Reko Diq dispute

Reports published in New York based magazine Law 360 reveal that government has requested a US federal court to pause the proceedings for the enforcement of International Center for Investment Disputes (ICSD) award worth $6 billion in favour of Tithyan Copper Co Pvt, which was given in July last year. The award imposed unpredicted heavy penalty on Pakistan for the breach of lease agreement by terminating the mining contract of Reko Diq after the company had made an investment $220 million.

 The amount of penalty in the award is equal 2 percent of year country’s gross domestic product and 40 percent of its total liquid reserves. Its payment may prove the proverbial last straw on camel’s back for the weak economy of Pakistan. Hence, in September last year, a US Law Firm GST was hired for legal defense in a review petition after discussing with it the Nitti Gritty of the case by Federal Law Minister Dr. Farogh Naseem. If Pakistan loses the review petition at the US federal court, it will inflict enormous political damage on the incumbent government and add to the economic woes of the country and its people.

Tethyan Copper Company of Australia had sued Pakistan in ICSD after the termination of lease agreement by the then Baluchistan government in 2012 in compliance with Supreme Courter verdict. A three member bench of the Supreme Court headed by former Chief Justice of Pakistan Justice Iftikhar Muhammad Chaudhry, in a verdict on writ petition of Maualna Abdul Baqi Baluch and others had declared the lease agreement null and void. In its judgment, the Supreme Court had cited the precedents of other international tribunals, preventing the investors taking benefits under investment treaty of shady nature.

It is very pathetic that people had reposed trust in their elected leadership to safeguard national interest and protect their rights as enshrined in the constitution. . But the contracts awarded to local and foreign companies by successive elected government secured self-interest and business interest of the investors. When Pakistan lost two cases, one in the London Court of International Arbitration against IPPs and other in ICSID against Thehyan Copper Company, then critical media debate started as to why successive governments failed to develop their own teams of local legal experts for contract writing instead of entirely depending on foreign legal experts. People did not give mandate to PPP in 1993 polls to empower its leadership to incorporate ‘idles payment capacity clause’ in thermal power purchase agreements. Likewise, they did not give mandate to PML-N leadership in 2013 general elections to include ‘take or pay clause’ in the LNG import agreement made with Qatar. In good faith, when PTI government came to power it wanted the review of LNG deal. In September last year, former petroleum minister Ghulam Sarwar Khan said in a press conference that if LNG import deal between PSO and Qarargas has been made in violation of Public Procurement Authority rules, then it would be renegotiated. But later he realised that exercise of this option is not that easy. Hence, the incumbent government preferred to refrain from renegotiating the LNG import deal.  Let us hope that review petition in the US federal court against the ICSID award against Pakistan will bring the desired legal remedy.