ISLAMABAD, Nov 24: The government is under the pressure of the United States and the World Bank because of a Supreme Court judgment in which it had directed a US-based multinational company to a furnish bank guarantee of one billion dollar for qualifying itself to defend a suit for damages.
Official sources told Dawn that the American government and the World Bank had taken up the matter with the highest office in the country. The ministers of finance and commerce have also been apprised of the anxiety of the US government.
The US is urging the Pakistan government to get the judgment reversed if it was interested in foreign investment and economic development.
The judgment in question was delivered by a three-member bench of the Supreme Court headed by the Chief Justice Shaikh Riaz Ahmad in a case titled Wak Orient Power and Light Limited versus Westinghouse Electric Corporation.
The SC accepted the request of Wak Orient, owned by former senator Gulzar Ahmad, and directed the Westinghouse Electric Corporation, to furnish a bank guarantee of one billion dollar for allowing it the right of defence in a suit for damages instituted by the Pakistani company for its alleged failure to honour the contract.
The whole objection is on the last five lines. According to the communications received by Pakistan from the WB and US government, the objection is that “at the end of the computer-generated Supreme Court order, someone has typed (with a typewriter and apparently after the judges had signed the documents), extremely prejudicial language that could be read to require the US company to put a bond of potentially one billion dollar before they can even present their defences in court.”
The government has been asked by the US government that there is no legal basis or precedent under Pakistani laws that requires defendants to post a bank guarantee even before they are allowed to defend the case.
The matter was raised at the highest level in Pakistan. After seeking instructions from the top, two federal ministers, Abdul Razzak Dawood and Shaukat Aziz, were seen running from pillar to post to resolve the matter as the communications they had received had threatened that the “matter stood in the way of future foreign investment and economic development in Pakistan.”
It is learnt from highly credible sources that the commerce minister had sought a meeting with Fakhruddin G. Ibrahim, counsel for the Westinghouse, to ascertaining further developments in the case.
Fakhruddin G. Ibrahim, a prominent jurist of the country, confirmed that he had been contacted by the commerce minister to ascertain the facts. “Yes, it is correct that one federal minister ascertained facts of the case from me. The minister was perturbed at what was happening and its consequences on Pakistan’s commerce and industry,” he said.
Westinghouse is a big multinational company, having great influence in the power corridors in Washington.
The United States government always extended full support to its nationals and multinationals.
The Supreme Court on Aug 12, had directed the Westinghouse Electric Corporation to furnish a bank guarantee of $1 billion for allowing it the right of defence in a suit for damages instituted by a Pakistani company for its alleged failure to honour the contract.
The apex court had upheld the Lahore High Court judgment which had remanded the suit to a civil court with the direction that the Westinghouse Electric Corporation, shall be allowed to submit a written statement but had required the company to furnish a bank guarantee equivalent to decreed amount, $1 billion to the satisfaction of the trial judge.
The civil court Lahore had created a history on July 7, 1999, when it decreed the biggest-ever civil suit of $1 billion without hearing defendant company.
The Supreme Court’s three-judge bench had reserved the judgment on April 11, 2002. The court made three announcements, first on May 21, 2002; second on June 21, and third on July 12, 2002, for the announcement of the judgment by affixing a notice.
The judgment was not announced on the above dates. It was announced somewhere in August and its copy was made available to the parties in August 2002.
The civil court after striking off defence of the respondent company passed a decree in the suit worth $1 billion on July 7, 1999. The decree was passed for non-compliance of the order of filing the written statement in the given situation.
The Lahore High Court, however, set aside the judgment and decree and remanded the case for its disposal after obtaining a written statement from the respondent company. Both the parties later approached the apex court.