ISLAMABAD, Nov 10: The International Centre for Settlement of Investment Disputes has “recommended” to the government of Pakistan not to pursue the case which it filed against the Swiss company, SGS, until such time its tribunal decided the jurisdiction issue.

The Swiss company, Societe Generale de Surveillance (SGS) which had been contracted for providing pre-shipment inspection services, had approached the ICSID, a forum set up under a UN Convention, for recovering $120 million from Pakistan for premature termination of the contract.

Benazir Bhutto and Asif Ali Zardari were convicted on the charges of receiving commission from the SGS. The conviction, however, was set aside by the Supreme Court, which remanded the case back to the court for retrial.

The ICSID, which functions under the umbrella of the World Bank, after registering the complaint of the SGS, has agreed to first decide the issue of its jurisdiction after Pakistan protested against the registration of the complaint.

Pakistan has taken the stand that the provision of Bilateral Investment Treaty signed between Pakistan and Switzerland covered only “investment” and the SGS had only been engaged for providing pre-shipment services. It brought no investment whatsoever, it said.

The ICSID arbitral tribunal in a Procedural Order has recommended that Pakistan-based proceedings be stayed until such time its tribunal had decided about its jurisdiction.

Justice Nasir Aslam Zahid, former judge of the Supreme Court, is the arbitrator in Pakistan.

The three-member ICSID arbitral tribunal has also recommended to the government not to take any action against the company in a contempt matter.

The SGS fears initiation of contempt of court proceeding after the Supreme Court restrained the government from participating in any proceedings outside Pakistan.

The government, however, is pursuing the case before the ICSID, despite the Supreme Court’s ruling due to its previous experience as ex parte decisions of the tribunal are always implemented under the supervisions of international lending agencies.

In one case in the past, an ex parte decree was passed against Pakistan and the government was threatened that its foreign assets might be confiscated to recover the decratal amount. Pakistan, despite its financial problems, had to arrange $100 million.

The ICSID further stated that if the Supreme Court had initiated proceedings on its own, the government should inform it about the recommendation of the ICSID.

It further recommended to Pakistan to ensure that if contempt proceedings were initiated by any party, such proceedings should not be acted upon.

The ISCID tribunal said that the Supreme Court judgment is final as a matter of the law of Pakistan. “As a matter of international law, it does not in any way bind this tribunal.”

It said that Article 41 of the ICSID convention empowered the tribunal to determine whether it had the jurisdiction to consider the claims that have been advanced and it could not decline to do so.

It further said that the SGS prima facie had a right to seek access to international adjudication under the ICSID convention.