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September 25, 2017

Rs3.1 bn paid to law firms/lawyers in international litigations since 2013

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September 25, 2017

ISLAMABAD: Pakistan might have to pay a hefty fine worth Rs85 billion in the coming months. The country was slapped with this heavy fine of millions of dollars after it met embarrassing outcome in several international legal disputes and litigations.

The latest outcome came when the London Court of International Arbitration (LCIA) directed Islamabad to pay Rs11 billion claimed by the independent power producers (IPPs) by issuing a final partial award against Pakistan. The federal government has been heavily engaged in international arbitrations under public and private international laws where it has paid around Rs3.1 billion to several law firms/lawyers since 2013.

This correspondent in several background meetings with senior officials associated with international arbitrations learnt that Pakistan was paying millions of dollars to around a dozen law firms/lawyers to plead cases namely; Indian spy Kulbhushan Jadhav, Karkey Rental, Rekodiq mining, Kishanganga hydropower, Progas LPG, Hubco Power, Sapphhire Electric, Halmore Energy and this list goes on. But not a single victory could be achieved by the hired legal teams so far.

Another tribunal will also start proceedings in another case to determine the quantum of rest of damages claimed by nine companies of the IPPs for which a hearing is scheduled for next month, a cabinet member told The News. “Claims’ amount may go up after a new quantum stage set up,” he feared. The International Centre for Settlement of Investment Disputes (ICSIDs) awarded some $700 million to Karkey Karadeniz Elektrik Uretim after a Turkish filed damage suit against Pakistan. Current Foreign Minister Khawaja Asif approached the Supreme Court against the contract awarded by the previous government to Karkey. If it was not enough then Pakistan met another embarrassment when the International Court of Justice ruled against Pakistan by putting stay on execution of Indian spy Kulbhushan Jadhav. “Pakistan made a mistake in Jadhav case,” observed Justice (R) Shaiq Usmani. "It (Pakistan) has shot its own foot. It's Pakistan’s mistake to have appeared there. They shouldn't have attended (this proceedings),” Justice Usmani remarked.

Similarly, Islamabad and New Delhi failed to reach any agreement on the Indus Waters Treaty (IWT) last week. Both neighbours held talks on this issue in Washington DC where Islamabad apparently could not convince the arbiters about its objections against the designs of Ratle and Kishenganga hydroelectric power projects in Indian Held Kashmir (IHK).

“We need to settle with foreign investors in order to attract investments -- recent embarrassments at international forums are alarming for us,” admitted a cabinet member who did not want to be named. “The Supreme Court’s orders in Karkey were perhaps disregarded by international forums -- so the top court also needs to be careful in commercial matters, particularly in our international commitments,” he told this correspondent. Shedding light on reasons which led to this failure, he further said, “hesitation of various departments to develop a consensus to resolve the matter is responsible for this outcome -- government generally engaged good legal teams but the best legal teams cannot make up for lapses of their clients.” Ministries of Water and Power and Law and Justice did not offer their comment on this development by saying, “reports pertaining to international arbitrations are not factually incorrect. We are consulting our legal teams and will respond accordingly”. Zahid Hamid, Minister for Law and Justice, did not offer comment despite attempts by this correspondent.

Another senior official associated with the Ministry of Law and Justice was of the view that the government also did not avail its newly passed laws pertaining to ‘Mediation Act’ which provides this window of setting up a panel of retired judges to resolve such issues. In IPPs and Karkey and several other cases, he recalled, international investors have repeatedly been requesting for the settlement on win-win terms but traditional indemnity of civil servants remained a major stumbling block in way of avoiding current billions of rupees loses to national exchequer. The senior official, who is not authorised to speak to media, was of the view that civil servants have concerns that if they settle for lesser amount, later institutions like the National Accountability Bureau (NAB) will come after them -- therefore they hesitated and arbitration moved on resulting into adverse orders.

Ahmer Bilal Soofi, ex (caretaker) federal law minister, was of the view that it was necessary to contest all international cases fully once filed but there should be a strategy to avoid or resolve international litigation. “My experience is that in most of such cases international investor is keen to talk to someone in the government and finds a resolution even before filing claim. Officials remain reluctant to negotiate and settle for fear of subsequent NAB’s inquiry against them,” Ahmer Bilal Soofi, an authority on international laws, told this correspondent. He said further negotiation requires coordination and consensus of several ministries, provincial governments, Prime Minister Secretariat etc and that takes enough time and on the other hand arbitration processes moves on and final orders or awards get issued. “That weakens bargaining power of the government,” he said, adding, “It is important to recognise that all claimants are actually foreign investors and if we resolve and settle claims we encourage other foreign investors to invest in economic zones of Pakistan and that will also act as a positive balancing factor here.”

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