ISLAMABAD: A spokesperson of Law Ministry has termed British Virgin Islands (BVI) Court’s judgment in Reko Diq case as a great legal victory of Pakistan.
In a statement, he said the judgment has saved Pakistan’s assets worth billions of rupees from being frozen or sold out. After this court order, Pakistan got back PIA’s Roosevelt Hotel, New York and Scribe Hotel Paris.
The spokesperson of Law Ministry said Pakistan strongly pleaded its case before the court in an application filed by Tethyan Copper Company (TCC) for the enforcement of Reko Diq award.
He said according to the court order, the TCC will have to bear all expenses of the case. He appreciated the efforts of Law Minister Farogh Naseem and Attorney General of Pakistan Khalid Javed Khan in the case.
The verdict of British Virgin Islands court
The High Court of Justice in the British Virgin Islands (BVI) ruled in favour of Pakistan and recalled its earlier order of freezing and attachment of PIA’s offshore assets which pertained to an appeal of TCC regarding enforcement of the award in the Reko Diq case.
The development was confirmed by the Attorney General for Pakistan office who apprised the media about the latest outcome in favour of Pakistan.
The message said “A short while ago judgment was announced by British Virgin Island High Court. Great legal victory for PIA and Pakistan. The order was passed earlier on the request of TCC which was seeking enforcement of Reko Diq award. All orders passed against PIA earlier are now recalled by the Court. Receiver removed from Roosevelt hotel, NY and Scribe hotel, Paris. Cost of litigation also awarded.”
PIA on its official Twitter account posted, “Justice prevails! By the grace of Allah and with the prayers of all our countrymen, courts in BVI decide in favour of PIA, releasing all hard earned assets i.e., Roosevelt NYC & Scribe Paris. Great victory for PIA and Pakistan.”
Additional Attorney General for Pakistan and Head of International Disputes Unit Ahmed Irfan represented Pakistan before the BVI court. PIA had engaged its own legal team in the case while all offshore companies, two registered PIA hotels hired their separate counsels.
BVI High Court Justice Gerhard Wallbank, on December 10 last year, had issued an order in favour of attachment of offshore assets of PIA. The case was moved by the Tethyan Copper Company (TCC) which was seeking enforcement of Reko Diq award granted by the International Centre for Settlement of Investment Disputes (ICSID) on July 12, 2019.
Tethyan Copper Company (TCC) on November 20 last year had sought attachment of assets for enforcement of the $6 billion awards that the International Centre for Settlement of Investment Disputes (ICSID)I imposed on Pakistan for revoking the mining contract at Reko Diq in Balochistan.
Despite the withdrawal of attachment orders by the BVI court, the $6 billion awards against Pakistan will still be intact. The ICSID stayed the enforcement of the $6b awards and on September 17 and issued a 70-page order which said the stay shall continue on a conditional basis.
The arbitrator ordered Pakistan to provide an “unconditional and irrevocable” bank guarantee or the letter of credit (LC) for 25 percent of the award, plus accrued interest as of the date of the decision.
The guarantee or the LC was to come from a reputable international bank based outside of Pakistan, which was pledged in favour of the claimant — the TCC — and to be released on the order of the ICSID.
The ICSID also held that if Pakistan could not furnish the security and undertaking in terms as set out within 30 days after notification of the decision, the stay of enforcement in the amount of 50 percent of the award, plus accrued interest as of the date of the decision would be lifted. However, Pakistan missed the deadline and did not deposit a 25 percent bank guarantee.
What is Reko Diq case?
TCC is a 50-50 joint venture of Barrick Gold Corporation of Australia and Antofagasta PLC of Chile. The Reko Diq district in the southwest of Balochistan known for its mineral wealth, including gold and copper.
The ICSID tribunal had taken up the dispute between Pakistan and TCC after the latter claimed $8.5bn when the mining authority of Balochistan rejected its application for a mining lease in 2011.
The project stalled in November 2011 after the application was rejected. Pakistani officials said the mining lease was terminated by the government because it was secured in a non-transparent manner.
The company had invested $220 million in Reko Diq. The mining company sought help from the World Bank arbitration tribunal in 2012, who ruled against Pakistan in 2017, rejecting an earlier decision by the Supreme Court.
The tribunal opted to use a formula for calculating damages for the cancelled lease based on the assumed profits Tethyan might have earned from the mine over 56 years. In July 2019, the tribunal slapped a $5.97 billion award against Pakistan for denying the mining lease to the company.
The fine, including the damages award and interest, is equal to about two per cent of Pakistan’s GDP and roughly the size of the current bailout package by the International Monetary Fund (IMF).
The TCC commenced proceedings for enforcement of the award. In November 2019, Pakistan had challenged the award and initiated proceedings seeking its annulment.
In March 2020, the AGP office announced that it had filed a request on November 8, 2019, for the annulment of the award rendered by the ICSID on July 12, 2019.
Pakistan had also requested a provisional stay on the enforcement of the award issued against the country on November 18, 2019 which was granted in April last year. On September 16, 2020, the tribunal finally ruled in favour of Pakistan, confirming the stay on the enforcement of the award.
However, on November 20, 2020, the company moved a separate case in the BVI High Court for the enforcement of the award which included attachment of the assets belonging to Pakistan International Airlines Investment Ltd, a final decision on which came out today in Pakistan’s favour.
The ICSID is still considering Pakistan’s appeal against the penalty over its decision to cancel the Reko Diq mining lease for the TTC and a final hearing will take place in 2021.
