LAHORE: The International Centre for Settlement of Investment Disputes (ICSID) has bound Pakistan to post cash security of US$150 million by April 30, 2019 as a condition for extension of stay of enforcement, claimed Karkey Karadeniz Elektrik Uretim, Turkish power company.
Karkey claimed that enforcement of an award, already given by the ICSID against Pakistan, would be enforced if such security was not posted in time. In case of failure, Karkey will be free to pursue enforcement of the award, the company said here on Sunday, citing ICSID Tribunal’s March 22, 2019 order.
Pakistan lost the case in the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in 2017, which was filed by Karkey Karadeniz Elektrik, a company involved in provision of floating power generation facilities.
The ICSID is an international arbitration institution established for legal dispute resolution and conciliation between international investors. The ICSID is part of and funded by the World Bank Group.
Karkey’s investment in Pakistan in 2008/2009 met an unfortunate consequence due to continued breaches by Pakistan and its state-owned entities or instrumentalities, the company said. In March 2012, Karkey first lodged its claim for direct losses in the approximate amount of US$250 million for breach of contract awarded to Karkey in competitive international bidding.
However, due to the active engagement of the Government of Turkey at that time, Karkey agreed to conclusively settle the matter by taking back all four of its vessels and forgoing the said claim.
The precise terms of this settlement were agreed upon in writing in the form of a deed of settlement dated 7 September 2012. The National Accountability Bureau of Pakistan (NAB) was a party to this deed. It was a specific term of the deed that if Pakistan parties renege or breach the Deed of Settlement, Karkey would be free to seek recourse through international arbitration, company claimed.
Regrettably, the company said, Pakistan breached the Deed of Settlement. Karkey was, therefore, compelled to file its request for arbitration before the International Centre for Settlement of Investment Disputes against Pakistan on January 16, 2013, which was officially registered on February 8, 2013. Eventually, on August 22, 2017, after detailed consideration of issues and evidence ,led by the parties, the ICSID Tribunal ruled in favour of Karkey and ordered Pakistan to pay a total amount of approximately US$780 million (the “Award”), which carried an approximate monthly interest of US$ 5.5 million. The current liability of Pakistan stands at approximately US$900 million.
Instead of fulfilling its obligation to comply with the Award, on October 27, 2017, Pakistan chose to petition ICSID for Annulment of the Award. Under ICSID rules, when such petition is registered, there is an automatic stay on enforcement of Award. However, the ICSID empanelled Ad hoc Committee denied Pakistan’s request for extension of the stay on enforcement of Award. Presently, Karkey has initiated enforcement proceedings against Pakistan and is seeking attachment of Pakistan assets to satisfy the Award and payments due thereunder to Karkey.
While the parties had completed written submissions in the Annulment Proceedings, and the Annulment Proceedings were scheduled for final hearing in April 2019, Pakistan chose to initiate yet another new set of proceedings before ICSID.
In January 2019, Pakistan filed a request Revision of Award. Unlike the Annulment Proceedings (which are adjourned but pending before a new tribunal until revision proceedings are concluded), the recent Revision Proceedings are under way before the original Tribunal that passed the Award. Pakistan again asked the Tribunal to stay enforcement proceedings initiated or to be initiated by Karkey in ICSID member states.
The company claimed that if such security of $150 million is not posted in time, Karkey will be free to pursue enforcement of the Award, which may lead to logical conclusion of the order given by the ICSID.
Pakistan continues to contest the Award on alleged ground of corruption. Karkey categorically and expressly denies such allegations. Recent reported move of the National Accountability Bureau of Pakistan to arrest certain individuals, namely Mr Laeeq Ahmed and Mr Omar Zulqarnain in connection with the alleged scheme of corruption and money laundering has nothing to do with the company, it is claimed.
Karkey unequivocally and categorically denies any and all alleged that association with these individuals. Neither of these individuals has ever acted for an on behalf of Karkey nor has Karkey ever had any alleged financial dealings with such persons. As far as Karkey is concerned, this is yet another attempt to abuse the local legal process against Karkey as well as another ploy by Pakistan authorities to mislead not only the adjudicatory bodies, but also the general public.
Karkey reserves the right to take due legal actions in the matter and other defamatory acts of Pakistan. The Government of Pakistan, including its National Accountability Bureau, continues to deliberately withhold correct and complete facts and details of various orders of the ICSID tribunals, which is indeed regrettable, company asserted.
When contacted, a spokesman for Power Division, Ministry of Energy, did not comment on the claims made by Karkey over payment of security and enforcement of Award against Pakistan.
(This news/article originally appeared in The News on 15th, 2019)