The Tethyan Copper Company (TCC) has filed an appeal against the verdict of a British Virgin Islands (BVI) court that allowed Pakistan to retain its assets — Roosevelt Hotel in New York and the Scribe Hotel in Central Paris owned by the Pakistan International Airlines (PIA) Investment Limited.
Last week, the court withdrew its earlier orders to freeze the offshore assets of PIA as a settlement in the Reko Diq case. It had also imposed a 50,000 penalty on the TCC.
The TCC approached in November last the High Court of Justice for enforcement of the $6 billion award in the Reko Diq mining case and on December 16, the court, through an ex parte order, had attached PIA’s assets that included Roosevelt Hotel in New York, Scribe Hotel in Paris, and froze 40 percent interest in Minhal Incorporation.
In July 2019, the International Center for Settlement of Investment Disputes (ICSID) slapped a massive $5.976 billion fine against Pakistan for revoking TCC’s mining contract at Reko Diq in Balochistan.
Former chief justice of Pakistan Iftikhar Muhammad Chaudhry’s verdict in the Reko Diq case had set off the series of events that led to the ICSID decision after nearly seven years of litigation.
In September 2020, Pakistan won a stay on the enforcement of the award and ICSID said the stay shall continue on a conditional basis. The arbitrator directed Pakistan to provide an “unconditional and irrevocable” bank guarantee or the letter of credit (LC) for 25 percent of the award, plus accrued interest as of the date of the decision.
Pakistan, however, missed the deadline and did not deposit a 25 percent bank guarantee.
REKO DIQ DISPUTE: TCC is a joint venture of Barrick Gold Corporation of Australia and Antofagasta PLC of Chile. The Reko Diq district in the southwest of Balochistan is famed for its mineral wealth, including gold and copper.
The ICSID tribunal had taken up the dispute between Pakistan and the TCC after the latter claimed $8.5bn when the mining authority of Balochistan rejected its application for a multi-million dollar mining lease in the province in 2011.
According to details available on Tethyan’s website, the Reko Diq Mining Project was to build and operate a world class copper-gold open-pit mine at a cost of about $3.3 billion. An agreement signed in 1998 with the Balochistan government entitled it to the mining lease, subject only to routine government requirements.
However, the project stalled in November 2011 after its application was rejected by the government. Pakistani officials say the mining lease was terminated by the government because it was secured in a non-transparent manner.
By then, the company had invested $220 million in Reko Diq. The mining company sought help from the World Bank arbitration tribunal in 2012, and it ruled against Pakistan in 2017, rejecting an earlier decision by the Supreme Court of Pakistan.
The tribunal then opted to use a formula for calculating damages for the cancelled lease based on the assumed profits Tethyan might have earned from the mine over 56 years. In July 2019, the tribunal slapped a $5.97 billion fine against Pakistan for denying the mining lease to the company.
The fine, including the damages award and interest, is equal to about two per cent of Pakistan’s GDP.
Immediately thereafter, the TCC had commenced proceedings for enforcement of the award. In November 2019, Pakistan had challenged the award and initiated proceedings seeking its annulment.
In March 2020, the AGP office announced that it had filed a request on November 8, 2019, for the annulment of the award by the ICSID on July 12, 2019.
Alongside the plea for annulment, Pakistan had also requested a provisional stay on the enforcement of the award issued against the country on November 18, 2019.
Pakistan was granted the provisional stay upon initiating annulment proceedings after which a hearing to confirm the stay order took place over ‘video link’ in April last year. On September 16, 2020, the tribunal finally ruled in favour of Pakistan, confirming the stay on the enforcement of the award.
However, on November 20, 2020, the company moved a separate case in the BVI High Court for the enforcement of the award which included attachment of the assets belonging to Pakistan International Airlines Investment Ltd, a final decision on which came out today in Pakistan’s favour.