THE decision of the High Court of Justice in the British Virgin Islands to unfreeze PIA properties Roosevelt Hotel in New York and Scribe Hotel in Paris is a victory for Pakistan. The court reversed its earlier orders to attach the properties in a case initiated by the Tethyan Copper Company that was seeking enforcement of the $6bn Reko Diq award. The court also removed the receivers from the two properties. Yet the fact remains that withdrawal of the attachment orders does not affect the status of the award given by the International Centre for Settlement of Investment Disputes against Pakistan for unilaterally revoking the mining contract in Balochistan’s Reko Diq. The liability will continue to stand unless Pakistan’s request for the annulment of the award is granted by the ICSID or the government succeeds in striking a negotiated deal with the mining company. Though the government has vowed to vigorously pursue the proceedings initiated by TCC in “any jurisdiction” in order “to protect national assets”, it may only be able to delay the inevitable, not avoid it. The award is equal to about 2pc of the nation’s GDP and the money borrowed from the IMF to support a weakened balance-of-payments position.

Pakistan’s decision to cancel TCC’s mining licence in Reko Diq, famous for its gold and copper reserves, underscores the crisis of governance as well as the bureaucracy’s incompetence, and the general inability to protect the country’s economic interests while negotiating large contracts and agreements. This is not the first time we have failed to honour our contractual obligation and faced embarrassment by reneging on our commitment to global investors — sometimes witnessed after a change of government. More importantly, it is a major reminder of how unsolicited judicial interventions in complex commercial contracts for public approval can have an adverse impact on the country’s image as a safe destination for foreign investment. The fact is that when the apex court began in 2012 to hear civil and criminal petitions challenging the agreement between TCC — an Australian firm — and the Balochistan government, there was full awareness of Pakistan’s responsibilities under international law and the country’s bilateral investment treaty with Australia to protect the mining company’s investments. We should be worried about payment of the massive fine. But we should be more worried about how to address poor governance to avoid such embarrassment in the future.

Published in Dawn, May 27th, 2021