The International Center for Settlement of Investment Disputes (ICSID) has placed certain conditions while granting a stay on the enforcement of the $6 billion penalty imposed on Pakistan for its decision to deny a mining lease for the Reko Diq project to Australia's Tethyan Copper Company (TCC).
Sources told that one of the conditions was to submit an irrevocable bank guarantee for 25% of the total amount of penalty from a reputable international bank based outside of Pakistan.
However, a senior government official said the tribunal placed such conditions in every matter wherein a stay was granted on the enforcement of an award.
He maintained that state functionaries had already evolved a plan to deal with the situation
“Pakistani officials and the complainant company TCC had met in London in October last year and agreed to continue negotiations for an out-of-court settlement,” he explained.
“Both sides are still engaged in talks and a deal might be reached in the next three or four months.”
A senior lawyer, who is an expert in international law, believes that Pakistan would have to provide the bank guarantee of 25% of the penalty that came to around $1.02 billion.
“The stay order improves Pakistan's negotiating position and defers any adverse economic impact arising from this arbitration,” Barrister Taimur Malik said.
“It is a good development from our perspective. This also implies that the annulment proceedings are being considered seriously by the ICSID panel and that Pakistan has a viable case for annulment, he added.
In July last year, an international arbitration tribunal of the ICSID had slapped a penalty of $6 billion on Pakistan for its 2011 decision to deny the mining lease to the TCC — a 50-50 joint venture of Barrick Gold Corporation of Australia and Antofagasta PLC of Chile.
The tribunal – chaired by Germany's Klaus Sachs and including Bulgarian arbitrator Stanimir Alexandrov and the UK's Lord Hoffmann had ordered Pakistan to pay over $4 billion in damages to the TCC in addition to $1.7 billion in pre-award interest.
The tribunal found that Pakistan had unlawfully denied the TCC a lease to mine copper and gold deposits at the Reko Diq mine, located in Chagai district of Balochistan. It held that the state had committed an unlawful expropriation under the Australia-Pakistan bilateral investment treaty.
Later, the TCC approached five different countries courts for the enforcement of the penalty imposed on Pakistan.
In November, Pakistan moved a plea before ICC for annulment of the award on several grounds. When the country's plea was registered, an interim stay was granted automatically on the enforcement proceedings initiated by the TCC.
In June this year, Spain had persuaded an ICSID committee to annul a €128 million award in favour of a solar power investor on the basis of arbitrator Stanimir Alexandrov's failure to disclose a longstanding professional relationship with one of the claimant's expert witnesses from the Brattle Group.
The tribunal that imposed the penalty on Pakistan included Alexandrov as an arbitrator.v