust appears as having been no more than the alter ego of the Defendant
which appears, in substance, as the real party in interest, and therefore as the proper
party to the Agreement with the Claimant.

16
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 party to the Agreement with the Claimant.
65-2. The Defendant identified as the Ministry of Religious Affairs, Government of Pakistan
has been in actual fact the party that was involved in the negotiation, implementation and
termination of the Agreement with the Claimant, from the first day that the Housing Project
was contemplated until after the repudiation of such Agreement. This was - and remained -
true, before, during and after the existence of the Trust, with no change being noticed in
the role of the Defendant whether during the lifetime of the Trust or after its elapse. All
dealings of the Claimant were with the Defendant whether before, during or after the
institution of the Trust.
Such behavior shows and proves that the Defendant has always been - and considered
itself to be - the real and true party to the Agreement with the Claimant.
– In this respect, arbitral as well as judicial case-law has widely recognized that, in
international arbitration, the effects of an Agreement may extend to parties that did
not actually sign such Agreement but that were directly involved in the negotiation
and performance of such Agreement, such involvement raising the presumption that
the common intention of all parties was that the non-signatory party would be the
true party to such Agreement.
– In conclusion, and on the basis of all the foregoing elements that form a
comprehensive set of evidence that may be relied upon, the Tribunal determines and
decides that the Defendant is the true party to the Agreement:
– Firstly by application of Saudi law which considers the MOU signed with the
Defendant as a binding agreement and the Agreement of September 10, 1996 as a
supplement thereto, forming together one transaction.
– and secondly by application of those general principles of law, which are consistent
and in conformity with the general principles of Saudi law, and which reflect the
fundamental requirements of justice in international trade, including the basic
principles governing contract interpretation: under such principles, the direct and
total involvement of the Defendant in the negotiation and implementation of the
Agreement, before, during and after its signature, reflects and shows the common
intention of the parties to consider the Defendant as the real party in interest and
therefore as the true party to the Agreement.
P 403
P 404
This conclusion confirms also to the general justice of the case, the more so given the
background of the MOU in which the participation of the Defendant was not in doubt.
III Determination of the liability for termination of the Agreement
68- It is an undisputable fact that the relationship between the Claimant and the
Defendant in respect of the Agreement of September 10, 1996 was repudiated by a letter of
January 19, 1997 addressed to the Claimant by the Defendant: “Government of Pakistan,
Ministry of Religious affairs, Zakat and Ushr and Minorities Affairs”. This letter stated
literally the following:
SUBJECT: AGREEMENT DATED 10.9.1996 MAKKAH HOUSING PROJECT, MAKKAH
MUKARRAMAH.
Dear Sir.
Pursuant to the above mentioned Agreement for the leasing of housing facilities in
the holy city of Makkah, Kingdom of Saudi Arabia, you were required within ninety
(90) days of the execution of the said Agreement to get the detailed specifications
and drawings approved by the Trust. However, since you have failed to submit the
specifications and drawings for the approval of the Trust to date you are in breach
of a fundamental term of the Agreement which tantamounts to a repudiation of
the whole Agreement which repudiation is hereby accepte..
Moreover, the effectiveness of the Agreement was conditional upon your arranging
the requisite financing facility amounting to U.S. $ 100.000, 000, 00 within thirty
(30) days of the execution of the Agreement and your failure to do so has
prevented the Agreement from becoming effective and as such there is no
Agreement in law.
This is without prejudice to the rights and remedies which may be available to us
under the law.
Yours faithfully.
69- From the above-mentioned text, it appears that the Defendant has considered:
1 That the Claimant has failed to submit the specifications and drawings for the
approval of the Trust within 90 days of the execution of the Agreement, and that such
failure constitutes a breach of a fundamental term of the Agreement which is
tantamount to a repudiation of the whole Agreement which repudiation is accepted
by the Defendant.
2 That the effectiveness of the Agreement was conditional upon the arrangement by the
Claimant of a financing facility of USD 100,000,000 within 30 days of the execution of
the Agreement and that the Claimant's failure to do so prevented the Agreement from
17
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the Agreement and that the Claimant's failure to do so prevented the Agreement from
becoming effective and as such there is no Agreement in Law.
P 404
P 405
In addition, the Defendant submitted later on that the failure of the Claimant to submit
the required Performance Bond has also prevented the Agreement from becoming
effective.
– This position of the Defendant is challenged by the Claimant which contends that the
letter of January 19. 1997 amounts to an unlawful repudiation of the Agreement by the
Defendant, for which it is liable, while the Claimant had complied with all its
obligations.
– In order to settle this issue, the Tribunal shall proceed with an analysis and
discussion of the relevant contractual clauses and the conduct of the parties during
their implementation, with a view to determine in a logical sequence whether the
Agreement did come into effect or not, whether a breach of contract existed, and
which party is liable therefore.
For this purpose, the Tribunal shall address the following issues:
– The issue of the financing facility and its impact on the effectiveness of the
Agreement and on the liability of the parties.
– The issue of the specifications and drawings and its effect on the liability of the
parties.
– The issue of repudiation of the Agreement and the liability resulting therefrom.
– The issue of the financing facility and its impact on the effectiveness of the
Agreement and on the liability of the parties:
We will deal with this issue through an analysis and discussion of the relevant Contractual
Clauses (A 1) and through a review of the conduct of the parties (A2) in the course of
implementation.
A 1 The Contractual Clauses
Clauses 2 and 3 of the Agreement, which are the core of the issue, state the following:
“Clause”
2: The total leased value of the said land area of 22,000 square meters and the total
P 405 construction cost of the Housing is computed at U.S. $210,000,000 and U.S. $135,000,00.
P 406 respectively aggregating to U.S. $345,000,000 (U.S. S Three Hundred and Forty Five
Million only), out of which the Trust shall pay a lump sum of U.S. $100, 000, 000, 00 (U.S.
Dollars One Hundred million only) to Dallah by way of advance (“the Advance Lease
Payment”) within thirty (30) days from the date of execution of this Agreement by the
Parties, subject to (i) Dallah arranging through one of its affiliates a U.S. Dollar
1,000,000, 00 (U.S. $ Dollars one hundred million only) Financing Facility for the Trust
against a guarantee of the Government of Pakistan, (ii) Dallah submitting to the Trust a
Performance Bond covering the Advance Lease Payment in the format attached as
Schedule “B” to this Agreement. (iii) A counter guarantee issued by the Trust and Al-
Baraka Islamic Investment Bank, E.C., Bahrain, (Hereinafter referred to as the (“Trustee
Bank”) appointed by the Board of Trustees pursuant to Section 8 of the Awami Hajj Trust
Ordinance, 1996 in favour of the Government of Pakistan.
-
“Clause”
3: This Agreement shall come into effect on the date that Dallah receives from the Trust
the Advance Lease Payment and submits the aforesaid Performance Bond to the Trust
(“Date of Effectiveness”).
– When carefully read and perused, in the light of the general spirit and wording
of the whole Agreement, and of the terms of the previously defined MOU dated
July 24, 1995, the above-mentioned clauses of the Agreement appear to have
one main purpose (I), made however subject to certain prior conditions(2).
– (1) One main purpose
It is clear from the text of Clause 2 that its main purpose is to provide for the right of the
Claimant to receive payment of a lump sum advance on the lease payments amounting to
One hundred Million U.S. Dollars (100,000,000) within 30 days from the date of execution of
the Agreement, and therefore to impose on the Defendant the obligation to pay to the
Claimant the said advance within the prescribed 30 days period.
Claimant's right to such advance seems justified, because on the one hand the Claimant
had already on the basis of the MOU dated July 24, 1995, and in implementation of its
provisions, acquired the land in Mecca and paid its price, and because on the other hand
the Claimant was, pursuant to the Agreement, under the contractual obligation to build
and construct the required housing facilities. In such a context, it was obviously in the
interest of the Claimant, that the obligation to pay the advance lease payment was put
forward in the Agreement, that a short time (30 days) was provided for its implementation,
and that the effectiveness of the Agreement was made conditional upon such payment
being received.
P 406
18
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 406
P 407
– (2) Prior conditions
However, in view of the fact that the Defendant did not have the funds necessary to make
the advance lease payment, and in order to guarantee the Defendant against
nonperformance by the Claimant, the right of Claimant to receive such advance lease
payment amounting to USD 100,000,000 was made conditional upon:
– Claimant arranging through one of its affiliates a USD 100,000,000 Financing Facility
to the Defendant against a guarantee of such Defendant.
– Claimant submitting a Performance Bond covering the Advance Lease Payment in a
form agreed upon.
– a counter guarantee issued by the Trust and the Trustee Bank in favour of the
Defendant.
Such conditions were contractually required to be fulfilled prior to the payment of the
advance lease payment by the Trust. However, none of these conditions were under the
Agreement, specifically required to be fulfilled within 30 days from the date of Agreement,
and in particular, Clause 3 does not make of the arrangement of the Financing Facility a
condition for the effectiveness of the Agreement.
– On the basis of the foregoing, the following conclusions may be clearly made:
– The 30-day period, provided for in Clause 2 of the Agreement, relates - and relates
only to the obligation of the Defendant to pay to the Claimant the advance lease
payment, and is meant to ensure that the Claimant receives payment as quickly as
possible and within a short and fixed period of time, in order to give it some payment
security after having incurred the costs of the land, and before starting to bear the
construction costs. Such period is clearly put for the benefit of the Claimant, and its
expiry therefore does not, by itself, deprive such Claimant of its right to payment.
Moreover, the Claimant may, in an express or implied way, extend such period.
– Although the Claimant's obligation to arrange for the Financing Facility is set forth as
a prior condition to the Claimant's right to receive payment, such obligation is not
directly and explicitly linked to a 30-day period for implementation. In particular,
P 407 there is no express clause in the Agreement providing for the termination or the non-
P 408 effectiveness of the Agreement as a result of the failure to arrange the Financing
Facility, within the 30-day time limit, and, in the absence of such express clause. It
cannot be said that the Agreement is terminated or that it did not come into effect.
– Clause 3 of the Agreement, by making reference to the date of effectiveness, as being
the date on which payment of the advance lease payment is made and the
Performance Bond is submitted, does not mean that prior to such date the
Agreement was not in existence or did not have any binding effect, nor does it
require, for the effectiveness of the Agreement, that the obligations provided for
therein be fulfilled within the prescribed 30-day period.
In this respect, it is worth indicating:
(a) That an agreement already existed between the parties since July 24, 1995, date of
signature of the denominated “MOU”. Such agreement, in fact, by the firm and
detailed commitments and undertakings it contained, and by the absence of any
clause providing for its expiry in case no agreement is subsequently reached within
an agreed time limit, constituted a real binding agreement. Thus, it is on the basis of
such Agreement, that the Claimant acquired in Mecca the lands necessary for the
construction of the housing facilities, and in implementation of Article 1 of said
Agreement. It is also, in compliance with Article 4 of such Agreement that the
Claimant prepared and submitted to the Defendant, the terms and conditions of the
proposed lease, the detailed plan for financing, and the detailed specifications and
drawings of the housing facilities.
It is also in compliance with Article 28 of the same Agreement authorizing the
Defendant to entrust the constructed buildings to any other person or trust to be
called borrower, for management and maintenance, that the Defendant established
the Awami Hajj Trust.
(b) that the Agreement itself was existing and was binding as of its date of signature and
prior to the so- called date of effectiveness referred to in Clause 3 thereof. Such
Agreement did not contain any clause deferring its entry into force or its existence to
a date that is different from the date of signature. Therefore, under the general rules
of contract interpretation, such Agreement is deemed in existence and in force as of
the date of its signature, unless otherwise agreed.
Such Agreement, coming after the agreement (MOU) of July 24, 1995, constitutes in fact a
P 408 supplement of such agreement, aimed at establishing the vehicle and the modalities of
P 409 the implementation of the project, following the due performance of the contractual
obligations consisting of the acquisition of land and the submission of the plans and
drawings.
At the time of execution of the Agreement, the main positive obligation of the Claimant
was to build and deliver the housing facilities for leasing, while the main obligation of the
19
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 was to build and deliver the housing facilities for leasing, while the main obligation of the
Defendant was to provide payment to the Claimant.
Clauses 2 and 3 of the Agreement, by instituting a right to an advance payment, though
conditional, to the Claimant: and by making the effectiveness of the Agreement conditional
upon such payment coupled with the submission of a performance bond, did not mean to
make the Agreement void, or inexistent, in case the aforementioned conditions are not
fulfilled. Such agreement, having existed prior to such rights and obligations, and having
had binding effects (acquisition of land, payment of price. submission of drawings,
approval of financial plan, etc…), the real and only meaning of Clause 3 when it refers to
effectiveness of the Agreement, is that, until payment is received by the Claimant and the
Performance Bond is submitted by this latter, the remaining obligations of the Agreement
shall not come into effect and become binding, and therefore, the Claimant shall not be
bound to start construction and performance of its construction obligations under the
Agreement.
Nothing in Clause 3 sustains the contention that failure to fulfill its conditions means that
the Agreement is void and that there is no Agreement in law.
The Agreement exists, and failure to fulfill its conditions means- and- only means-that the
Claimant could be entitled to abstain from starting performance of its construction
obligations, and to consider that such obligations did not come into effect until after the
conditions of Clause 3 were realized.
In particular, Clause 3, by itself, has no bearing whatsoever on the obligation to arrange for
the financing facility and on the failure to fulfill such obligation.
– There is no direct or primary obligation imposed by the Agreement on the Claimant
to arrange a financial facility for the Defendant. Such financing is not an essential
condition for the continuation of the contractual relationship. Such obligation is -and
is only - a condition and a result of the primary and main obligation of the Defendant
to pay the advance lease payment amount within 30 days from the date of the
Agreement. If the Claimant did not have – or had waived - the right to receive such
payment, no obligation would have existed for the Defendant to arrange the financial
facility. Therefore, all conditions and terms provided for in Clause 2 and appearing as
P 409 obligations of the Claimant are in fact mere conditions for the implementation of the
P 410 Claimant's essential right to receive the required advance payment within 30
days, and are, thus deemed put for the benefit of the Claimant, which can set aside
all such obligations if it decides to waive its right to the advance payment. In other
terms, if there is no financing facility, the obligation to pay the advance payment
does not arise, but that does not mean that the Agreement can be terminated in the
absence of an express provision in this respect.
– In consequence, and on the basis of the foregoing, the Tribunal, pursuant to the well-
recognized general rules of contract interpretation, determines that the relevant
contractual clauses do not offer any valid ground for the Defendant's contention that
the failure of the Claimant to arrange for the financing facility within 30 days of the
execution of the Agreement, prevented the Agreement from becoming effective, and
that as such there is no Agreement in law.
On the contrary, the Tribunal determines that there is no obligation as such to arrange for
the financial facility within 30 days and that failure to do so does not lead to the
ineffectiveness of the Agreement. Moreover, the Tribunal determines that the 30-day
period is put forward only with regard to the Claimant's right to receive and advance
payment, and is therefore put for the benefit of the Claimant which alone can invoke or
waive such time limit.
A 2 The conduct of the parties
– The conclusions reached on the basis of interpretation of the relevant contractual
clauses are confirmed and reinforced by the conduct of the parties after the
execution of the Agreement.
In fact, the witness statement of Mr. Shezi Nackvi and the documents annexed thereto
confirm the occurrence of the following events:
– Shortly after the signature of the Agreement, Claimant started to arrange the
financial facility in order to fulfill the conditions required to obtain the advance
lease payment. But it was prevented from syndicating the facility because the
Defendant had, prior to the signature of the Agreement, given to ANZ Bank a clear
market mandate to raise financing for another project, without informing the
Claimant either about this mandate or about its unusually long duration which
extended until October 22, 1996. The Claimant was made aware of this duration after
signature of the Agreement by an official of the Defendant.
P 410
P 411
– The expiry of the mandate on October 22, 1996 while the Agreement was signed on
September 10, 1996 made it impossible for the Claimant to secure the Financial
Facility within 30 days from the date of the Agreement.
– The Defendant, through one of its officials, agreed that the Claimant would have to
wait until October 22, 1996 to commence arranging the financing facility.
– The Claimant sent the loan documents providing for the Financial Facility on October

20
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 – The Claimant sent the loan documents providing for the Financial Facility on October
22, 1996, i.e. the same day of expiry of the clear market mandate of ANZ bank, to the
Defendant which accepted them. There is no evidence that any objection was
formulated at that time.
– The Financing Facility did not materialize finally because, as a result of a change of
administration, the Defendant failed to agree to it or to provide the guarantee which
was a condition of the Facility in accordance with Clause 2 of the Agreement.
– From the foregoing facts and events, it becomes clear to the Tribunal that:
– The Claimant, which attempted shortly after signature of the Agreement, to arrange
the Financing Facility within the 30-day period, was prevented and precluded from
such arrangement by the long clear market mandate given to ANZ Bank by the
Defendant without informing the Claimant about the existence of such mandate or its
duration. As soon as such mandate expired, the Claimant submitted the loan
documents to the Defendant on October 22, 1996.
This clearly proves that the delay in arranging the Financial Facility was not due to the
Claimant's negligence or fault, but was beyond the Claimant's control, and resulted from
the Defendant's conduct which, by the length of the clear market mandate given to ANZ
bank without informing the Claimant about it prior to the signature of the Agreement,
prevented the implementation of the Agreement within the prescribed time limit
– Both parties agreed in their best interest, and in order to let the financing get
through, to extend the 30 days time limit and to postpone the starting date of such
time limit until the date of expiry of the clear market mandate, i.e. until October 22,
1996, and thereby waived their right if any, to strict compliance with such time limit.
Such waiver, agreed verbally by the Defendant, is confirmed by the absence of
evidence as to any objection or protest by the Defendant upon or after the
submission of the loan documents on October 22, 1996.
P 411
P 412
– The conduct of both parties shows that no party insisted on the 30-day time limit. No
doubt that by sending notice in this respect, either party would have restored
prompt compliance with the 30-day period, but no party did.
– The Claimant, by submitting the loan documents for the Financing Facility on October
22, 1996, i.e. even after the expiry of the 30-day time limit, is deemed to have
complied with its contractual obligations under Clause 2 of the Agreement, as such
time limit is not of the essence, but is for the sole benefit of the Claimant, being a
condition for the advance lease payment, and had been moreover waived by both
parties.
– The Claimant could not be made liable for not submitting the performance bond, as
such submission was due to be made to cover the advance payment to be made to
the Claimant and following the Defendant's guarantee to be given against the
Financing Facility. Since the Defendant's guarantee was not given and the Financing
Facility did not materialize, there was no advance payment ready to be made,
therefore the obligation to submit the performance bond did not arise.
In particular, since the text of the performance bond was agreed upon in the Agreement,
there is every reason to believe that the Claimant could have produced the Performance
Bond, which required only a signature, had the Defendant not intervened to stop the due
performance of the Agreement and to terminate such Agreement.
81- In consequence, the Arbitral Tribunal, on the basis of its analysis and interpretation of
the relevant contractual clauses, as well as of its review of the conduct of the parties, has
reached the conclusion that:
– The Agreement, which was binding as of its execution, did not become void and
ineffective as a result of the delay in providing the Financial Facility under Clauses 2
and 3 of the Agreement.
– The Defendant, by failing to agree to the loan documents and by failing to provide
the guarantee which was a contractual condition of the Financial Facility, prevented
the continuation of the performance of the Agreement and the payment of the
advance payment to the Claimant. In so doing, the Defendant committed a breach of
Clause 2 of the Agreement and of its obligation to provide for the guarantee against
the Financing Facility.
P 412
P 413
B- The issue of the specifications and drawings and its effect on the liability of the
parties
– The Defendant contends that the Claimant failed to submit the specifications and
drawings for the approval of the Trust within 90 days of the execution of Agreement,
and that such failure constitutes a breach of a fundamental term of the Agreement
which is tantamount to a repudiation of the whole Agreement, that was accepted by
the Defendant.
83- To determine this issue, it is fundamental to address again the relevant contractual
clauses.
In this respect, it should be noted that Clause 4 of the Agreement provides for the
21
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 In this respect, it should be noted that Clause 4 of the Agreement provides for the
following:
“Dallah shall develop, construct and complete the Housing in accordance with
such detailed specifications and drawings that shall be approved by the Trust
within ninety (90) days from the date of execution of this Agreement. Upon such
approval they will be signed by both parties…. (emphasis added)”.
Prior to that, Clause 6 of the agreement (MOU) dated July 24, 1995 had provided the
following:
“Within sixty (60) days of the Approval Date, Dallah shall prepare and submit to
GOP detailed specifications and drawings of the housing facilities based upon
the requirements of GOP as contained in Schedule A. Within twenty –four (24)
months from the date that GOP approves in writing said specifications and
drawings, Dallah shall develop, construct, complete in all respects and hand
over vacant possession of the housing facilities to GOP upon execution and
registration of the lease. (Emphasis added)”.
– A careful reading of the above-mentioned clauses shows that while Clause 6 of the
MOU imposes on the Claimant the obligation to prepare and submit to the Defendant
detailed specifications and drawings within 60 days of the Approval Date, Clause 4 of
the Agreement dated September 10, 1996 provides only for the obligation of the
Defendant to approve the detailed specifications and drawings within 90 days from
the date of the Agreement, in order to enable the Claimant to develop and construct
the Housing in accordance with such specifications and drawings.
P 413 – There is no provision in Clause 4 or elsewhere in the Agreement imposing upon the
P 414 Claimant an obligation to submit to the Defendant detailed specifications and
drawings. This is because the submission of such specifications and drawings was
already imposed on the Claimant by Clause 6 of the MOU dated July 24, 1995, and had
effectively been made by the Claimant prior to the signature of the Agreement.
– In fact, from the witness statement of Mr. Shezi Nackvi and the documents annexed
thereto, it appears clearly that the following events took place:
– The Claimant, in accordance with Clause 6 of the MOU, submitted to the Defendant on
August 17, 1995 copies of the proposed lease, financial proposal and architects
drawings of the proposed buildings (Exhibits 62-84)
– Such drawings and specifications were positively received subject to minor
modifications to design which were suggested by a letter of the Defendant to the
Claimant dated September 19, 1995 (Exhibits 87-8).
– On July 16, 1996, a Government Cabinet Meeting took place, where the Prime Minister
confirmed the Government's approval of the plans for the proposed buildings.
– On July 30, 1996, a letter from the joint Secretary of the Defendant to the Claimant
confirmed that the construction plans already submitted for the Project were to be
adopted.
– All these events occurred prior to the signature of the Agreement which, in the light of
the foregoing, and although the specifications and drawings were also approved prior
to said Agreement, provided, under Clause 4, for a formal approval of said
specifications and drawings to be given by the Trust within 90 days from the date of
the Agreement.
– In consequence, it appears clearly from the relevant contractual clause that, contrary
to the Defendant's allegation, the Agreement did not impose on the Claimant an
obligation to submit specifications and drawings or an obligation to get such
specifications and drawings approved by the Trust within 90 days, but rather the
Agreement imposed on the Defendant the obligation to approve the specifications
and drawings, deemed to be already submitted, within the 90-day period.
– Thus, the obligation under the Agreement in respect of the specifications and
drawings rested on the Defendant which had an obligation of approval, while there
was no specific obligation on the Claimant who had supplied the required
specifications and drawings prior to the Agreement and pursuant to its obligation
under the MOU.
P 414
P 415
– From all the foregoing, the Arbitral Tribunal concludes and determines that the
Claimant, by not submitting after the Agreement specifications and drawings to the
Defendant, and having no specific obligation under the Agreement in respect of such
specifications and drawings, was in full compliance with its contractual obligations
and did not commit any breach whatsoever of the Agreement that would be
tantamount to a repudiation of the whole Agreement; therefore the Defendants
contention to the contrary is groundless under the Agreement, and is dismissed.
Moreover, the Tribunal decides that the Defendant, by failing to approve formally the
already submitted specifications and drawings within the 90-day time limit, has
committed itself a breach of Clause 4 of the Agreement.
– The issue of repudiation of the Agreement and the liability resulting therefrom:
– It has been sufficiently evidenced under the headings (A) and (B) hereabove

22
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 – It has been sufficiently evidenced under the headings (A) and (B) hereabove
that the Defendant's contentions as formulated in its letter of January 19, 1997 to
the Claimant, and regarding the Claimant's alleged contractual failures and
breaches, whether in respect of the arrangement of the required financial
facility under Clause 2 of the Agreement or in respect of the specifications and
drawings under Clause 4 of the Agreement, do not have any basis in fact or in
law and in particular under the well-established principles of interpretation of
contracts. Such contentions appeared as contrary to the wording and the spirit
of the relevant contractual clauses and to the common intent of the parties, as
well as to the effective conduct of the parties during the implementation of
their contractual relationship.
– In consequence, after having determined that the Claimant has not committed
any breach or repudiation of the Agreement, and that all the contentions
submitted by the Defendant to the contrary are groundless and to be dismissed,
there remains the bare facts relating to the termination of the Agreement and
which need to be reviewed and assessed.
– In this respect, it has been shown hereabove that the Defendant:
– by failing to give the guarantee against the financial facility as agreed
under Clause 2 of the Agreement, has prevented the arrangement of such
financial facility and therefore stopped the implementation of the
Agreement, and committed a breach of Clause 2 of the Agreement for
which it should be held liable; and
– by failing to approve the specifications and drawings within 90 days from
the date of the Agreement, has committed a breach of Clause 4 of the
Agreement for which it should also be held liable.
P 415
P 416
– Last but not least, the Defendant, by addressing to the Claimant the letter
of January 19, 1997 through which it did put an end to the Agreement by
attributing to the Claimant alleged failures and breaches which appeared
to be incorrect and groundless, has in fact terminated and repudiated the
Agreement without any valid reason and in an unlawful manner. Such
repudiation, having been based on contentions that were revealed to be
untrue and without any valid basis, was not lawful and therefore
constitutes a serious and fundamental breach of the whole Agreement and
of the Defendant's obligations under such Agreement, for which the
Defendant is - and should be held - liable in accordance with the well
established general principles governing contractual obligations in
international trade law.
In this respect, it should be emphasized that judicial precedents as well
as Arbitral case law have established a general principle that the failure
to perform a contract renders the defaulting party liable.
– In consequence, having determined that the Defendant is liable under the
Agreement for the non-performance of the Agreement and for its unlawful
repudiation, it follows that the Claimant is entitled to damages to be
assessed by the Tribunal on the basis of the submissions and the evidence
to be filed by the parties on the issue of the quantum of damages which
the Tribunal agreed to bifurcate and split from the issues of liability
pursuant to Procedural Order N° 2 dated February 27, 2002.
IV The validity of a 99 years lease contract
– In its written observations sent to the Tribunal on September 16, 1999, and never
followed-up thereafter, the Defendant contends that the Agreement is void because
it provides for a leasing period of 99 years which is not permissible, under Saudi law,
to Non-Saudis in the Mecca Area.
– It should be noted firstly that the Defendant did not insert this alleged cause of
termination of the Agreement in its letter of January 19, 1997 where it stated the
reasons that should lead to consider the Agreement void or repudiated. Therefore, it
is clear that at the date of termination, this contention was not relevant as a justified
cause for termination.
– Secondly, it should also he noted that under the terms of the Agreement, there is
absolutely no reason in fact or law to consider a long-lease contract as void in its
principle.
P 416
P 417
– Thirdly, under Saudi law, which has been determined by the Tribunal to be the
governing law of the Agreement, and which is also the law applicable to the longlease
contract, as seems to concur both parties to this Arbitration, and insofar as lease
agreements. are usually subject to the local law of the country where the land subject
of lease is located, it appears, from the Saudi legal opinions submitted by the
respective parties, that a lease for 99 years is in principle valid but may suffer some
restrictions that may be imposed by specific regulations, such as is the case for the
Holy Mecca Area where regulations restrict leases to non-Saudis to one year
renewable annually. However, these same regulations allow exemptions that are
normally given by the competent authorities (the Ministry of Hajj) which approve and
23
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 normally given by the competent authorities (the Ministry of Hajj) which approve and
grant the necessary permits for long-term leases.
– In this respect, attention is drawn to Clause 7 of the Agreement which provides
explicitly that:
“All required clearances, consents, permits, licenses, exemptions and
approvals for giving effect to the terms hereof shall be obtained and
maintained in full force by Dallah from the Kingdom of Saudi Arabia and
its concerned Departments and Authorities”.
(Emphasis added)
– From this clause, it is clear that the Claimant has undertaken to obtain all permits,
approvals and exemptions that are required to give effect to the terms of the
Agreement, including the lease contracts that are made in implementation of such
Agreement, and therefore it cannot be said ab initi. that the long-lease contract which
is not yet signed nor did it take effect, is void and consequently the Agreement is
void.
The Agreement by providing for the construction of housing facilities in Mecca to he
leased to the other party for 99 years with a provision requiring the Claimant to
obtain all necessary consents and exemptions for giving effect to its terms, is a valid
and binding agreement and cannot be construed as being in breach of the law unless
and until Claimant fails to obtain the necessary consents or exemptions.
– In consequence, the Defendant's contention that the Agreement is void because it
provides for a leasing period of 99 years is unfounded and does not have any valid
basis, and should therefore be dismissed.
P 417
P 418
V Final Remarks
– After the closing of the proceedings following the hearing of April 24, 2003, the
Tribunal received from Mr. M Saleem Sahgal by letter dated July 17, 2003 a copy of an
order made on 2 May 2003 by Maulvi Anwarul Haq J. in the Rawalpindi Bench, Lahore
High Court. The Court held that the Government of Pakistan was not a party to the
Agreement dated 10 September 1996 which is the origin of the present arbitration.
The writer of the letter invites the Tribunal to recall all its previous orders and to
refrain from proceeding further in the matter. The letter advances no reasoning in
support of this demand.
The members of the Tribunal have therefore set themselves to consider what reasons there
might be. The first is that the judgment of the Rawalpindi Bench makes the identification
of the parties to the Agreement a matter of res judicata. The members of the Tribunal do
not accept this. Under the ICC Rules of Arbitration the arbitrators have power to rule on
their own jurisdiction. They cannot be disseized of this power simply because a national
court having a territorial connection with one of the parties chooses to intervene and
attempt to impose its own opinion on the matter.
Secondly, it might be said that the Rawalpindi judgment is evidence of the relevant law of
Pakistan to which the arbitrators ought to pay attention. For the moment at least the
Tribunal does not view the matter in this way. The law of Pakistan has not been established
as the putative governing law either of the Agreement itself or of the Arbitration Agreement
which it contains. Thus, the materiality of Pakistan law has not been demonstrated as
relevant to the matters now, before the Tribunal. Moreover, the judgment enunciates no
principles peculiar to that law which the Tribunal might be asked to take into account
when deciding on the matters covered by the reference to arbitration, but merely analyzes
the particular facts and documents without reference to any individual legal system. This
is something which the members of the Tribunal can do for themselves, and indeed
already are in the course of doing in the present Award. Whilst naturally paying due
respect to the Courts of Pakistan, the Tribunal disagrees with the conclusion expressed by
the Learned Judge. To arrive at its own opinion on the matter is something which the
tribunal is not only entitled but also bound to do as the Tribunal to whom this dispute has
been entrusted.
Thus, although the Tribunal has naturally studied both the letter and the judgment with
care, it does not consider that they affect its conclusion in any way.
P 418
P 419
Section IV Conclusions
On the basis of the foregoing considerations of fact, evidence and law,
NOW, THEREFORE, IT IS HEREBY AWARDED AND ADJUDGED BY THE ARBITRAL TRIBUNAL that:
– The law applicable to the merits of the case is the Law of Saudi Arabia, with the
Tribunal taking into account the applicable provisions of the Agreement as well as
the usages of trade.
– The “Ministry of Religious Affairs, Government of Pakistan” named as Defendant is a
true party to the Agreement with the Claimant dated 10 September 1996, and is
therefore bound by such Agreement.
24
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 therefore bound by such Agreement.
– The Defendant's contention that the Agreement of 10 September 1996 is void because
it provides for a leasing period of 99 years does not have any valid basis and
therefore is hereby dismissed.
– The letter addressed by the Defendant to the Claimant on January 19, 1997 constitutes
an unlawful repudiation of the Agreement of September 10, 1996 entailing the
liability of the Defendant for such repudiation.
– Therefore, the Claimant is entitled to be compensated for its claims for damage
suffered as a result of the repudiation by the Defendant of the Agreement of
September 10, 1996.
– The quantum of damages shall be determined by a subsequent Award of the Tribunal,
in the light of the submissions to be filed by the parties on this matter.
– The issues relating to interest and costs shall be reserved to be determined by the
final Award of the Tribunal.
Place of Arbitration: Paris, France.
Date: 19 January, 2004.
THE ARBITRAL TRIBUNAL
Lord Michael MUSTILL
Justice Dr. Nasim Hasan SHAH
Dr. Ghaleb MAHMASSANI
Chairman
P 419

© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.

Kluwer Arbitration is made available for personal use only. All content is protected by copyright and other intellectual property
laws. No part of this service or the information contained herein may be reproduced or transmitted in any form or by any means, or
used for advertising or promotional purposes, general distribution, creating new collective works, or for resale, without prior
written permission of the publisher.

If you would like to know more about this service, visit www.kluwerarbitration.com or contact our Sales staff at lrs-
[email protected] or call +31 (0)172 64 1562.

KluwerArbitration

25
© 2020 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.