Attorney General of Pakistan Consulted for Controversy Around SCO License

Ministry of Information Technology and Telecommunication has sought the Attorney General of Pakistan’s opinion on the matter pertaining to the Special Communication Organization (SCO).

This was after the Law and Justice Division declared that in light of Competition Act 2010, SCO had the right to be awarded a license for operating across the country.

Senate Sub-Committee on Delegated Legislation was briefed regarding the enhancement of the area of SCO operations.

The meeting was convened by Senator Advocate Muhammad Daud Khan Achkazai and was attended by Senator Kalsoom Parveen and officials from M/o IT & Telecommunications and Law Division.

The Ministry of IT & Telecommunication has requested to get the opinion of the Attorney General on the matter as it involves international commitments and stakes of the entire telecom sector.

The matter was deferred till the next meeting when the opinion of the Attorney General is received.

Convener of the Committee directed that steps shall be taken to obtain the opinion of the AG at the earliest.

IT&T Ministry has disputed the Law Division’s opinion saying that it would be in violation of the shareholder agreement with Etisalat and the Government of Pakistan, with serious consequences for their finances as well as for the overall telecom sector.

The matter has now been referred to Attorney General of Pakistan for seeking his view. In case, his view conflicts with the Ministry of IT&T, the matter would be sent to the Prime Minister who would take it to the Cabinet.

The amendments proposed by the SCO to enhance operations throughout Pakistan were disagreed upon by Ministry of IT as being against the stated policy of the government, international commitments and other commercial agreements in the telecom regime.

Ministry of Law and Justice’s official said that under section 39 of the Pakistan Telecommunication (Re-organization) Act 1996, a licence to PTCL was issued by the Pakistan Telecommunication Authority (PTA) in order to provide telecom services within Pakistan excluding Northern Areas and Azad Jammu & Kashmir, for a period of twenty five years. In terms of section 39 (3) exclusive rights of PTCL to provide telecom services within Pakistan was for a period of seven years.

Under section 40 of the Act ibid, SCO was issued a licence to operate and provide telecom services within Northern Areas and Azad Jammu.

It is important to point out that Section 40 of the Act in fact reiterates and reinforces SCO’s right to operate in the Northern Areas and Azad Jammu & Kashmir, to the exclusion of all other operators. However, the said provision cannot be interpreted as imposing a bar upon SCO to operate in Pakistan.

Ministry of IT is of the view that an LDI licence for SCO to operate within Pakistan cannot be granted in light of the agreement. Clause 10.2 of the agreement reads as follows:

GoP covenants with the investor that it shall not be concerned directly with any business in Pakistan which is competitive with or likely to be competitive with the business then carried on by the company provided that this restriction shall not apply to National Telecommunication Cooperation ration or Special Communications Organization to the extent of the business carried on by those businesses at the date of this Agreement.

The agreement containing clause 10.2 was executed when SCO was already in existence operating. Hence, parties were fully aware of the matter and there exists no specific provision or mention in the Share Purchase Agreement that SCO shall not be granted any license for any category of service or technology leading to provision of telecommunication services.

Furthermore, the restrictive covenant in Clause 10.2 of the Shareholders Agreement, unless exempted under Section 5 of the Act cannot bar SCO from seeking and being granted a LDl licence for Pakistan.

Moreover, Clause 10.2 is in conflict with section 3 of the Competition Act, 2010. It is important to point out that the agreement itself contains a provision that it shall be governed by the laws of Pakistan. Clause 29 of agreement reads as follows: “This Agreement is governed by the laws of the Islamic Republic of Pakistan”

Hence, any provision of the agreement which is not in conformity with the laws of Pakistan or in conflict with any provision of the enactment would be treated as invalid. Act of 1996 is the binding authority on the issue. Any subsequent contractual obligation which is governed by the laws of Pakistan shall be in accordance with the aforesaid Act.

The Act of 1996 has given absolute power to PTA to grant licences. As PTA is an autonomous body, it should also examine the issue and refer the case to Ministry of IT. As per the note of Ministry of Information Technology referred to this Division, no referral has been made to PTA.