KARACHI, April 29: A Malaysian multinational company and a subsidiary of the Karachi Metropolitan Corporation have locked horns over construction of a 47-storey high-rise IT Tower in Karachi.

According to highly-placed sources, the IM Technologies Pakistan, a subsidiary of the Malaysian multinational company, has moved the Singapore-based International Chamber of Commerce (ICC) International Court of Arbitration for the recovery of damages totaling over $36 million while the KMC subsidiary, the Karachi Development Company, has sought help from the Sindh High Court which has directed the Malaysian firm to restrain from pursuing the issue in Singapore till next date of hearing.

The sources said the IM Technologies was asked seven years ago to build the tower in Gulshan-i-Iqbal on a plot next to the KMC head office, Civic Centre, on a built, operate and transfer (BOT) basis.

The firm was to bring in around $200 million foreign exchange to build the high-rise, manage it for over three decades to recover the investment and profit and then hand it over to the KDC, said the sources.

The tower was envisaged to include a hotel, call centres and offices. But soon disputes arose between the firm and the KDC and the contract was changed from the BOT to a mere construction contract, with the KDC paying the money to the firm to erect the high-rise and hand it over to the KDC.

The sources said the project could not take off since payment was not made to the firm and it stopped work after digging up a ditch and laying some foundations. Over the years, wild grass has almost entirely covered the ditch.

The sources said that some time back the KDC and the firm started talks to resolve the dispute but failed to reach an agreement on terms and conditions and damages to be paid.

Later, the Malaysian firm, approached the Singapore-based ICC International Court of Arbitration, Asia office, to recover the damages, profits etc, from the KDC which according to it totaled over $36 million.

The sources said that the Singapore-based arbitrators have approached the KDC to come and present its side of the issue so that it could be resolved.

The KDC moved the Sindh High Court to restrain the IM Technologies from going ahead with its case in the international court.

The court issued an order on April 10 and restrained the firm from participating in the arbitration before the Singapore International Arbitration Centre at Singapore and the International Chambers of Commerce, till next date of hearing. It further directed that a notice be issued to IM Technologies to appear in court on April 30.

The sources said that as the dispute over the tower dragged on, residents of the area adjacent to the tower’s site were facing hardships because the plot – now a ditch – had been fenced and the road that passed along it had been closed down at one end, encroached upon and brought in to the fenced boundary.