Following a report on a conflict between the Chinese oil company Sinopec and an Iranian private company called Khalkhal Dasht which was published on March 19 by Tehran Times, Khalkhal Dasht responded to the mentioned report, denying Sinopec’s claims against the Iranian company. The response was published by Tehran Times on April 9.

In response to Khalkhal Dasht claims, Sinopec once again wrote to Tehran Times dismissing the Iranian company’s claims, what comes below is Sinopec’s explanations regarding some of Khalkhal Dasht’s accusations and false claims toward the company.

1. In respect to Khalkhal Dasht’s claim regarding the change in the contract’s price, it should be mentioned that according to the contract which was signed between Sinopec (as the main contractor and investor) and National Iranian Oil Company (NIOC), any changes in the contracts with sub-contractors such as Khalkhal Dasht, shall have NIOC’s approval, therefore Sinopec cannot change the contract price at its own discretion. Sinopec rejects Khalkhal Dasht claims regarding the changes in the project and/or the increase of the contracts’ price from $200 million to $300 million.

2. In their claims Khalkhal Dasht mentioned that the project was completed and delivered to Sinopec and refers to the supplementary agreement dated 6th May 2015. Sinopec dismisses such claims, asserting that: firstly there is no mentioning of final “hand over” or “completion” of project in the mentioned supplementary agreement, in fact, Khalkhal Dasht abandoned the project incomplete with plenty of qualitative and quantitative defects which imposed millions dollars of loss on NIOC, Sinopec and the entire country and only with the pressure of NIOC and for Sinopec to complete the project by itself or thorough other contractors, delivered the site to Sinopec. in the same supplementary agreement mentioned by Khalkhal Dasht (dated 6th May 2015), it has been mentioned that plenty of unfinished works of Khalkhal Dasht will be completed by Sinopec that, itself, proves that Khalkhal Dasht had not finished the project. Secondly, several years after Khalkhal Dasht left the project, finally the project was completed and delivered to NIOC through two other sub-contractors with more than a hundred million dollars damage. NIOC has announced this issue to the Iran Court as a formal letter.  

3. Regarding Khalkhal Dasht claims about releasing the bank guarantees and paying extra work with referring to supplementary agreement dated 15th Aug. 2015, Sinopec explained: with what logic we can accept that while Khalkhal Dasht left the project with lots of defects and Sinopec due to its commitments to NIOC had to complete it with millions dollars of damage, would agree to release the guarantees or pay any extra work. Since Khalkhal Dasht raised a lawsuit against Sinopec in Iran Courts in contrary to the arbitration clause inserted in both contracts with Sinopec, both parties agreed based on supplementary agreement dated 15th Aug. 2015 that, without prejudice to the arbitration clause, make efforts to solve the differences including bank guarantees and extra or reduced works in a friendly way. But Khalkhal Dasht continued to follow its false claims in Iran Courts in breach of its contractual obligations and law and loosed any opportunity for friendly settlement.  
4. About Tehran court’s verdicts against Sinopec for 100 million USD, the company stated that they have appealed against the court’s verdict which was based on a false expert opinion and in contrary to all supporting documents. Furthermore, they have sued the experts in the expert’s organization which is under proceedings.
5. Khalkhal Dasht claimed that the arbitration clause provided in Article 36 of the contracts between the two companies had been annulled by court order.

Sinopec again explained that, in the contracts, both parties agreed that the contracts would be governed by the “law of Islamic Republic of Iran”, and in case of any conflict, they would settle it in the International Chamber of Commerce Arbitration (ICC), in a neutral country, Singapore.

Sinopec insists that Khalkhal Dasht, with breach of arbitration clause in both contracts and in contrary to Article 58 of the Iranian Civil Procedure Code and Section A (2) of the Law on translation of statements and documents in courts and offices, provided unofficial, false and deviated translations of the contracts claiming that governing law of the contracts is “Singapore law” and that Sinopec is an Iranian company!!! to mislead the judges in the only hearing (which Sinopec was absent); whereas Sinopec is a Chinese company (As page 9 of Official Gazette No. 17996 dated December 7, 2006, addressed Sinopec as a Chinese-nationality company). Fortunately, finally the Head of the Judiciary Power, Ayatollah Sadegh Larijani, ordered to stop the enforcement of the verdicts on 4th April 2018.

6. In their claims, Khalkhal Dasht referred to the “Iranian general conditions” several times stating that Sinopec should be committed to them, however according to Islamic Republic of Iran's law, which governs the contracts between Sinopec and Khalkhal Dasht, Iranian general conditions are only binding on governmental companies, while neither Sinopec nor Khalkhal Dasht are Iranian governmental companies. On the other hand, the contracts have their own general condition which is binding on the parties.  Khalkhal Dasht claims regarding Sinopec’s lawyer is all untrue and false.

What came above is Sinopec’s explanations regarding Khalkhal Dasht claims published by Tehran Times on April 9, Sinopec presented relative documents and evidence to Tehran Times which backs their explanations, the company is further ready to provide the mentioned documents and evidence in case of necessity.