Reko Diq case: British Virgin Islands high court attaches Pakistan’s assets

Pakistan is faced with another setback on the international legal front as the British Virgin Islands high court ruled to attach certain assets belonging to the country’s institutions, sources revealed to The Express Tribune.

Sources informed that the British Virgin Islands high court passed an ex parte order on December 16 regarding the attachment of Pakistani institutions’ assets. In view of that order, Pakistan cannot sell these assets.

For the enforcement of the $6 billion award in the Reko Diq case, Tethyan Copper Company (TCC) has sought attachment of certain assets belonging to Pakistani institutions.

‘Govt vigorously contesting matter’

Pursuant to the proceedings for the enforcement of the award before the high court of Justice in British Virgin Islands by TCC, the office of the Attorney General for Pakistan (AGP) has said that the government of Pakistan is vigorously contesting the matter with all legal resources available to it. Likeiwse, the government is also engaged in settling the matter actively.

Without prejudice to such engagement, it is reiterated that the government of Pakistan shall vigorously pursue proceedings initiated by the TCC in any jurisdiction and the government reaffirms its commitment to protecting national assets, wherever they may be located, says the statement issued by the AGP.

The International Center for Settlement of Investment Disputes (ICSID) on September 17 issued a 70-page order in which it was decided that the stay of enforcement of $6 billion award — the same forum rendered on July 12, 2019 — shall be continued on a conditional basis.

The order said Pakistan shall provide an “unconditional and irrevocable” bank guarantee or the LC for 25 per cent 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 — Tethyan Copper Company (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 per cent 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 25 per cent bank guarantee.

Out of court settlement

Pakistani authorities are hopeful that the country will reach an out of court settlement with the TCC next year. Senior lawyers are of the opinion that the claimant company has no choice but to reach out for an out of court settlement as Pakistan has very limited assets abroad.

The TCC had initially claimed $11.43 billion in damages for the termination of their contract but Pakistan’s incumbent legal team was able to restrain the sum to $4.08 billion.

In 2012, the TCC filed a claim for international arbitration before the ICSID of the World Bank. The litigation carried on for seven years. Former chief justice of Pakistan Iftikhar Chaudhary’s judgment in the Reko Diq case was the first in the previous government’s tenure. The current Pakistan Tehreek-e-Insaf (PTI) led government has already spent $10 million as legal expenditures on this case.

Many senior lawyers have been critical of the former CJP’s judgments which in the ensuing years have caused trouble for policymakers and stirred concerns amid international investors.

A senior official revealed that the “misstatement” of scientist Dr Samar Mubarakmand before the tribunal was one of the main reasons behind the ICSID slapping the heavy penalty on Pakistan.

Dr Samar had claimed that the Reko Diq gold mines would fetch the country around $2.5 billion annually. He had also maintained that Reko Diq and other gold reserves in the country will bring in $131 billion to the national exchequer. The tribunal relied on his statement.

Three different international firms were hired to plead the case before the ICSID. Cherie Blair, the wife of former UK prime minister Tony Blair, was leading Pakistan’s first legal team. Renowned lawyer Ahmar Bilal Sufi was assigned the task of hiring the team.

During the tenure of the Pakistan Muslim League-Nawaz government, then AGP Salman Aslam Butt had hired an international firm, Alen and Avery.

However, Alen and Avery was unable to find evidence of corruption in the contract between Pakistan and the TCC. Later, ex-AGP Ashtar Ausaf Ali engaged an American firm, GST, in the quantum stage. Only $1 million was paid to it. The firm raised 11 arguments of which seven were accepted at the quantum stage.

(This story has been published from The Express Tribune feed, without modifications to the text)