The Tethyan Cooper Company (TCC) has approached the British Virgin Islands High Court of Justice for the implementation of the $5.97 billion award by the International Centre for the Settlement of Investment Disputes (ICSID) against Pakistan in the Reko Diq case.
However, the Office of the Attorney General for Pakistan has ensured that Pakistan uses all available legal means to challenge these prosecutions vigorously. The government is still committed to amicably resolving the matter.
On November 20, the corporation moved the high court to impose the award, which involves adding the properties of Pakistan International Airlines Investment Ltd (PIAIL), a company that is also registered in the British Virgin Islands, to the high court.
The high court issued an ex-party stay order on 16 December without hearing Pakistan, but the government said it would appeal the case when it was taken up again on 7 January 2021.
Without regard to such commitments, Pakistan has affirmed that in every jurisdiction, the government will aggressively prosecute prosecutions launched by the corporation and the government reaffirms its pledge to protecting national properties wherever they may be found, said a statement by the office of the attorney general.
The TCC is a 50-50 joint venture between Barrick Gold Corporation of Australia and Antofagasta PLC of Chile while the Reko Diq district in southwest Balochistan is renowned for its mineral resources, including gold and copper.
Reko Diq dispute
After the latter asserted $8.5bn when the mining authority of Balochistan vetoed its bid for a multi-million dollar mining lease in the province in 2011, the ICSID tribunal took up the dispute between Pakistan and the TCC.
The Reko Diq Mining Project was to build and run a world class open-pit copper-gold mine at a cost of around $3.3 billion, according to information available on Tethyan’s website. The business maintains that its 1998 deal with the government of Balochistan entitled it to a mining contract, subject to regular government conditions only.
After the submission was rejected, the project halted in November 2011. Pakistani officials say that the government’s mining lease was terminated because it was secured in a non-transparent way.
By then, $220 million had been spent in Reko Diq by the firm. In 2012, the Australian mining corporation requested support from the World Bank arbitration tribunal, and in 2017 it ruled against Pakistan, challenging an earlier Supreme Court ruling.
Based on the assumed income Tethyan should have received from the mine over 56 years, the tribunal decided to use a calculation to determine liability for the terminated contract. In July 2019, the tribunal slapped Pakistan with a whopping $5.97 billion reward for rejecting the Australian company’s mining lease.
The almost $6 billion fine, plus the award of penalties and interest, is equivalent to approximately two percent of Pakistan’s GDP.
Immediately thereafter, proceedings for implementation of the award were launched by the TCC. Pakistan contested the award in November 2019 and began litigation for its annulment.
In March this year, the AGP office announced that it had filed an appeal on November 8, 2019 for the annulment of the award made by the ICSID on July 12, 2019.
Alongside the appeal for annulment, Pakistan had also demanded a provisional stop on the implementation of the award given against the nation on November 18, 2019.
On launching annulment proceedings, Pakistan was granted the provisional stay after which a hearing to validate the stay order took place over ‘video link’ in April this year. The tribunal eventually ruled in favour of Pakistan on September 16, 2020, confirming the hold on the award’s compliance.
Pakistan’s appeal against the sanction for its decision to revoke the Reko Diq mining lease for the TTC is also being considered by the ICSID and a final hearing will take place in May 2021.