Supreme Court says Reko Diq agreement is legal

In a major development that will boost foreign investors’ confidence in Pakistan, the Supreme Court on Friday declared the government’s agreement with the Canadian company Barrick Gold Corporation for developing the Reko Diq mines in Balochistan legal.

Moreover, the verdict will also enhance Pakistan credibility on world stage, which has been damaged thanks to political and economic uncertainty, inconsistent policies and judicial interventions.

The move comes as the country’s top court announced a unanimous verdict on a presidential reference which sought the opinion on the deal.

In a 13-page judgment reserved a week ago and announced by Chief Justice Umar Ata Bandial on Friday, the court said the constitution did not allow legislation against national assets and the provinces could make changes in the laws related to minerals.

“There is nothing illegal in the new agreement,” the order read and added that the deal was neither against the apex court’s 2013 verdict nor the environment.

The court also noted that the experts had informed that the agreement was inked between the federal and provincial governments. However, once the Balochistan Assembly was taken into confidence they backed the deal.

“As per the Riko Diq agreement, most workers will be Pakistanis. This is not for a single person but for Pakistan. There is nothing illegal in this agreement,” said the court.

The court stated that Barrick Gold Corporation had promised to implement labour laws and fulfil social responsibility.

“The foreign investment bill is not exclusively for Barrick Gold. The foreign investment bill is for companies that will invest more than $500 million dollars,” said the court.

The agreement

Earlier in March, Imran Khan, the then prime minister, had announced the successful agreement with the Canadian firm for the development of Reko Diq, saying it will create 8,000 new jobs.

In a separate statement, Barrick Gold Corporation confirmed that they had reached an agreement with the federal and Balochistan governments on a “framework that provides for the reconstitution of the Reko Diq project”.

According to the mining company, Barrick “will be the operator of the project which will be granted a mining lease, exploration licence, surface rights and a mineral agreement stabilising the fiscal regime applicable to the project for a specified period”.

“The process to finalise and approve definitive agreements, including the stabilisation of the fiscal regime pursuant to the mineral agreement, will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan.”

“If the definitive agreements are executed and the conditions to closing are satisfied, the project will be reconstituted including the resolution of the damages originally awarded by the International Centre for the Settlement of Investment Disputes and disputed in the International Chamber of Commerce,” said the statement.

Later, the then finance minister Shaukat Tarin shared details of the agreement and said Barrick Gold would retain 50 percent of the shares while the rest of the shares will be divided between the federal and Balochistan governments.

The federal government’s 25 percent share would be divided between the state-owned enterprises Oil and Gas Development Company (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Pakistan (GHPL).

Presidential reference

In October, President Dr Arif Alvi, on the advice of Prime Minister Shehbaz Sharif, filed a reference in the Supreme Court, seeking its input on the deal.

The president had asked two legal questions in reference: (1) whether the Government of Balochistan or Government of Pakistan can enter into an international agreement as per Supreme Court’s judgment, in Molvi Abdul Haq vs Federation of Pakistan 2013 Case, and (2) if the proposed Foreign Investment (Protection and Promotion) Act 2022 would accord to the constitution?

Molvi Abdul Haq

Today’s Reko Diq Project Agreement was earlier called Chaghai Hill Exploration Joint Venture Agreement (CHEJVA).

Barrick Gold and Antofagasta Company sought a mining lease extension from the Mines and Mineral Development Department of Balochistan for their exploration in 2011.

The department rejected their request following which the two companies entered into litigation against the governments of Pakistan and Balochistan at two separate international forums on the basis of $240 million spent by them on exploration.

Pakistan faced a suit for specific performance in the extension of lease in the International Center for Settlement of Investment Disputes (ICSID) while the Balochistan government had to face a case in the International Court of Arbitration (ICC). The ICSID decided the matter against Pakistan, fulfilling all demands of the investor’s companies.

The Supreme Court on January 7, 2013, declared the CHEJVA as illegal, null and void, saying there were severe violations of basic legal requirements and a lack of due diligence in the Reko Diq Project.

The investor companies again filed a lawsuit against Pakistan with the ICSID whose tribunal, in 2019, announced a $6.927 billion award against Pakistan for violation of the agreement. It also ruled against Pakistan but the award is yet to be announced. Legal Experts are of the view that the award against Pakistan would be around $3 billion.

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