Following a report on a conflict between the Chinese oil company Sinopec and an Iranian International company called Khalkhal Dasht which was published on March 19 by Tehran Times, Khalkhal Dasht has responded to the mentioned report, what comes below is the Iranian company’s account of the events.

The addendum

According to the response received by Tehran Times, Khalkhal Dasht company stated that Sinopec Corporation did not consider or acknowledge an addendum, agreed by both sides on 02.16.1394 (May 6, 2015), in their claims against the Iranian company. Khalkhal Dasht believed that what was accounted by the Chinese company as the truth had been false claims.

Khalkhal Dasht stated that the company has legal evidence to prove that Sinopec’s claims had been wrong and in case of necessity Khalkhal Dasht is willing to present legal documents as they had before in court.

According to Khalkhal Dasht, the National Iranian Oil Company (NIOC) did award the first phase of Yadavaran oilfield development project to Sinopec in 2007 and, in 2011 the Chinese company signed the mentioned two engineering, procurement, construction and commissioning (EPCC) deals, worth $200 million with the Iranian-based international company, but afterwards the Chinese company changed the contract provisions based on some new requirements in the project which consequently raised the contract’s value to $300 million (according to Khalkhal Dasht the new terms were covered in the May 6, addendum).

As stated by Khalkhal Dasht, the company finished the project based on the May 6, 2015 addendum and without the execution of articles 46 and 48 in the contract’s general terms, and the project was taken over by Sinopec on schedule.

After the final “take over”, based on the changes in the main contract and considering the May 6, 2015 addendum along with an Article 5 of a complementary addendum dated to 24.5.1394 (August 15, 2015), Sinopec was obliged to pay Khalkhal Dasht for the additional work done on the project and also release the Iranian company’s financial guarantees. However, as Khalkhal Dasht claimed, the Chinese company did not conform to the terms of the addendum and refused to pay the fees or release Khalkhal Dasht’s guarantees.

Khalkhal Dasht then filed a law suit against Sinopec and an 8-member group of experts specialized in oil industry from Iran’s court of justice approved the final take over and also the additional work that was done on the project. Based on the expert-group’s report the court sentenced Sinopec to a payment of $100 million in compensation for the additional works done beside the contractual obligations.

Khalkhal Dasht further stated that despite court orders to release the company’s guarantees, Sinopec has illegally blocked $47 million worth of Khalkhal Dasht’s financial guarantees and refused to pay over $120 million of their debts.

The Iranian company believes that Sinopec’s lawyer wasn’t able to persuade the Iranian court of justice with their presented evidence, since all the Chinese company’s claims had been raised without acknowledging the addendums which were approved by both sides.

Regarding the international arbitration term in the contracts, Khalkhal Dasht explained that the item was excluded from the contracts based on a definitive judicial verdict, and based on the article 6 of the May 6, 2015 addendum any conflict or disagreements should have been settled in Iranian judiciary system and not any other third party could get involved.

Khalkhal Dasht finally explained that when a foreign company (in this case Sinopec) registers a representative office in Iran, under the Companies Registration Act approved on 02.10.1310 (December 24, 1931) by the country’s judiciary system, the new office will be considered and treated as an Iranian company confronting the country’s laws.

What came above was all and only Khalkhal Dasht’s account of the events and Tehran Times does not approve nor reject the raised claims.