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Appeal against hostile decisions

Minister for Power Omer Ayub has said the government will challenge the decisions of International Centre for Settlement of Investment Disputes (ICSID) in Reko Diq and Karkay cases against Pakistan. Earlier, in July, the ICSID slapped a whopping award of $5.976 billion against Pakistan on a plea of petitioner Tethyan Copper Company (TCC), which originally claimed $11.43bn in damages. The cash-strapped government is in no position to pay such a huge penalty. The government also cannot be blamed for spoiling the accord with TCC. The case was already in the court when Pakistan Tehreek-i-Insaf came in power. Another choice is securing an out-of-court settlement, for the TCC showed willingness to negotiate right after the verdict. Before going into the appeal, the authorities must try the idea of out-of-court negotiation. Another compensation award of $1.2 billion in the Karkay case is also looming. On another front, the London Court of International Arbitration has also slapped a Rs14 billion award against Pakistan on a plea of nine independent power producers.
Is going into appeal against these awards a sensible decision? Well, yes and no. The authorities need to do their homework before initiating a round of litigation, which is expensive and damaging, in case we emerge from the court as loser. On the other hand, awards are huge and Pakistan may not afford such a huge fine. The cost of defaulting on these awards is even more expensive as well as embarrassing. The minister himself is aware of the bitter fact that default on these payments results in seizure of national assets aboard. In this scenario, appeals may buy time for Pakistan, and in case of adverse decisions, there will be no bargaining chip left.
The minister is perhaps a man of out-of-court settlement. He presents a recently-done financial settlement of Rs 1.2 billion with Rousch (Pakistan) Power Limited. Again, the government inherited the dispute as their predecessors imposed damages on Rousch. Litigation is as bad for the corporate sector as a bad deal for the government. Recently, the government tried to kill many cases with one presidential ordinance in the notorious Gas Infrastructure Development Cess. The government was expecting a Rs220 billion cheque in the wake of the cess ordinance. The move backfired as the media dubbed it a loan waiver measure. Now, the government has passed the ball on to the Supreme Court. We have a history of spoiling financial matters whenever we entrust the judiciary with the corporate sector. Reko Diq and Karkay are glaring examples.



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