• CJP-led bench sees no issues with proposed foreign investment bill
• Notes legislation will facilitate deal, boost FDI in similar projects
ISLAMABAD: The Supreme Court on Friday green-lit the revival of the Reko Diq project by announcing a short order on a presidential reference pertaining to the validity of the fresh settlement deal between two international firms — Barrick Gold Corporation (BCG) and Antofagasta PLC — and the government, aimed at warding off the $10 billion looming in arbitration penalties on Pakistan.
The settlement, which was finalised in March after three years of intense negotiations, was declared lawful by Chief Justice of Pakistan (CJP) Umar Ata Bandial, who was heading a five-judge bench, in a 13-page opinion on the reference moved by President Arif Alvi in October.
The president had sought the apex court’s opinion on two main points; firstly, does the 2013 judgement in the Maulana Abdul Haque Baloch case prevents the federal and Balochistan governments from entering into the implementation agreement or affect its validity; and, secondly, whether the proposed Foreign Investment (Protection and Promotion) Bill 2022 (FI-Bill), if enacted, would be valid and constitutional.
“The agreements do not, prima facie, violate any of the findings recorded in 2013 Abdul Haque Baloch case,” CJP Bandial responded to the questions. Detail reasons will follow soon.
While Justice Yahya Afridi, agreed with the opinion, he said he would clarify soon in a detailed response that he may not respond to Question No 1 to the extent of ‘public policy’.
The court observed that the proposed FI-Bill would not only pave way for implementation of the Reko Diq project in its present form but would also facilitate and encourage foreign direct investment in similar mining projects and other high capital intensive industries in which direct foreign investment was required to be encouraged through guarantees assured by laws and regulatory measures.
“To sum up, we are of the opinion that parameters set out in 2013 Abdul Haque Baloch’s case have been duly addressed by the federal and provincial governments,” the bench explained.
Thus, the process for project’s revival has been undertaken ‘transparently’ and with ‘due diligence’.
The agreements are being signed by authorities duly authorised and competent to do so under the law and to ensure transparency and fairness, expert advice on the financial, technical and legal issues involved has been sought from both local as well as independent international experts/consultants on the terms settled in the agreements, according to the court opinion.
The agreements had been put in place after “due deliberation and have not been found by us to be unconstitutional or illegal”, it explained.
Likewise, the court expects, the rationale, basis, legality and vires of FI-Bill as well as the amendments to its schedules and annexure and the amendments incorporated through SROs following due process, would be duly enacted as required under the Constitution.
“And such laws and regulatory measures do not in any manner violate the constitution or the law,” the court noted.
The bench was of the opinion that FI-Bill was not limited exclusively to the Reko Diq project, rather it provided a framework for grant of investment incentives which, subject to the provisions of the bill, would be available to all investments of $500m or more.
The fact that the Reko Diq project was the first to be identified as a ‘Qualified Investment’ under FI-Bill did not render the statute as ‘person-specific’, it added.
The court observed that unlike the Chagai hills exploration joint venture agreement, the decision to enter into the settlement agreements with the mining firms was backed by law and taken after careful negotiations during which independent international consultants assisted the authorised representatives of Pakistan and Balochistan governments.
In a tweet, PTI leader and former energy and petroleum minister Hammad Azhar welcomed the court opinion and recalled how companies falling under the petroleum division had played a key role in arranging funding for the settlement and becoming stakeholders in the project. “We used to get things done under PTI government,” he remarked.
“It is a step back from the financial precipice,” former additional attorney general Tariq Khokhar said, adding that this was “not the time for angry remonstrance, but we must reflect on the cause and causes that pushed the nation to the brink of financial bankruptcy.”
Senior counsel Hafiz Ahsaan Ahmad Khokhar highlighted the need of revisiting all existing commercial laws by policymakers to introduce legislation on matters relating to foreign direct investment and commercial dispute by adopting best international practices.
Simultaneously, he said, robust alternative dispute resolution be introduced with time-bound adjudicating and court processes to make Pakistan an attractive place for foreign investment and “to avoid such heavy contracts default and penalties before international forums”.
Published in Dawn, December 10th, 2022