Pakistan has failed to provide an “unconditional and irrevocable” bank guarantee or letter of credit (LC) as required by an arbitrator for continuation of a stay on a $6 billion Reko Diq gold mines award.
However, the authorities insist that this failure will not have any adverse effect on the country. The International Center for Settlement of Investment Disputes (ICSID) on September 17 issued a 70-page order in which it was decided that the stay of enforcement of $6 billion award — the same forum rendered on July 12, 2019 — shall be continued on a conditional basis.
The order said Pakistan shall provide an “unconditional and irrevocable” bank guarantee or the LC for 25% of the award, plus accrued interest as of the date of the decision.The guarantee or the LC was to come from a repu-table international bank based outside of Pakistan, which was pledged in favour of the claimant — Tethyan Copper Company (TCC) — and to be released on the order of the ICSID.
The ICSID also held that if Pakistan could not furnish the security and undertaking in the terms as set out within 30 days after notification of the decision, the stay of enforcement in the amount of 50% of the award, plus accrued interest as of the date of the decision would be lifted. However, Pakistan missed the deadline and did not deposit 25% bank guarantee.
Now there are speculations about effects of lifting the stay order. Sources revealed to The Express Tribune that Pakistan will not pay a single penny fine after its failure in furnishing the bank guarantee.
However, the sources said enforcement proceedings regarding implementation of US$6 billion will be resumed, which may not be concluded in a decade. According to the sources, the TCC has initiated proceed-ings against Pakistan in the United States and Australia and Pakistan has already engaged lawyers to contest enforcement proceedings in both the countries.
Senior lawyers with expertise in international law said the company will find it very difficult to enforce the award as Pakistan has limited assets abroad. Therefore, a negotiated settlement is still probably the most likely scenario in this case. The sources said Pakistani officials are actively engaged with the company officials for an out of court settlement.
Due to the negotiations, the company is unlikely to pursue enforcement proceedings. Similarly, Pakistan authorities are very careful and do not want to take any action which could negatively affect the atmosphere for ongoing negotiation between both parties. The sources revealed that the authorities have ex-pressed serious concern over the National Accountability Bureau’s (NAB) decision to file a reference against Pakistani officials in the Reko Diq case.
Senior lawyers believe that NAB should be restrained from doing anything harmful to national interest. The ICSID has already rejected Pakistan’s allegation that former Balochistan chief minister Nawab Aslam Raisani was offered a bribe of US$1 million by the TCC in connection with Reko Diq mines in 2009. “The tribunal concludes that Respondent [Pakistan] has not established any of its individual allegations of cor-ruption that would be attrib-utable to the claimant [TCC].
"The tribunal has found no proven incident of the claimant (TCC) exercising, or attempting to exercise, improper influence on government officials aimed at obtaining rights or benefits relating to the claimant’s in-vestment in Pakistan,” said the ICSID’s 425-page judgment issued July 2019. In 2015, Pakistan had hired a new legal firm Allen & Overy LLP to plead its charges of corruption against the TCC.
In November 2017, the ICSID rejected Pakistan’s more than one dozen allegations.The tribunal also noted that the local expert group recommended in its briefing note of June 4, 2015, that the Balochistan government should write to NAB as to initiate an inquiry into corruption and corrupt practices in respect of Reko Diq. “Responsible governmental officials and TCC personnel should be brought to justice,” it said.
In line with this recommendation, the Balochistan government requested NAB to initiate an inquiry through a letter dated June 22, 2015, which NAB did by authorization of its chairman two days later .“Taking into account that NAB started to interview the seven individuals identified by the local group of experts as well as further individuals in July 2015 and obtained in the course of August and September 2015 so called Section 161 statements from the individuals that Pakistan presented as witnesses in this arbitration in which each of them confessed to having been directly involved in corruption.
“It is indeed remarkable that as far as the tribunal has been informed, NAB has to date not initiated a prosecution against any of these individuals. The tribunal also feels the need to record its concern as regards the timing and context in which the evidence was produced,” said the verdict.
It noted that NAB did not allow for an inspection of the diary outside Pakistan and then refused Pakistan’s own expert LaPorte to perform the very analysis for which he had been retained, ie, an ink-dating analysis, which could have positively proven that two of the relevant entries in the diary were made in 2015 rather than in 2008 and thus that the evidence would have been fabricated.
However, NAB on November 5 announced to file a reference against 26 people over abuse of authority in the Reko Diq project. It said the reference was the result of a thorough investigation into the 30-year record by the director general of NAB Operations and the director general of NAB Balochistan.
NAB also issued the names of 26 accused, nominated in the reference filed in an accountability court of Quetta.It included names of a former caretaker governor, former chief secretary, former senior officials of mines and minerals department, Balochistan Development Authority and Revenue Department and representatives of Australian mining companies.The legal experts said in the absence of solid evidence, NAB should not proceed into the matter.
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