Reko Diq project settlement pact ‘legal’: SC

Court says the agreement doesn’t violate its 2013 verdict

Our Correspondent December 09, 2022
Police officers walk past the Supreme Court of Pakistan building, in Islamabad, Pakistan April 6, 2022. REUTERS/Akhtar Soomro


The Supreme Court on Friday declared that the settlement agreement between the Pakistani government and two international companies, Antofagasta and Barrick Gold Corporation, for the revival of the Reko Diq mining project was legal.

Chief Justice of Pakistan Umar Ata Bandial announced the 13-page short order after a five-judge larger bench of the apex court reserved its decision on November 29 in the presidential reference on the matter.

The settlement agreement was signed in March and the presidential reference sought the SC’s opinion on whether or not its 2013 verdict prevented the Centre and provincial governments from entering into the implementation pact again.

The SC observed in its order that in the settlement deal, there was no violation of the apex court's 2013 judgment, which had declared the first agreement as void.

The SC added that the federal and provincial governments had signed the agreement with expert opinion and that the Balochistan Assembly was taken into confidence as well.

It also stated that elected public representatives had not objected to the agreement either.

According to the order, the mining firm had assured that labour laws would be enforced and ensured corporate social responsibility.

“The process for the reconstitution of the Reko Diq project has been undertaken transparently and with due diligence. The agreements are being signed by authorities duly authorised and competent to do so under the law,” the order, authored by Justice Ijazul Ahsan, read.

The court noted that expert advice on financial, technical and legal issues was sought from local and independent international consultants to ensure transparency and fairness in the project.

The SC added that the agreements under which the terms for consultancy were settled were also formulated after “due deliberation” and had not been found by the court to be “unconstitutional or illegal”.

The order further stated that the proposed Foreign Investment (Protection and Promotion) Bill, 2022 and any changes in it would not violate the Constitution or the law, provided that the relevant resolutions were passed by the Sindh and Balochistan assemblies and by the National Assembly after following due process.

“We also note that the proposed [bill] will not only pave the way for the implementation of the Reko Diq project in its present form but will also facilitate and encourage direct foreign investment in similar mining projects and other high capital-intensive industries in which direct foreign investment is required to be encouraged through guarantees assured by laws and regulatory measures,” it read.

It added that the bill was not rendered “person-specific” just because the Reko Diq project was the first to be identified as a “qualified investment” under its terms.

The SC noted that while it was a settled law that disposal of public assets through a competitive process was the ordinary rule, it was not an invariable one.

Read Reko Diq accord can help quash '$9b penalty'

The order further read that the Constitution did not forbid the disposal of public assets other than through a competitive process as long as the alternative process had legal support and was rationally justified, pointing out that these conditions were met in the Reko Diq project.

The SC observed that provincial assemblies alone had the exclusive legal competence to deal with mines and mineral development, therefore, they were “competent to alter, amend or repeal any existing law” in connection with these areas.

The court added that the Balochistan cabinet had approved the decision to enter the project agreement and an apex committee headed by the prime minister and involving relevant stakeholders had negotiated the pact's terms.

“Prima facie, the agreements cannot be faulted for lack of due diligence on the part of State authorities,” the order read.

“We have also been informed that the provincial assembly of Balochistan was given a detailed in-camera briefing and was taken into confidence regarding the entire project and the terms and conditions of the proposed settlement between the parties were accepted without any objections being raised,” it added.

The court observed that it also had been assured that the agreements contained no exemptions from environmental laws and required Barrick Gold to act in accordance with both international environmental standards and domestic laws.

The order also read the court was informed that the exemptions granted under the proposed Foreign Investment (Protection and Promotion) Bill, 2022 were already available through other ways.

“Further, the exemptions being granted from the operation of labour laws do not denude the labour force of their rightful entitlement to fair wages, allowances and guarantees/benefits provided by law,” it added.

The court also observed that it was also assured about Barrick contributing towards corporate social responsibility by dedicating a portion of its returns towards the provision of fresh drinking water, health facilities, schools and local infrastructure to native residents.

“In addition, most of the labour force will be employed from amongst the local population of the province. In addition, programmes for the development of skills will also be put in place” the order stated.

Through the presidential reference, the government had sought opinions on two questions.

First, was the deal with the complainant company Tethyan Copper Company (TCC), compliant with the apex court’s earlier judgment in the Maulvi Abdul Haq case.

In July 2019, the International Centre for Settlement of Investment Disputes (ICSID) Tribunal ruled in favour of TCC, ordering Pakistan to pay a hefty fine of $5.9 billion.

Secondly, is the proposed Investment Protection Act compliant with the Constitution? The president inquired that if enacted, would the proposed bill be valid and constitutional or not.

However, one member of the bench, Justice Yahya Afridi, did not respond to the first question wherein it was asked as whether or not the public policy or Constitution prevented the Centre and the Balochistan government from entering into implementation and definitive agreements.

Balochistan Chief Minister Mir Abdul Quddus Bizenjo tweeted that the verdict was an acknowledgement of the provincial government’s “determination and efforts for the economic independence of the province and protection of its resources”.

In a related development, the Sindh Assembly passed two resolutions in connection with the Reqo Diq project, while setting aside all matters on the agenda of the legislature.

The resolutions, which were presented by MPA Mukesh Chawla, stressed the need for the Centre to create an international investor-friendly environment in Sindh as well as the protection of labourers' rights.

(With input from our correspondent in Karachi and agencies)


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