The commission notes that, “there is a lack of capacity and understanding of International and Commercial law matters both at the Ministry of Law and Justice and the Office of Attorney General of Pakistan.” It recommends that the Cabinet Division must instruct the Ministry of Law and Justice to hire competent international and commercial law experts for the Federal Government. These recommendations need attention by the government considering the importance of international law.
In recent decades, the number and importance of international and regional courts and tribunals have increased manifold. The proliferation of international dispute resolution institutions creates voluminous jurisprudence. The increasing reliance on international courts and tribunals is only going to enhance the importance of building our capacities in international law. At the same time, the effective use of international dispute resolution forums requires developing expertise in the field. Due to a lack of this expertise, Pakistan has suffered a huge loss. A brief discussion of a few important cases will be instructive.
Broadsheet LLC. (Isle of Man) and other matters
Broadsheet LLC, a UK-based company, made an asset recovery agreement on June 20, 2000, with the government of Pakistan, recovering monies and other properties corruptly taken from Pakistan and held outside the country. After NAB ended the agreement in 2003, Broadsheet and another company engaged as a third party filed for damages before an arbitration court in UK, stating Pakistan owed them money under the agreement as the government was taking action against the properties they had found. This claim was held valid by an arbitration court and later by a United Kingdom high court determining the total payable amount at more than 33 million dollars (Rs5.21 billion). The flawed drafting and termination of the agreement by the NAB show the lack of international law expertise in Pakistan when relevant government agencies failed to foresee the consequences of making and terminating the international agreements without due consideration and procedure. Moreover, it seems Pakistan has not defended its case professionally.
Effective use of international dispute resolution forums requires developing expertise in the field. Due to a lack of this expertise, Pakistan has suffered a huge loss
Reko Diq Case
The International Center for Settlement of Investment Disputes (ICSID) of the World Bank gave about $6 billion (Rs950 billion) award against Pakistan in the Reko Diq case. The ICSID rendered a huge $4 billion fine and around $2 billion in interest and costs. This is perhaps the biggest award in the history of the ICSID. Further, Pakistan had to pay millions of dollars to international law firms.
The Reko Diq case commenced when the Tethyan Copper Company (TCC) mining contract with the Balochistan government was terminated by the Supreme Court. The ICSID declared that termination of the agreement was unlawful. The tribunal further said that Pakistan Supreme Court was quite unaware of international law and conventions respecting the international agreements as well as lacked specialized expertise.
Karke Karadeniz
The Karkey Karadeniz Elektrik Uretin (KKEU) was one of 12 rental power companies that had entered into contracts with the government of Pakistan in 2008-09 to resolve the electricity crisis. However, the plant yielded only 30-55MW of electricity and which was a grave violation of the contract. Some politicians moved the Supreme Court and then the chief justice of the Supreme Court cancelled the contract and pressed to recover the full $120m from the Turkish company. Consequently, Karkey approached the ICSID in 2013, pursuing compensation for the losses suffered by its vessels for damage or depreciation. The ICSID, in 2018, had ordered Pakistan to pay $760 million with interest to KKEU.
Keeping aside the merits of these decisions taken by international forums, it is high time that our relevant institutions realize the importance of improving international law understanding and skills in the country.
To strengthen our economy and national sovereignty, we must develop expertise in international and commercial law. Building on the recommendations of the Commission, I propose the following measures:
First, international and commercial law should be taught at the civil services academies. The civil servants need to be trained in formulating and reviewing international commercial agreements; second, to meet the rising challenges, lawyers and judges should be provided rigorous education and training in international law. The Ministry of Law and Justice and the Office of the Attorney General of Pakistan must engage required international law experts to protect the interest of Pakistan energetically; third, the Ministry of Foreign Affairs (MoFA) should be given due role and resources on international law issues including international contracts and litigation; MOFA may consider publishing a Yearbook of International Law to consolidate international law matters relevant to Pakistan; four, in-house international law expertise be promoted and engaged rather than seeking expensive legal advice from international law firms; however, prominent practitioners may be engaged from abroad for capacity building in Pakistan; five, a national centre of excellence may be established for joint training of lawyers, judges and civil servants.
Finally, we need to establish a Dispute Settlement Centre within the country – on the example of other regional and national centres established elsewhere – which can work as a venue and forum for international litigation, especially those concerning Pakistan. The government needs to prioritize the capacity building of relevant ministries in international law. Otherwise, as pointed out in the inquiry report, incompetence and corruption will continue compromising Pakistan’s interest.
The writer is an advocate in the Supreme Court of Pakistan