Reko Diq stay comes with bank guarantee condition
The stay granted by the World Bank's International Centre for Settlement of Investment Disputes (ICSID) on enforcem-ent of the award against Pakistan in the Reko Diq dispute carries certain conditions.
A source privy to the development told media that one of the conditions set by the World Bank-funded tribunal for international disputes was that Pakistan furnish an irrevocable bank guarantee amounting to 25 per cent of the penalty, which the tribunal had awarded, from a reputable international bank based outside the country.
All such awards granted by the ICSID always carried certain conditions, he added.
The ICSID, on July 12, 2019 had slapped a whopping $ 5.97 billion award against Pakistan that includes $4.08bn as penalty and $1.87bn in interest in a 700- page ruling for denying a mining lease to a foreign company, Tethyan Copper Company (TCC).
The source explained that Pakistan would have to furnish 25 per cent of the $4.08bn penalty as guarantee.
The ICSID tribunal was seized with a dispute between Pakistan and the TCC, which had claimed $8.5bn in damages for rejection of its application by the mining authority of Balochistan for the multimillion-dollar mining lease in the province in 2011.
Pakistan had taken the plea before the tribunal that the agreement /mining licence of the Reko Dig project was procured through corrupt means and, therefore, the claimant could not ask for damages.
However both parties - Pakistan and the TCC - met in London in October last and agreed to remain open to a negotiated outof-court settlement of the dispute, the source said, adding that the parties were still engaged with each other and hopeful that the matter would be resolved soon.
He also recalled how Pakistan had welcomed a statement made by William Hayes, the chairman of the TCC board of directors, in which he had expressed willingness to work towards a negotiated settlement.
In his statement, Mr Hayes had stated that the company remained willing to discuss the potential for a negotiated settlement with Pakistan and would continue to protect its commercial interests and legal rights until the conclusion of the dispute.
Then Pakistan had taken the stand that it had considered the July 12, 2019 press release issued by Antofogasta Plc, one of the two partners in the TCC, and the statement of Mr Hayes, in which he had expressed willingness to work towards a negotiated settlement.
"The government of Pakistan welcomes this approach to work towards a mutually beneficial solution that works for both sides," Pakistan had taken the stand, adding that it was a responsible state and its government always took its international legal obligations most seriously.
Pakistan had also stated that the mineral resources in Reko Dig were collective resource of the people of Balochistan and Pakistan, adding that the country was keen for development of this resource to ensure that development needs of some of the poorest people on the planet were addressed.
When asked to comment, Barrister Taimur Malik, an international law expert, said that the stay order was a welcome development from Pakistan's perspective and it implied that the annulment proceedings were being seriously considered by the ICSID panel and that Pakistan had an arguable case for annulment of the unprecedented $6bn award.
He said that the stay also improved Pakistan's negotiating position in the case of any settlement talks with the claimants. The TCC is a 50-50 joint venture of Barrick Gold Corporation of Australia and Antofagasta PLC of Chile and a final hearing will take place in May 2021. The Reko Diq area in south west of Balochistan is famous for its mineral wealth, including gold and copper.
Meanwhile, The International Center for Settlement of Investment Disputes (ICSID) of World Bank has rendered almost $6 billion (Rs950 billion) award against Pakistan in Reko Diq case.
The arbitration case started in July 2012 with the constitution of the tribunal, and the final award announcement had been awaited since last year. On Friday, the tribunal concluded the case in 700page verdict awarding a massive $4 billion in penalty and around $2 billion in interest and the expenditure incurred on the case by the TCC.
Since this is the largest award in the history of the tribunal, Pakistan now faces a serious threat of assets seizure abroad. According to sources of Pakistan’s Ministry of Law, the legal team of Pakistan made efforts to bring down the TCC claim to $6 billion from $16 billion.