Govt mulls legal means to challenge ICSID’s award

LAHORE: Government is mulling legal ways to deal with $800 million award by a World Bank’s dispute settlement arm in a damage suit filed against Pakistan by a Turkish rental power company, sources said on Thursday.     

“Government of Pakistan is examining the award from all aspects, including availing all legal remedies under the international arbitration laws,” a well-placed source said. The source said the proceedings were conducted between March 2013 to March 2016, while the award was announced on August 22, 2017. 

“Therefore, the impression of hiding the award for a long duration is baseless,” he added.  In August, International Centre for Settlement of Investment Disputes (ICSID)
of the World Bank awarded $800 million, including interest, in penalty on Pakistan in a damage suit filed by Karkey Karadeniz Elektrik Üretim A, a subsidiary of Karadeniz Holding.

Karkey resorted to the ICSID in 2013 after the Supreme Court scrapped the $560 million contract awarded to Turkish power generation ship and ordered investigation into an alleged non-compliance with standards and procedures in the contract awarded the Pakistan Peoples Party-led government in 2009. 

A Karkey’s spokesman said the ICSID Tribunal’s decision vindicated its legitimate claims against Pakistan for its breaches of the bilateral investment treaty, including but not limited to the violation of free movement of investment and unlawful expropriation of various rights and assets of Karkey.

“Karkey encountered unjust and unlawful claims in Pakistan since 2012,” the spokesman added. “Pakistan’s internal political and administrative uncertainties and conflicts have resulted in great harm to international investors including Karkey.” 

Such adverse impact will be minimised if Pakistan’s honours its international law commitment and ensures due, faithful and timely compliance with the ICSID-World Bank Tribunal’s award of 22 August 2017.

The spokesman said Karkey continues to grow its business around the globe adhering to the values that “our company has been preserving with pride throughout its 70-year history, while maintaining the highest ethical, commercial and technical standards.”

The ICSID declared that it had jurisdiction over the claims that were brought by Karkey.  “Pakistan violated its obligations under the Turkish-Pakistan bilateral investment treaty, by expropriating Karkey’s investments in Pakistan, as well as by restricting Karkey’s right to free transfer of its investment,” it said.

Conversely, the tribunal rejected all of the claims and defenses asserted by Pakistan. Earlier in 2014, the ICSID Tribunal had issued a provisional measures decision in which it ordered Pakistan to immediately release the Karadeniz Powership Kaya Bey, which had been unlawfully detained by Pakistan.