Reko Diq Case and its aftermath – Eagle Eye – Daily Notable
By Dr. Attaulwadood
The United States District Court for the District of Columbia released the documentation filed on 9th of August 2019 by the Tethyan Copper Company (TCC). – as the Petitioner – against the Islamic Republic of Pakistan – as the Respondent.
The arbitral award was issued on 12th of July 2019 in ICSID Case No. ARB/12/1 for the Petitioner, Tethyan Copper Company, against the Respondent. The Islamic Republic of Pakistan, following the arbitration proceedings conducted by the ICSID Convention.
Accordance With Arbitral Award
In accordance with the arbitral award, this petition was brought which brings the action to enforce the Islamic Republic of Pakistan to pay the award of almost 6 billion USD. This petition, accordingly to the TCC requests, will bring the Court to “enter an order enforcing the Award in the same manner as a final judgment issued by a court of one of the several states, and enter judgment against Pakistan and in TCC’s favor in the amounts specified in the Award.”
Moreover The two parties in the petition include the Petitioner TCC – a company constituted and registered under the laws of Australia – and Respondent Pakistan – a foreign state within the meaning of the Foreign Sovereign Immunities Act (FSIA).
Petition Through Novation Agreement
According to the petition, through a 1st April 2006 novation agreement, TCC became a party to a joint venture agreement with the Government of Balochistan to explore potential copper and gold mining in Pakistan’s Balochistan province. In February 2011, TCC’s wholly-owned subsidiary, Tethyan Copper Company Pakistan, filed an application for a mining lease for the Reko Diq deposit in northwestern Balochistan for which in November 2011, Balochistan’s Licensing Authority rejected their application.
As TCC an Australian company, its investments protected by the bilateral investment treaty between Australia and Pakistan – the Australia-Pakistan Treaty. Moreover This treaty intended to promote investment relations and strengthen economic co-operation between Australia and Pakistan “in accordance with the internationally accepted principles of mutual respect for sovereignty, equality, mutual benefit, non-discrimination and mutual confidence.”
Moreover This Australia-Pakistan Treaty provides that if a dispute between an investor of one contracting state and the other contracting state “cannot be resolved through consultations and negotiations,” “either party to the dispute” may submit the dispute to the ICSID for arbitration under the ICSID Convention, provided that both Australia and Pakistan are parties to the ICSID Convention “at that time.”
Pakistan & Australia
Now, Pakistan and Australia are both parties to the ICSID Convention. And as a party to the ICSID Convention. Moreover Pakistan has consented to arbitrate disputes arising under the Australia-Pakistan Treaty pursuant to the ICSID Convention.
Moreover On 28th November 2011, TCC filed a request with ICSID for arbitration under the ICSID Convention for which ICSID registered the request on the 12th of January 2012 and notified the parties of the registration.
On 12th of July 2012, an ICSID arbitral tribunal named as the “Tribunal” constituted. and the Tribunal was reconstituted on 10th of September 2012. After one of the arbitrators resigned and thence was replaced.
Moreover The Tribunal conducted 32 days of hearing: from 6th of October through 17th . Of October 2014 – a .Hearing on Jurisdiction and Liability, in Paris, France. From 10th of October through 15th of October 2016 – a Hearing on Respondent’s Application to Dismiss the Claims, in Paris, France. Moreover Which continued in Hong Kong from 3rd of December to 10th of December 2016; and on 21st of February 2017 in Paris, France; and from 14th of May through 24th of May 2018 – a Hearing on Quantum in London, United Kingdom.
Tribunal Issued Its Decision Jurisdiction And Liability
On 10th of November 2017, the Tribunal issued its Decision Jurisdiction and Liability, a 371-page decision that incorporated by reference into the Award. In which it decided, among other things, that:
- The Tribunal had jurisdiction to hear the claims submitted to it by TCC.
- TCC’s claims were admissible.
- Pakistan had breached its obligations under the Australia-Pakistan Treaty by:
- Failing to accord fair and equitable treatment to TCC’s investments within Pakistan’s territory, in violation of Article 3 of the Australia-Pakistan Treaty.
- Effectively expropriating the value of TCC’s investment, in violation of Article 7 of the Australia-Pakistan Treaty.
- Impairing TCC’s use of its investment, in violation of Article 3 of the Australia-Pakistan Treaty.
- TCC entitled to compensated for all damages and losses resulting from Pakistan’s breaches of the Treaty. In an amount that to determined in a later phase of the arbitration proceeding.
In its Decision, the Tribunal found that Pakistan had—through the contractual and regulatory framework governing TCC’s investment. However And Pakistan’s own repeated assurances— created the legitimate expectation. That TCC would entitled to convert its exploration license into a mining lease. Subject only to compliance with routine government requirements. However. The Tribunal also noted that TCC had invested approximately 240 million USD. In its exploration work and completed a feasibility study on the initial mine development. Of the area in direct reliance on that legitimate expectation.
Tribunal Mining Lease Application
Moreover The Tribunal carefully considered TCC’s mining lease application and concluded that TCC had fulfilled all applicable requirements. And that Balochistan had rejected its application on pre-textual grounds with the motive of implementing its own mining project. And taking the value of TCC’s investment for itself. The Tribunal concluded that the denial of TCC’s mining lease application deprived TCC of the entire value. Of its investment and thus constituted an unlawful expropriation of TCC’s investment.
Moreover the same day, the Tribunal issued its 421-page Decision on Respondent’s Application to Dismiss the Claims. Which incorporated by reference into the Award, in which it considered and rejected Pakistan’s application to dismiss TCC’s claims.
Tribunal Rendered 622-Page Award
On 12th of July 2019. The Tribunal rendered the 622-page Award, in which it ordered the Islamic Republic of Pakistan to pay 4.087 billion USD. In compensation, together with pre-award interest from 15th November 2011. Until 12th July 2019 at a rate corresponding to the U.S. Prime Rate plus 1 percent, compounded annually.
However. In addition, the Award requires Pakistan to reimburse TCC 2,533,277.08 USD. For the costs of arbitration and 59,447,596.60 USD for TCC’s legal fees and other expenses. Moreover the Award further requires Pakistan to pay post-award interest at a rate corresponding to the U.S. Moreover Prime Rate plus 1 percent, compounded annually.Moreover And specifies that the amounts shall paid in US dollars. Without any reduction, claim or offset for taxes, other fiscal obligations or other reasons.
Moreover With accordance to these rules and regulations, this petition enforces the Arbitral Award on the Islamic Republic of Pakistan. (“Pakistan”) to pay the award of 6 billion USD to the Petitioner Tethyan Copper Company Pty Limited (“TCC”).
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