Reko Diq case: ICSID imposes $6 billion penalty on Pakistan

Tethyan Copper had discovered vast mineral wealth more than a decade ago in Reko Diq

Tethyan Copper had discovered vast mineral wealth more than a decade ago in Reko Diq

On Friday, the World Bank's worldwide arbitration tribunal committee awarded $5.84 billion in damages to Tethyan, according to a statement from the company, because of the government's decision to shut down the mine.

The arbitration case started in July 2012 with the constitution of the tribunal, and the final award announcement had been awaited since previous year.

In its 700-page ruling against Pakistan, the tribunal on July 12 awarded a $4.08 billion penalty and $1.87 billion in interests, Dawn reported. Since this is the largest award in the history of the tribunal, Pakistan now faces a serious threat of assets seizure overseas.

The company had claimed $11.43 billion in damages.

Pakistan's military sees Reko Diq as a strategic national asset and had taken a key role in its development amid the dispute with Antofagasta and Barrick, sources familiar with the situation told Reuters earlier this year.

The then Supreme Court chief justice Iftikhar Muhammad Chaudhry had in January 2013 declared the Reko Diq agreement void and in conflict with the country's laws.

The consortium Tethyan Copper company - of which Canadian gold firm Barrick and Chile's Antofagasta Minerals control 37.5 percent each - is the largest Foreign Direct Investment mining project in the country.

The company said it had invested more than $220 million by the time Pakistan's government, in 2011, unexpectedly refused to grant them the mining lease needed to keep operating. The tribunal had then said, "The Tribunal can not assume that Claimant [TCC] does not have the rights or remedies to which it asserts it is entitled, including any right capable of enforcement by specific performance". The full details of the case are yet to be released by the tribunal.

More than a decade ago the group found vast gold and copper deposits at Reko Diq, in the turbulent southwestern Baluchistan province, and had planned a hugely lucrative open-pit mine. According to its own findings, the Reko Diq Mining Project was a $3.3 billion investment project that promised to build and operate a world class copper-gold-open-pit mine at Reko Diq.

TCC won award in worldwide arbitration after Supreme Court nullified its contract. It says that "despite the initiation of arbitral proceedings in order to protect its rights, TCC remains hopeful of an opportunity to reach a negotiated resolution to the case".

The detailed report said Dr Samar Mubarak Mand appeared before the tribunal to represent Pakistan.

The worldwide mining firm had lodged the case against Pakistan on January 12, 2012, and the ICSID constituted the tribunal on July 12, 2012.

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