Between litigation and obligation

Pakistan’s judicial failure to fulfil international obligations is one of the major reasons behind the increase in international litigation against the country. Currently, the country is facing three kinds of disputes, which treaty-based disputes, contractual and commercial disputes and national security matters. Cases such as Reko Diq, Karkey, IPPs disputes and Iran-Pak Gas pipeline have economic implications as well as matters like Indus Water Treaty Dispute, Kulbhushan Jadhav, Hyderabad funds and Samjhota train bombing.

Explaining the reasons behind this growth, former Attorney General for Pakistan (AGP) Anwar Mansoor Khan, during his briefing to the federal cabinet in May 2019, cited verdicts by Pakistan’s judiciary to demonstrate their failure to fulfil obligations or reach dispute-mitigating decisions and poorly negotiate contracts.

Advocate Asad Raheem, who has worked as a consultant for the AGP office in the past, believes that the reasons for Pakistan’s failure in international arbitrations are four-fold: signing off on extraordinarily generous bilateral investment treaties that have maximised risk but failed to encourage investment, accepting the jurisdiction of neoliberal investment forums such as International Centre for Settlement of Investment Disputes (ICSID) without consideration or limiting the state’s exposure, inking disastrous power policies that entirely favoured IPPs in 1994 and 2002, which have since wreaked havoc on circular debt, and after having bound oneself to such irresponsible obligations, have also failed to fulfil them like a responsible contracting party.PHOTO: FILE

“It also requires mentioning that the superior courts must tread gently when it comes to economic affairs, as they did under Justice Jillani,” says Raheem. “Justice Chaudhry’s decision in Abdul Haque vs. Government of Balochistan was a terrible misstep, which culminated in ICSID’s equally ridiculous award of $4.96 billion against Pakistan,” he adds.

Senior lawyers also blame the Foreign Office for its failure to timely advice in international legal disputes because it is a matter of fact that there is no international law expert in the Foreign Office.

International litigation against Pakistan has significantly increased in the last five years. Where previously there were six cases against Pakistan, there have now risen to approximately 50 cases in the last five years.

Currently, Pakistan is literally paying a high price for this international litigation against it. The country has paid $100 million to foreign lawyers during Pakistan Muslim League-Nawaz’s (PML-N) tenure. Similarly, more than $10 million has been spent for this purpose by the by Pakistan Tehreek-e-Insaf (PTI) government.

International Centre for Settlement of Investment Disputes (ICSID) on July 12, 2019 awarded massive $5.976 billion award against Pakistan in the Reko Diq case, which is one of biggest in ICSID history.

Tethyan Copper Company’s (TCC) management, the complainant whose contract was terminated, had claimed $11.43 billion in damages. In 2012, TCC filed claims for international arbitration before the ICSID of the World Bank after the Balochistan government turned down a leasing request from the company. The litigation has continued for seven years. Former Chief Justice of Pakistan Iftikhar Muhammad Chaudhry’s verdict in the Reko Diq case was the first in a series of events that led to the massive award.

After the case was filed, Pakistan lost its first jurisdictional challenge, when the international tribunal said that it has the jurisdiction to adjudicate the Reko Diq matter. After that, the tribunal declared that there was no wrongdoing in the agreement – the grounds on which the Supreme Court of Pakistan terminated the deal in 2013 – and eventually, the tribunal decided that Pakistan is liable to pay the damages. In July 2019, the final award was announced against Pakistan.

In December last year, the…