Reko Diq stay comes with bank guarantee condition

Published September 19, 2020
The Reko Diq area in south west of Balochistan is famous for its mineral wealth, including gold and copper. — Courtesy Tethyan Copper Company Pakistan/File
The Reko Diq area in south west of Balochistan is famous for its mineral wealth, including gold and copper. — Courtesy Tethyan Copper Company Pakistan/File

ISLAMABAD: The stay granted by the World Bank’s International Centre for Set­t­lement of Investment Dis­p­utes (ICSID) on enfor­cem­ent of the award against Pak­istan in the Reko Diq dispute carries certain conditions.

A source privy to the development told Dawn that one of the conditions set by the World Bank-funded tribunal for international disputes was that Pakistan furnish an irrevocable bank guarantee amounting to 25 per cent of the penalty, which the tribunal had awarded, from a reputable international bank based outside the country.

All such awards granted by the ICSID always carried certain conditions, he added.

The ICSID, on July 12, 2019 had slapped a whopping $5.97 billion award against Pakistan that includes $4.08bn as penalty and $1.87bn in interest in a 700-page ruling for denying a mining lease to a foreign company, Tethyan Copper Company (TCC).

The source explained that Pakistan would have to furnish 25 per cent of the $4.08bn penalty as guarantee.

The ICSID tribunal was seized with a dispute between Pakistan and the TCC, which had claimed $8.5bn in damages for rejection of its application by the mining authority of Balochistan for the multimillion-dollar mining lease in the province in 2011.

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

However both parties — Pakistan and the TCC — met in London in October last and agreed to remain open to a negotiated out-of-court settlement of the dispute, the source said, adding that the parties were still engaged with each other and hopeful that the matter would be resolved soon.

He also recalled how Pakistan had welcomed a statement made by William Hayes, the chairman of the TCC board of directors, in which he had expressed willingness to work towards a negotiated settlement.

In his statement, Mr Hayes had stated that the company remained willing to discuss the potential for a negotiated settlement with Pakistan and would continue to protect its commercial interests and legal rights until the conclusion of the dispute.

Then Pakistan had taken the stand that it had considered the July 12, 2019 press release issued by Antofogasta Plc, one of the two partners in the TCC, and the statement of Mr Hayes, in which he had expressed willingness to work towards a negotiated settlement.

“The government of Pakistan welcomes this approach to work towards a mutually beneficial solution that works for both sides,” Pakistan had taken the stand, adding that it was a responsible state and its government always took its international legal obligations most seriously.

Pakistan had also stated that the mineral resources in Reko Dig were collective resource of the people of Balochistan and Pakistan, adding that the country was keen for development of this resource to ensure that development needs of some of the poorest people on the planet were addressed.

When asked to comment, Barrister Taimur Malik, an international law expert, said that the stay order was a welcome development from Pakistan’s perspective and it implied that the annulment proceedings were being seriously considered by the ICSID panel and that Pakistan had an arguable case for annulment of the unprecedented $6bn award.

He said that the stay also improved Pakistan’s negotiating position in the case of any settlement talks with the claimants.

The TCC is 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.

The Reko Diq area in south west of Balochistan is famous for its mineral wealth, including gold and copper.

Published in Dawn, September 19th, 2020

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Good examples

Good examples

It is not impossible for female (or male) leaders to fulfil promises if they have the will and drive to do so.

Editorial

Democracy damaged
Updated 28 Feb, 2024

Democracy damaged

The reserved seats controversy could have been avoided had the ECP by now decided whether SIC deserves them or not.
Misplaced priorities
28 Feb, 2024

Misplaced priorities

THE federal government’s filing of a petition with the Supreme Court on Monday, seeking to overturn an Islamabad...
Killing jirgas
28 Feb, 2024

Killing jirgas

ANOTHER day and another chilling story unfolds in Kohistan. The jirga institution, declared illegal by the top ...
New funds
27 Feb, 2024

New funds

PAKISTAN plans to seek a new loan of $6bn from the IMF under its Extended Fund Facility for a period of three years,...
Missing link
27 Feb, 2024

Missing link

WITH most of Punjab and KP now accessible via motorways, which have greatly eased road travel for the bulk of the...
Tragedy averted
Updated 27 Feb, 2024

Tragedy averted

Pakistan must shed the layers of intolerance that have been allowed to permeate society.