US court denies relief to Pakistan in Reko Diq case

The Express Tribune | 17 March 2022

US court denies relief to Pakistan in Reko Diq case

by Hasnaat Malik


Washington DC’s District Court has dismissed Pakistan’s motions for stay enforcement of $6 billion award against the country in Reko Diq case by the International Centre for Settlement of Investment Disputes (ICSID) in July 2019.

The ICSID imposed a $6 billion fine on Pakistan on July 12, 2019 for revoking a contract for mining at Reko Diq in Balochistan. A British Virgin Islands (BVI) court also ruled on the matter, attaching Pakistan International Airlines’ (PIA) assets in New York and Central Paris to enforce the award.

Investment Arbitration Reporter (IA Reporter) has reported that Pakistan argued that it had not waived its sovereign immunity under the Foreign Sovereign Immunities Act
(FSIA) since no valid arbitration agreement existed.

The court, however, emphasised that it was not entitled to review such an arbitrability argument with respect to an ICSID award under the FSIA. It added that even if it were allowed to do so, it would owe deference to the arbitration tribunal’s decision on this issue.

The court next noted that the US statute implementing the ICSID Convention required courts to give awards “the same full faith and credit as if the award were a final judgment” of a state court.

While Pakistan contended that no such full faith and credit should be granted since the arbitration tribunal lacked jurisdiction ratione materiae, the court swiftly disposed of this argument, stressing that “longstanding precedent bars this attempt to recycle a losing jurisdictional argument”.

Consequently, Pakistan’s motion to dismiss was rejected.

IA Reporter further reported that the court closed its order by emphasising that the award was final and that in application of Articles 53(1) and 54(1) of the ICSID Convention, Pakistan was obliged to abide by and comply with the award, as well as to enforce the pecuniary obligations arising under the award.

The court next directed the parties to agree on a joint proposed final judgment consistent with its Memorandum Opinion, including the current amounts for pre- and post-award interest.