The High Court of Justice in the British Virgin Islands has granted a stay order ex-parte without hearing Pakistan about the assets of PIA Investments Limited, a company which is incorporated in the British Virgin Islands. PIA Investments main assets include 2 hotels in New York and Paris. The Tethyan Copper Company (TCC) has approached the High Court of Justice in the British Virgin Islands for the enforcement of the $5.97 billion awards against Pakistan by the International Centre for Settlement of Investment Disputes (ICSID) in the Reko Diq case. Lawyers representing Pakistan and PIA Investments will present their case today.
PIA sources claim that the High Court ordered to freeze the assets of PIA days before Christmas and set the date for next hearing and ordered the lawyers defending the state of Pakistan and PIA to appear on 7th of February. Due to Christmas and New Year holidays, the case will now resume where Pakistan and PIA will state that they are a private company and the assets are their own rather than of the state of Pakistan.
But the fact of the matter is not just the assets if things go against Pakistan and PIA. The airline has accounts which some time has quite a lot of money depending on the season and time of year. So it will be quite a lot for both state of Pakistan and PIA to prove their relations and the real state of ownership of assets. The office of the Attorney General for Pakistan, however, has reportedly said: “that Pakistan is vigorously contesting these proceedings using all available legal resources. The government is also engaged to settle the matter amicably”.
A statement issued by the attorney general’s office said “without prejudice to such engagements, Pakistan has reiterated that the government will vigorously pursue proceedings initiated by the company in any jurisdiction and the government reaffirms its commitment to protecting national assets wherever they may be located”.
International Centre for Settlement of Investment Disputes
International Centre for Settlement of Investment Disputes is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and States.
Reko Diq dispute
The Pakistani government was ordered by the International Centre for Settlement of Investment Disputes to pay TCC $5.8 billion. The TCC is a 50-50 joint venture of Barrick Gold Corporation of Australia and Antofagasta PLC of Chile whereas the Reko Diq district in southwest Balochistan is famed for its mineral wealth, including gold and copper.
The ICSID tribunal had taken up the dispute between Pakistan and the TCC after the latter claimed $8.5bn when the mining authority of Balochistan rejected its application for a multi-million dollar mining lease in the province in 2011.
According to details available on Tethyan’s website, the Reko Diq Mining Project was to build and operate a world class copper-gold open-pit mine at a cost of about $3.3 billion. The company says its 1998 agreement with the Balochistan government entitled it to the mining lease, subject only to routine government requirements.
The project stalled in November 2011 after the application was rejected. Pakistani officials say the mining lease was terminated by the government because it was secured in a non-transparent manner.
By then, the company had invested $220 million in Reko Diq. The Australian mining company sought help from the World Bank arbitration tribunal in 2012, and it 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 whopping $5.97 billion award against Pakistan for denying the mining lease to the Australian company.
The fine, of nearly $6 billion, including the damages award and interest, is equal to about two per cent of Pakistan’s GDP.
Immediately thereafter, the TCC had commenced proceedings for enforcement of the award. In November 2019, Pakistan had challenged the award and initiated proceedings seeking its annulment.
In March this year, 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.
Alongside the plea for annulment, Pakistan had also requested a provisional stay on the enforcement of the award issued against the country on November 18, 2019.
Pakistan was granted the provisional stay upon initiating annulment proceedings after which a hearing to confirm the stay order took place over ‘video link’ in April this year. On September 16, 2020, the tribunal finally ruled in favour of Pakistan, confirming the stay on the enforcement of the award.
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 May 2021.