Daily Times

The Reko Diq fix is widely being discussed these days on account of two prime, amongst other, reasons: first, the financial losses that it is deemed to cause to Pakistan; second, the bad repute that it has earned to Pakistan across the international fraternity.

The International Tribunal of International Centre for Settlement of Investment Disputes (ICSID) has rendered its judgment in the famous Reko Diq case wherein it has penalised the state of Pakistan with 4.08 billion US Dollars along with imposition of 1.87 billion US Dollars as interest.

The sitting Prime Minister of Pakistan has ordered to ‘probe into the matter’ and fix the responsibility for this colossal mishandling. Experts from Pakistan as well as international community hold several opinions as to what led Pakistan to this juncture. Some are blaming the former Chief Justice of Pakistan, Iftikhar Muhammad Chaudhary, for terminating the Reko Diq deal in 2013; some, on the other hand, are attributing the quandary with repeated change of legal team that Pakistan has been doing throughout the proceedings of the case, however, some say that the Reko Diq case has been ‘handled poorly’ in general by Pakistan.

No matter what factors led to inflicting Pakistan with a penalty of 5.9 Billion US Dollars in total, the point of grave concern now is to decipher the remedies available to Pakistan under the ICSID regime.

No matter what factors led to inflicting Pakistan with a penalty of 5.9 Billion US Dollars in total, the point of grave concern now is to decipher the remedies available to Pakistan under the ICSID regime

The Chapter IV of ICSID Convention articulates four to five post award remedies which are available to parties aggrieved by the award of the Arbitral Tribunal constituted under the Convention. These remedies are arguably sufficient to safeguard the generic rights of both the parties to be heard fully and fairly. The remedies under the Convention include the remedy of requesting for supplementary decision under Article 49, rectification of the award under Article 49, Interpretation of the award under Article 50, Revision of the award under Article 51 and Annulment of the award under Article 52 of the ICSID Convention.

Any party to the proceedings may approach the Arbitral Tribunal within 45 days from the date of rendering the award to seek a supplementary decision or rectification. A request for the supplementary decision may be made where any question which the Tribunal should have considered has been omitted by the Tribunal while deciding the disputes, whereas rectification may be sought in order to correct any clerical, arithmetical or similar error in the award.

Another important remedy covered under Article 50 of the Convention is the interpretation of the award. Though the ambit to apply for interpretation of the award is quite narrow and is restricted to the meaning and scope of the award only, it can be resorted to where both the parties fail to agree on a certain sense, meaning or scope of the award and each one of them has its own distinct interpretation or understanding of the award.

Any of the parties to the proceedings may apply for revision of the award as well within 90 days from the date of rendering the award, however, the latitude of a revision application is constrained to discovery of any new fact only which is vital to the arbitration proceedings.

The most eclectic remedy and pertinent in case of Pakistan is filing for the annulment of the award under Article 52 of the Convention. Article 52 ICSID Convention stipulates five grounds that a party may take in its application for annulment of the award, namely (a) the Tribunal was not properly constituted; (b) the Tribunal has manifestly exceeded its powers; (c) there was corruption on the part of a member of the Tribunal; (d) there has been a serious departure from a fundamental rule of procedure; or (e) the award has failed to state the reasons on which it is based.

The application for annulment of the award may be made within 120 days from the date of rendering the award. However, if the annulment is sought on the grounds of corruption on the part of any member of the Tribunal, then the application for annulment may be filed within 120 days from the date of discovery of such corruption. The application for annulment is heard by a committee of three persons constituted under Article 52(3) of the Convention. None of the members of Arbitral Tribunal which passed the award is included in the committee constituted for hearing the application for annulment of the award in order to brush out bias. The committee has the power to stay the enforcement of award as well till the final outcome of the annulment proceedings, which is a substantial relief.

Article 52 of the Convention elaborates diverse grounds to challenge the award and Pakistan can try hard to carve out any possibility in order to escape from the austere penalty imposed by the Arbitral Tribunal of ICSID.

It must, nonetheless, be admitted that chalking out a strategy to bring into question the 700 pages long and detailed award of ICSID’s International Tribunal is a tough task and Pakistan may end up in dead end having no other way out but to pay the penalty.

The writer is a lawyer, social activist and researcher