July 14: An international arbitration court has imposed $5.976 billion penalty on Pakistan for the unlawful denial of a mining lease to a company for the Reko Diq project in 2011.Prime Minister Imran Khan has ordered to form a commission to investigate and fix responsibility for the penalty imposed by the International Centre for Settlement of Investment Disputes (ICSID) in the Reko Diq case.
The Tethyan Copper Company – a joint venture between Chilean mining company Antofagasta and Canada’s Barrick Gold Corporation – had filed claims before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in 2012 after the Balochistan government rejected a leasing request from the company. In its 700-page ruling, the tribunal awarded a $ 4.08 billion penalty and $1.87 billion in interests.
The company had claimed $11.43 billion in damages. Tethyan Copper discovered vast mineral wealth more than a decade ago in Reko Diq, at the foot of an extinct volcano near Pakistan’s frontier with Iran and Afghanistan.
Tethyan Copper expressed willingness for a negotiated settlement. The government said it was disappointed by the ruling but had taken note of Tethyan Copper’s chairman seeking a negotiated settlement.
Pakistan has decided to challenge the award by filing a revision application which will take two to three years to decide, it will serve as an opportunity for the two sides to go for an out-of-court settlement in which both sides appear interested.
Pakistan, this month has signed a $6 billion bailout agreement with the International Monetary Fund to stave off a looming balance of payments crisis.