It’s not over yet for Reko Diq project success
PHOTO: FILE
Although the federal government has received a favourable opinion from the Supreme Court on the settlement agreement for the Reko Diq project, more measures are required before the signing of the pact between Pakistan and Barrick Gold before the December 15 deadline.
The Sindh Assembly has already passed two resolutions in favour of the proposed agreements. Now after the Balochistan Assembly also passes a similar resolution, the National Assembly will pass the Foreign Investment (Protection and Promotion) Bill, 2022.
These steps will need to be taken before December 15.
In case the settlement agreement is not signed before December 15, the country will have to pay $4 million per day as interest on the $5.9 billion penalty imposed by the International Centre for Settlement of Investment Disputes (ICSID) on July 12, 2019. Similarly, Pakistan will also have to pay $100 million to the other complainant company, Antofagasta.
Senior lawyers wondered that when both parties had agreed to an out-of-court settlement in the month of March, then why did the government delay in initiating the steps to meet the pre-conditions before the formal agreement.
Three days before the hearing, Additional Attorney General (AAG) Amir Rehman was assigned to argue the presidential reference.
Despite the shortage of time, he performed exceptionally well.
Read more: Reko Diq deal wins SC’s seal of approval
The presidential reference remained pending in the apex court for a couple of months.
More than a dozen hearings were conducted.
However, lawmakers only have a couple of days to debate on the proposed bill in the National and provincial assemblies.
Former additional attorney general Tariq Mahmood Khokhar said the SC short order was a direct consequence of the dire circumstances it had created in 2013.
“A constitutional institution, exercising plenary jurisdiction and powers, was overruled and refused impunity by a mere tribunal,” he added.
The ex-additional attorney general elaborated that it was a basic tenet of international law that it was superior to State law.
“Hence, no institution, including the Supreme Court, Constitution or law constitutes a valid defence for failure to exercise State obligations under international law,” he explained.
Another lawyer said the time had come that the SC judges should admit their errors, which caused losses worth billions of dollars to the public exchequer.
The apex court in its order noted that the International Chamber of Commerce (ICC) proceedings had also matured to a point of decision on liability and quantum with a likely award -- as per the advice of global legal and financial consultants of the Pakistani government – of around $2 to 3 billion expected in favour of the TCCA.
Read Reko Diq accord can help quash '$9b penalty'
“As a result, in addition to the actual determined liability of $5.9 billion plus interest (on the basis of the ICSID Award), another $2 to 3 billion award is in the pipeline to be paid to Barrick and Antofagasta by the GoP [government of Pakistan] and GoB [government of Balochistan],” the order read.
“We have been informed that as part of the settlement, the parties have agreed that Antofagasta shall be paid an amount of $900 million, which has since been deposited in an Escrow Account by the GoP,” the SC further noted.
“Upon [the] fulfillment of the conditions precedent on or before December 15, 2022 Antofagasta shall be entitled to the amount in the Escrow account. On receipt of the said amount any and all rights of Antofagasta under the ICSID award, the ICC proceedings and any and all claims of Antofagasta against GoP/GoB directly or indirectly arising out of or having any nexus or connection with the Reko Diq project shall stand finally and conclusively extinguished with no further claims either against Barrick or GoP/GoB,” it added.
The judgment noted that following the restructuring of the Reko Diq project, Antofagasta would be paid $900 million plus the accrued interest by the Pakistani government and exit the scheme by transferring its entire interest in the TCCA to Barrick Gold.
“The GoP, GoB and both Barrick and Antofagasta have agreed that all the disputes that have arisen from the Reko Diq project which are the subject matter of litigation/arbitration award(s) anywhere in the world shall finally and conclusively stand resolved as soon as the agreements which have been placed on record and the conditions precedent mentioned therein are met on or before December 15, 2022, and any or all claims including the outstanding ICSID award and the anticipated ICC award shall stand settled without any further claim of any nature from either side. One of the conditions precedent for finalisation of the proposed settlement is the president of Pakistan seeking an opinion from this court on the points noted in the implementation agreement,” the order read.
Advocate Hafiz Ahsaan Ahmad Khokhar said the present judgment of the SC would not only pave the way for implementation of the Reko Diq project in its present form, but also facilitate and encourage direct foreign investment in similar mining projects and other high capital intensive industries in which direct foreign investment was required to be encouraged through guarantees assured by laws and regulatory measures.
He added that the verdict would also increase the confidence of overseas investors over the country’s judicial system that was important for foreign direct investment and its allied matters in Pakistan in the future.
The senior lawyer noted that it was now high time that the country’s assemblies and policymakers should revisit all existing commercial laws and simultaneously introduce new legislation without any further delay especially relating to foreign direct investment and financial dispute matters by adopting best global practices to would avoid such heavy contract defaults and penalties before international forums.