Virgin Islands court unfreezes PIA assets in Reko Diq case

The High Court of Justice in the British Virgin Islands (BVI) on Tuesday decided the Pakistan International Airlines would retain its two assets — Roosevelt Hotel in New York and Scribe Hotel in Central Paris — retracting its earlier order to attach these properties with the enforcement of Reko Diq penalty on the request of the Tethyan Copper Company (TCC).

BVI High Court’s Justice Gerhard Wallbank, while passing the order on December 10, 2020, had attached the assets belonging to the PIA Investment Limited, including the company’s interests in the two hotels.

“A short while ago, [the] judgment was announced by British Virgin Island High Court. Great legal victory for PIA and Pakistan,” read a statement issued by the Attorney General for Pakistan's (AGP) office. “The order was passed earlier on the request of TCC which was seeking enforcement of Reko Diq award,” it added.

“All orders passed against PIA earlier are now recalled by the Court. Receiver removed from Roosevelt hotel, NY and Scribe hotel, Paris. Cost of litigation also awarded.”

Prime Minister Imran Khan has appreciated the efforts of the international disputes unit and the office of the AGP.

Also read: Pakistan wins stay over $6 billion penalty in Reko Diq case

On November 20 last year, the TCC had sought attachment of assets for the enforcement of the $6 billion award that the International Centre for Settlement of Investment Disputes (ICSID) slapped on Pakistan on July 12, 2019, for revoking a mining contract in Reko Diq, Balochistan.

Despite the withdrawal of attachment orders by the BVI court, the $6 billion award against Pakistan stands intact.

The ICSID stayed the enforcement of the $6b penalty and on September 17 and issued a 70-page order which said the stay would continue on a conditional basis.

The arbitrator ordered Pakistan to provide an “unconditional and irrevocable” bank guarantee or the letter of credit for 25% of the award, plus accrued interest as of the date of the decision.

The guarantee or letter of credit was to come from a reputable international bank based outside of Pakistan, which was pledged in favour of the claimant -- the TCC -- and to be released on the order of the ICSID.

The ICSID also held that if Islamabad could not furnish the security and undertaking in 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 the accrued interest as of the date of the decision would be lifted.

However, Pakistan missed the deadline and did not deposit 25% bank guarantee.