World Bank tribunal issues stay in Reko Diq case

Updated 18 Sep 2020

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Reko Diq hills.—Reuters/File
Reko Diq hills.—Reuters/File

ISLAMABAD: The World Bank’s International Centre for Settlement of Invest­ment Disputes (ICSID) has granted a stay on the enforcement of a penalty awarded against Pakistan in the Reko Diq mining lease dispute.

“This is a success for Pakistan and its legal team,” said a statement issued by the Attorney General office on Thursday.

In July 2019, an ICSID tribunal had slapped a whopping $5.97 billion award against Pakistan for denying the mining lease to Aus­tralian company Tethyan Copper Company (TCC).

Immediately thereafter, the TCC commenced proceedings for enforcement of the award, the AG office statement said, adding that Pakistan had in November 2019 challenged the award and initiated proceedings seeking its annulment.

Attorney General office claims stay has been granted on enforcement of nearly $6bn award against Pakistan; final hearing to be held in May 2021

In March this year, the AGP office announced that it had filed a request on Nov 8, 2019 for the annulment of the award rendered by the ICSID on July 12, 2019 in the matter of TCC versus Pakistan. Alongside the plea for annulment, Pakis­tan had also requested a pro­visional stay on the enforcement of the award issued against the country on Nov 18, 2019.

Pakistan was granted the provisional stay upon initiating annulment proceedings after which hearing to confirm the stay order took place over ‘video link’ in April this year. On Sept 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 Tethyan Copper Company — 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.

Reko Diq, a small desert town in Chagai district of Balochistan, is famous for its mineral wealth, including gold and copper. The area is located in Tethyan belt that stretches all the way from Turkey and Iran into Pakistan.

Prime Minister Imran Khan’s government considers it a strategic national asset, though instead of yie­lding a bonanza, Reko Diq mines have cost the country dearly owing to the ongoing international litigation between the TCC and Pakistan.

The quantum of the award is the same as the bailout package granted to Pakistan by the International Monetary Fund, the AG office statement recalled, adding that if enforced, the award would cause serious economic hardship and retard economic growth. Seen in this context, the decision on stay was a success and major relief for Pakistan, the statement said.

Earlier, Pakistan had taken the plea before the tribunal that the agreement/mining licence at Reko Dig was procured through corrupt means and, therefore, the claimant (TCC) could not ask for damages.

But after the announcement of the award, Pakistan reacted swiftly, with Prime Minister Khan constituting a commission to probe the reasons why Pakistan ended up in this predicament.

In Jan 2013, a Supreme Court bench headed by then chief justice Iftikhar Muhammad Chaudhry, while taking up a petition of former lawmaker Dr Abdul Haq Baloch, had declared the mining contract to the TCC for exploration of gold and copper as illegal.

Published in Dawn, September 18th, 2020