$1.2 billion surprise

Pakistan lost Karkey because a judge forgot that international courts do not care about his desire to be in the news

In a welcome surprise, the PTI-led government appears to have managed to convince Turkish President Recip Tayyip Erdogan to intervene and help Pakistan avoid a billion-dollar penalty. Pakistan had been fined $1.2 billion for breach of contract by the International Centre for Settlement of Investment Disputes (ICSID) in August 2017 over the Karkey rental power project case, with interest still accruing as Pakistan sought to appeal for a reduction. At the same time, extensive lobbying was also being done behind the scenes to reduce or waive the fine.

However, even though various PTI leaders had been hinting for weeks that the fine would be waived due to the international community’s faith in Prime Minister Imran Khan and the ruling party, it does appear that there was a quid pro quo. It has come out that the National Accountability Bureau (NAB) will not prosecute the Turkish company’s directors, agents and employees in the related rental power project (RPP) graft case. Earlier, the anti-graft body had refused to withdraw cases against Karkey staffers, even though reports in this paper suggested that this would have weakened the initial case against Pakistan. The report also quoted NAB officials as saying that the cases were being withdrawn in the “national interest”, but multiple reports have suggested that the state has solid evidence of corruption against Turkish company.

Unfortunately, this victory does not address the root of the problem. Pakistan did not lose the Karkey case because of corruption or lack thereof. It lost because a Pakistani judge either forgot or ignored the fact that international courts do not care about his desire to be in the headlines every day. Unfortunately, that judge was the Chief Justice of Pakistan at the time — Iftikhar Muhammad Chaudhry. Such activism continued well past Chaudhry’s term, and many would argue it was almost always to Pakistan’s detriment. Incidentally, another of former CJP Chaudhry’s decisions that could cost Pakistan dear came in the Reko Diq case, where Pakistan is appealing a potentially crippling $6 billion fine. And this time, a friendly government is less likely to intervene if things do not go our way.

Published in The Express Tribune, November 7^th, 2019.

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