International Centre for Settlement of Investment Disputes’ (ICSID) recently published a 700-page ruling against Pakistan, saying that the country owes $5.976 billion to Tethyan Copper Company (TCC) over a dispute for the Reko Diq mine in Balochistan.
Considering the financial crisis that Pakistan is facing right now, this news has had quite an impact on the government.
An internal review will be undertaken by the Pakistani government to review the verdict by the ICSID between the State and Tethyan Copper Company (TCC) and a body will be made to determine who was responsible for the problem that may cost Pakistan $5.976 billion.
Although complete information about the case is yet to be uncovered, ICSID has announced a $4.08 billion penalty and $1.87 billion in interest.
Attorney General’s Official Statement
The office of the Attorney General of Pakistan issued a press statement on July 13th (Saturday) on ICSID’s ruling. It says that Pakistan is “disappointed” with the verdict and the Prime Minister has ordered that a committee should be formed to,
…investigate reasons as to how Pakistan ended up in this predicament, who [was] responsible for making the country suffer such a loss and what are the lessons learned, so that mistakes made are not repeated in the future.
It further stated that all parties, including the Balochistan government, are exploring the legal and financial repercussions of the verdict and “will take a position” on the matter after considering all aspects.
The statement said,
For now, the government of Pakistan reserves its right to pursue any and all legal remedies available to it under the ICSID regime, international law, and all other relevant laws to safeguard its interests.
It also mentioned a statement by William Hayes, Board Chairman of TCC saying that the company is willing to work with the government in order to reach a settlement and that he “welcomed this approach to work towards a mutually beneficial solution that works for both sides”.
Hayes said that TCC is still “willing to strike a deal with Pakistan,” but added that “it would continue protecting its commercial and legal interests until the dispute was over.”
If you’re wondering what this is all about, here’s all you need to know about the Reko Diq case.
Where is Reko Diq?
Reko Diq, meaning Sandy Peak in Balochi, is a small town in Balochistan’s Chagai district and is believed to have the world’s 5th largest gold reserves and substantial copper deposits.
Background of the Reko Diq Case
An extensive technical and financial study was conducted at Reko Diq by TCC, which determined that a large scale, state-of-the-art mining, and processing unit was required at the mine.
In this regard, TCC made a feasibility report for creating a base for mine development in the area in August 2010. On February 2011, the company submitted a mining lease application along with an environmental and social impact assessment report to the local government.
The development on the project was halted in late 2011 when the Balochistan government abruptly vetoed the tender by TCC’s local operating company for a mining lease at Reko Diq.
Later, a three-member bench of the Supreme Court, led by former Chief Justice Iftikhar Muhammad Chaudhry, confirmed that the Reko Diq lease agreement was null and void and gave a verdict in favor of Balochistan government. The judgment said that the arrangement through which TCC had been awarded the contract, has been canceled.
According to Reuters, over $220 million had been invested by TCC by the time Pakistan government backtracked on the lease out-of-the-blue.
Thus, TCC filed a case against the country on 12th January 2012 and a tribunal was formed on 12th July 2012 by the ICSID –the case went on for 7 years and the ICSID ruled it against Pakistan in 2017, but they didn’t decide on a penalty back then.
Note that this is just one side of the story, other facts, and information about the case will be uncovered by the government body that will investigate the case.