Recently the English High Court has ruled against Pakistan’s National Transmission and Distribution Company (NTDC) on choice of law, and seat of arbitration proceedings. Atlas Power versus National Transmission and Distribution Company Limited was originally instituted in 2015, in the London Court of Investment Arbitration (LCIA). This case is a classic illustration of how Pakistan continues to (poorly) handle investment disputes. Atlas Power and others were unable to invoke their indemnification rights under Pakistan’s widely publicised sovereign guarantee instrument. Provided and facilitatedby the Government of Pakistan, this is not the first reported instance where sovereign guarantee instruments have caused havoc and illuminated light upon the weak investment regime. Atlas Power also exposes Pakistan’s weak investment regime and policy capture. Pakistan’s Energy and Investment Policy fails to refer to effective dispute resolution mechanisms and leaves investment parties at the behest of untrained courts. In Atlas Power, the underlying dispute concerns sums owed by NTDC to nine independent power producers (IPPs). These IPPs supplied electricity exclusively to NTDC, under a power purchase agreement (PPA). All PPAs contained a dispute resolution clause, which referred to mutual discussions and expert determination as a form of dispute resolution, with all remaining and outstanding disputes, to be “settled by arbitration in accordance with the London Court of International Arbitration”. The IPPs invoked their rights under their relevant PPAs to seek outstanding sums from the NTDC. In accordance with the provision of the PPA to commission an expert determination, it was concluded that the NTDC was unlawfully withholding sums. However, Pakistani courts declared this expert determination null and void. Not an ideal start to a much published investment climate! Pakistani court’s uncanny decision-making has been pronounced in the international legal community as both immature, and an illustration of the court’s inability to take an impartial approach. CPEC will prove to be an infrastructure investment multiplier if we use this opportunity to explore more investment options. However, poor decision making and cases like Atlas Power are nothing but stark reminders to the investors that Pakistan’s investment regime remain a double-edged sword State capture is not an uncommon, irrelevant transposition of a gamut of matters that have haunted the state and its fragments since Pakistan’s inception in 1947. I have extensively researched Pakistan’s energy sector from an academic perspective. My doctoral thesis reflects on some of these issues and present bitter questions for the state’s governance methods especially in electricity regulation and investment security. Infrastructure investment is predicated and contingent upon three issues: security, certainty and consistency. These notions are intertwined. Infrastructure investment can’t exist in a vacuum and its long-term existence is predicated on these quintessential features. Unfortunately, Pakistan’s investment climate is unable to consistently offer these factors. Historically, according to figures published by the World Bank, the highest foreign direct investment (FDI) recorded in Pakistan’s history was during 2004-2005. Approximately USD$5.6 billion is said to have been the inflow of capital in Pakistan. Since then and up to 2018, Pakistan has struggled to sustain and maintain those levels of FDI. Faltering FDI figures are not necessarily an indication of poor economic position. However, as demonstrated by recent economic figures (foreign reserves depleting and balance of payment crisis) it transposes a question whether there is an absolute resolve from the ‘state’. Under China-Pakistan Economic Corridor (“CPEC”), Pakistan has been promised several billions under the guise of development in the energy, infrastructure and development sector. Pakistan is not the only country to have received such generous capital (anticipated) inflow from China. Africa, Latin America have all been contracting with China in order to facilitate such agreements. Pakistan is an attractive, unexplored region that will generate generous payments for China on favourable terms in the long term. An ideal investment vehicle! Reports indicate that Pakistan will pay over $USD90bn for an initial stint of $USD50 billion invested by China. China’s economic imperialism has also triggered aggression from India. A disgruntled American establishment, and more importantly, has transformed large Pakistani cities into mini China towns. Just the other day I saw a Chinese fellow riding a CD-70 motorbike in Islamabad. All very promising and exciting! However, foreign investment presents its own challenges. Pakistan is not prepared to host such large capital inflows. Our investment instruments are not robust enough. Our regulators are inept and our regulatory regimes inadequate. Our glaring circular debt figures are here to stay unless there is a complete overhaul in our regulatory structures. Moldova, Czech Republic and even Nigeria have experienced similar issues. Their woes didn’t disappear overnight. More importantly, our investment resolution forums are ill-prepared to deal with complex commercial cases. Tethyan Copper Company’s Riqo Diq case is a classic illustration of our courts inability to understand complex commercial matters. World Bank’s ICSID has awarded several billion dollars to the claimant. Cause of action arising under Riqo Diq’s case is a good example of in-direct expropriation. Western academic literature considers expropriation as a redundant concept primarily on the understanding that it has long-term repercussions for a country’s economic climate. It will be foolish for a country to exercise expropriation if it desires a thriving investment regime. We did in fact exercise expropriation and will now pay a handsome price to correct a wrong that should not have been committed to start with. Investment regime in any jurisdiction is like an insurance policy. If an area has a higher probability for claims, premiums will automatically be higher. Pakistan continues to seek foreign investment proposals and yet alienates those who have already invested. We can’t have the cake and eat it too. CPEC is a golden era in Pakistan’s infrastructure development regime. I have defended CPEC on international forums despite unfavourable contractual terms and disproportionate benefits offered to the Chinese. However, CPEC is an excellent opportunity for Pakistan to redeem its reputation. We ought to prepare a favourable climate if we wish to sustain these investment measures. Pakistan needs to invest in dedicated investment courts, create a special category of judicial officers that are trained in international commercial dispute resolution, and above all, introduce investment security policy that precedes government ambitions. I recall reading Nargis Sethi’s remarks in a Woodrow Wilson special issue on Pakistan’s energy sector. Ms Sethi stated that Pakistan continues to be a firefighter. We continue to make policies, retract them later and then reinstitute the same. CPEC will prove to be an infrastructure investment multiplier if we use this opportunity to explore more investment options. However, poor decision making and cases like Atlas Power are nothing but stark reminders to the investors that Pakistan’s investment regime remain a double-edged sword. The writer is an ESRC Scholar and PhD in International Commercial Law and currently a Trainee Solicitor in the United Kingdom Published in Daily Times, October 16th 2018.