ISLAMABAD, Feb 26: Finland has asked Pakistan to early finalize a bilateral investment agreement to help Nokia phone company to invest $200-300 million during 2005 in the country.

Informed sources told Dawn here on Saturday that final round of talks between the two countries is expected to be held in Islamabad shortly to sign the agreement.

However, Pakistan has certain reservations over Nokia's demand that in case of a dispute Islamabad should accept arbitration only in the "International Court of Settlement of Investment Dispute".

The government, sources said, wanted that such dispute settlement could be sought in other international forums as well including those of the United Nations and the United Kingdom. But Pakistan has, in principle, agreed that in case of a dispute, foreign investors could seek international arbitration.

Pakistan was also opposing the demand of the Finland that arbitration clauses should be allowed to be invoked with retrospective effect. "We would not agree on that as it can cause a loss of millions of dollars to the national exchequer", a source said adding that various disputes worth $800 million were already pending against Pakistan and agreeing on retrospective clause would further burden the country financially.

Pakistan has been calling upon foreign investors to first seek the intervention of Pakistani courts for dispute resolution.

"We still are asking them to first exhaust local remedies before seeking any international arbitration", he said regretting that the foreign investors including those of M/s Nokia were not willing to accept local remedies on the plea that Pakistani courts were not independent.

Finnish investors including those of Nokia company were also asking their own government to change various investment clauses under which they could not seek international arbitration once any decision was announced against them in any other country's court where they have made certain investment. "The Finnish authorities maintained that if the verdict has been pronounced against any Finnish company outside Finland, it is unjustified to allow the company to seek international arbitration," a source added.

M/s Nokia which is one of the largest cellular Finnish companies has expressed its willingness to set up its production plant in Pakistan at a cost of $200-300 million keeping in view the tremendous growth of cell phones.

Pakistan was told that Nokia was in a position to set up the company and start the production of cellular phone within this year because of the cheap labour and various other fiscal and non-fiscal incentives available to the foreign investors.