Roosevelt counsel opposes petition

Expects slim chances of success against arbitration award; govt seeks settlement

ISLAMABAD:

The legal counsel of Roosevelt Hotel has informed Pakistan's government that chances of success in filing a petition against the arbitration award are 1%, which is forcing Islamabad to look for an amicable settlement.

The counsel has delineated three options, which include accepting the arbitration award, which will cost $11 million and entail additional penalties of 15%.

Another option is to file a petition in the District Court, although the chances of success are 1% along with imposition of additional fee, if rejected. Third option is to negotiate a severance package with the workers' union of the hotel forthwith.

In a recent meeting, the Economic Coordination Committee (ECC) of the cabinet was informed that Roosevelt Hotel was reopened post-Covid-19 pandemic with approval of the ECC in May 2023 by entering into a Migrant Business Arrangement with the New York City, under which the hotel was leased out for three years with a guaranteed period of 18 months (including a four-month notice period).

However, after the change of government in the United States, the New York City terminated the Migrant Business Arrangement with Roosevelt Hotel with effect from June 30, 2025.

The Hotel Trade Council, referred to as the union, filed a grievance before the impartial chairperson/arbitrator, saying Roosevelt Hotel Corporation, a subsidiary of PIA Investments, had failed to reopen the hotel after termination of the contract. The impartial chairperson on September 15, 2025, after hearing both parties, directed the hotel to take an appropriate decision.

The case was accordingly referred to the ministry concerned through a summary sent to the prime minister. The ECC considered the summary on September 9, 2025 and the decision was taken that the ministry concerned or PIA Holding Company would provide the requisite information about Roosevelt Hotel and financials to the ECC.

The cabinet committee was informed that the workers' union communicated the decision of the arbitrator on November 14, 2025 after an emergency hearing was fixed for October 13, 2025. The impartial chairperson on November 19, 2025 gave an adverse award to Roosevelt Hotel Corporation, ordering that the laid-off employees be restored and returned to the payroll effective January 1, 2026. "This will result in an additional financial cost."

It was shared that PIA Holding Company, after rigorous deliberations, proposed a hybrid course of action that would entail the filing of an appeal in the District Court to vacate the arbitrator's award, while simultaneously starting negotiations with the workers' union for a settlement. "In case a settlement is reached, the case can be withdrawn."

In respect of the negotiations, it was necessary that the authorities concerned were on board in terms of parameters of negotiations, composition of the negotiating team and the financial commitment, for which the authorisation of the ECC was required.

The other option was to constitute a negotiating committee comprising representatives from the ministry concerned, the Ministry of Finance, PIA Holding Company and the Privatisation Commission. It was also proposed that a US-based legal counsel may be made part of the committee.

Views of the Attorney General of Pakistan and the Law and Justice Division were obtained, in accordance with Rule 18(4) and Rule 23(4) of the Rules of Business, 1973. The Ministry of Law and Justice communicated its endorsement of the proposal, with the advice to also seek views of the Attorney General of Pakistan and to ensure the engagement of a foreign legal counsel at a reasonable remuneration.

The Attorney General of Pakistan said PIA Investments Ltd and Roosevelt Hotel Corporation, being a corporate body with independent board of directors, may be requested to prepare detailed proposals regarding the negotiating stance on the settlement, severance packages and any other outstanding liabilities, and the way forward.

In the interest of an amicable settlement and to avoid acrimonious and costly litigation in a time-sensitive matter, the Attorney General Office suggested that negotiations, as proposed by the ministry concerned regarding the impartial chairperson's award, may be pursued.