SC Judgment on Reko Diq Presidential Reference

 Hafiz Ahsaan Ahmad khokhar

Islamabad: The subject Presidential Reference was filed before the Supreme Court after the approval of federal Cabinet under Article 186 of the Constitution for seeking Supreme Court determination under their advisory jurisdiction on two important questions: whether the judgment reported as Maulvi Abdul Haque Baloch vs. Federation of Pakistan, PLD 2013 SC 641 etc. can prevent the Government of Pakistan and the Government of Balochistan from entering into a new proposed implementation agreement with Barrick Gold Corporation, and what would be the constitutionality of the proposed Foreign Investment (Protection and Promotion) Bill, 2022, said Supreme Court Advocate Hafiz Ahsaan Ahmad Khokhar stated while commenting on the Supreme Court decision.

According to the legal expert, a five-judge larger bench of the Supreme Court led by the Chief Justice of Pakistan who reserved their opinion on the Presidential reference on November 29 has confirmed under the advisory jurisdiction today that the proposed agreements do not, prima facie, violate any of the findings recorded in the Abdul Haque Baloch case (PLD 2013 SC 641). The Supreme Court has also held that the Constitution does not forbid the disposal of public assets other than through a competitive process so long as such disposal has the support of the law and is justified on rational grounds, as is the case here.

It would also avoid a $10 billion penalty in return for a settlement deal before a deadline of 15^th December with Antofagasta and the Barrick Gold in the Reko Diq mining case imposed by the International Centre for Settlement of Investment Disputes (ICSID) for alleged violations by Pakistan of the Australia-Pakistan Bilateral Investment Treaty1997. He said that earlier on July 12, 2019, after concluding the proceedings; the ICSID tribunal awarded $5.894 billion plus interest of $700,000 per day in damages against Pakistan to the TCC. At the same time, the London Court of Arbitration also imposed another $4 billion fine on Pakistan.

Shortly thereafter, the TCC initiated proceedings for the enforcement of the award in several jurisdictions, including, Australia, the US, and the UK. According to the Constitutional Expert, under the proposed settlement, Barrick Gold would own 50 per cent of the new project’s shares, while the remaining shares would be owned by Pakistan, divided equally between the Centre and the Balochistan government, and the federal government’s share of 25 per cent would be divided equally among three state-owned entities: the Oil and Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Pakistan Limited (GHPL).

The Supreme Court has further held that Article 144 of the Constitution allows provincial assemblies to empower Parliament to pass a law dealing with issues within the legislative competence of the Provinces. Similarly, Article 147 of the Constitution allows the provinces to entrust, either conditionally or unconditionally, to the Federal Government or to its officers, functions in relation to any matter to which the executive authority of the province extends.

Moreover, the Foreign Investment (FI) Bill 2022 is not limited exclusively to the Reko Diq project but would provide a framework for the grant of investment incentives that will, subject to the provisions of the Bill, be available to all investments of US$ 500 million or more. Thus, the Reko Diq project is the first to be identified as a “qualified investment” under the FI Bill 2022, does not render the statute as “person-specific.

According to Hafiz Ahsaan, the current Supreme Court decision will not only pave the way for the Reko Diq project to be implemented in its present form, but will also facilitate and encourage direct foreign investment in similar mining projects and other high capital intensive industries where direct foreign investment is required to be encouraged through guarantees assured by laws and regulatory measures, as well as increase the confidence of overseas investors over our judicial system which is important for foreign direct investment and its allied matters in Pakistan in future.

The Constitutional Expert stated that it is now a high time for our legislatures and policy makers torevisit all existing commercial laws and simultaneously introduce such new laws without further delay, particularly relating to foreign direct investment and commercial dispute matters, by adopting such best international practices and simultaneously introducing robust alternate dispute resolution with time-bound adjudication and court processes. The objective is to make Pakistan an attractive place for foreign investment, and in the future, Pakistan would avoid such heavy contract defaults and penalties before international forums.

The author is practicing Advocate of Supreme Court.  He has already served on many quasi judicial positions including Chairman Customs Appellate tribunal and Senior Advisor Federal Ombudsman Pakistan