Govt should keep global laws in mind: SC

CJP warns country may face arbitration in Reko Diq issue

Our Correspondent November 24, 2022
Empty trailers for housing workers at the site of the gold and copper mine exploration project of Tethyan Copper Company (TCC) are seen in this undated photo in Reko Diq, in Balochistan, Pakistan. PHOTO: REUTERS


Chief Justice of Pakistan Umar Ata Bandial on Wednesday observed in the Reko Diq case that in order to avoid any future dispute the government should make decisions keeping in mind the international conventions, adding otherwise the company, Barrick Gold, would go for arbitration again.

The hearing of a presidential reference on the Reko Diq project resumed in the Supreme Court by a five-judge larger bench headed by the CJP.

During the proceedings, Makhdoom Ali Khan, the lawyer representing Barrick Gold, told the court that 85% of the goods from Reko Diq project would be paid as soon as they reached the port.

He added that the remaining 15% would be paid according to the market rate and quality upon reaching the destination.

If any minerals other than copper and gold were recovered from the project, the procedure was specified in the contract.

The lawyer further told the court that it was unlikely that any other mineral other than gold and copper would be recovered from the site.

However, he added that if any rare mineral came out of the project, the government would buy it at the market rate.

If any strategic minerals including uranium and platinum would be recovered from Reko Diq, then they would be handed over to Pakistan free of charge.

The lawyer further told the SC that if land was acquired for the project, the payment would be made by the company while the government would provide the facility.

He added that the construction and repair of central highways would be carried out by the government.

The construction of the road from Nokundi to the project would be the responsibility of the company.

The lawyer said Barrick Gold would spend $240 million on feasibility studies.

The highways would be used not only for the project but also by the general public.

The provision of security at the border and in the province as well as the district would be the responsibility of the government.

The security within the project would be the responsibility of the company.

The lawyer further told the court that Barrick Gold would lay a 680-km long underground pipeline from Reko Diq to Gwadar.

On arrival at the port, the minerals would be separated from water and sent abroad for refining.

The lawyer added that 1% of the construction of the project while 0.4% of the annual income would be spent on social partnership.

Around 7,500 jobs would be created on the construction of the project and 4,000 when it became operational.

The lawyer said the company wanted to make the project fully transparent and in compliance with the law.

He added that if the government terminated any concession, it would do so openly through a public notice and not in secret.

Justice Munib Akhtar inquired that if 50% of the shares in the project belonged to Pakistan, would a dispute affect the country as well.

The CJP observed whatever the government should do, it should keep international laws in mind. Otherwise, he warned that the company would again move the international arbitration forum.

“There is a big difference between the judicial systems of Pakistan and the international one,” he noted.

“The improvement of Pakistan’s judicial system is a big challenge for us,” the CJP added.

The top judge remarked that foreign investors should also have confidence in Pakistan’s justice system.

“Many steps have been taken to improve Pakistan’s judicial system and the results will be visible after some time,” he added.

The lawyer for Barrick Gold told the court that several countries had appointed legal advisers at their ministries of foreign affairs to resolve investor disputes.

He maintained that transparency had been ensured in the current agreement to avoid any misunderstanding.

“There will be no compromise on the supremacy of the Pakistani government and parliament in the agreement,” he added.

However, he said if the government or parliament wanted to withdraw any concession in the contract, it would have to make it public.

“A section officer cannot withdraw a concession by issuing a notification,” he added.

However, he warned that the foreign company would reserve the right to approach an international arbitration court on the withdrawal of any concession.

The CJP noted that arbitration on an international level was very expensive.

The lawyer replied that the pact had been reached after talks that lasted for 3.5 years and after that he concluded his arguments.

The additional attorney general (AAG) moved on to the next question in the reference -- the one related to the conflict of fundamental rights of the Foreign Investment Bill, 2022 as in could the provinces amend a law made by the federation under Article 144 of the Constitution. The purpose of the Reko Diq agreement was to attract heavy investment to the country from abroad.

Justice Yahya Khan Afridi inquired why did the government want the approval of the proposed legislation from the court.

The AAG replied that the court should clarify whether or not parliament had the authority to legislate for the protection of foreign investment.

He added that the Foreign Investment Bill, 2022 would apply to all future investments.

The CJP noted that the government had also passed the Economic Security Bill 1992, which was not challenged in the courts.

“Why has the government come to the court to address its concerns this time?” he asked.

Justice Ijazul Hassan inquired why the Reko Diq project could not be given an exemption under the current law.

The AAG replied that foreign direct investment in Pakistan was $280 million till last year.

However, he added that the Reko Diq project would bring in an investment of billions of dollars to the country.

The AAG further told the court that the government was bringing all foreign qualified investments into a one-window operation through legislation.

The CJP inquired why were disputes related to investment brought to the courts.

He directed that a mechanism should be chalked out to resolve all disputes related to investment out of court.

“The biggest problem in Pakistan is the lack of business documentation. The country has increased international debt without producing the necessary resources,” he noted.

The top judge observed that the Financial Action Task Force (FATF) had also stressed the need for transparent transactions.

He added that if no limit was set on foreign investment, the proposed legislation would open a new Pandora’s box.

The hearing of the reference was adjourned till Thursday (today).


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