December 5, 2003	Friday	Shawwal 10, 1424

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ISLAMABAD, Dec 4: The International Chambers for Settlement of Investment Disputes has registered the request of Turkish company Bayinder, seeking damages of about US $400 million from Pakistan for its alleged violation of a bilateral investment treaty between Pakistan and Turkey, dragging Pakistan into another costly legal battle abroad.

Pakistan had “expelled” the Turkish contractor of Islamabad-Peshawar Motorway on the ground that it had failed to complete the project according to the agreement.

The request for the arbitration was filed with the ICSID, a forum set up under UN Convention, on April 15, 2002. The ICSID, however, kept it pending, as the government of Pakistan had protested against the immediate registration of a similar request by the Swiss company.

Barrister Farrukh Karim Qureshi, counsel for Bayinder, told Dawn that the request for arbitration by his client with ICSID, had been registered on Dec 1, 2003. He said: “A formal communication by Secretary General of ICSID has been received.”

Pakistan is facing cumulative claims of over one billion US dollars at ICSID by the Swiss company SGS, Turkish company Bayinder, and Italian company Impregilo.

Irrespective of the outcome at the ICSID, participation in the proceedings alone is so expensive that mere registration of the complaint means spending a few million dollars.

When a complaint is registered at the ICSID, both the parties are required to deposit US $100,000 as fee apart from engaging the foreign lawyers who have specialized in ICSID proceedings, mostly held in foreign countries.

The ICSID’s jurisdiction is invoked on the basis of bilateral investment treaties, and Pakistan has signed such treaties with forty-three countries of the world.

The contractor claims that Pakistan is in serious breach of its contractual commitments and is also responsible for denial of justice to it by frustrating the contractual dispute resolution mechanism.

Now both Pakistan and Bayinder will appoint an arbitrator each. Neither party can appoint one of its nationals as arbitrator. The two arbitrators will by mutual agreement appoint a Chairman. If they fail to agree then the Chairman will be nominated by the ICSID.

Legal experts dealing with the ICSID arbitration shift the blame on the country’s bureaucracy for creating the whole mess as it signs bilateral investment treaties without properly defining what is meant by investment.

Even a company which had been hired for providing “services” of pre-shipment inspection has dragged Pakistan to the ICSID with a claim of US $120 million.

Unlike other countries, Pakistan’s foreign assets are unprotected. If a suit is decreed by ICSID, the other party can ask for the execution of the treaty by identifying Pakistan’s assets abroad.

Pakistan’s foreign assets, including its reserves in Reserve Bank of America, PIA’s fleet, ships of PNSC and its embassies, are at risk of being forfeited on the orders of ICSID.

In one case, an identical arbitration forum had ordered Pakistan to pay US $100 to a French firm which had been contracted to build Jinnah terminal at the Karachi airport.

When the French government exerted pressure and threatened Pakistan with the confiscation of its assets, the latter had to borrow US $100 million from the former to pay the whole amount to the company.