Turkish firm’’s claim: government seeks 20 days to file reply

Business Recorder, Pakistan

Turkish firm’’s claim: government seeks 20 days to file reply

4 March 2014

By Mushtaq Ghumman

Pakistan has sought a 20-day extension to file its reply to the International Centre for Settlement of Investment Disputes (ICSID) against a damage claim of $2.1 billion filed by Turkish firm M/s Karkey Karadeniz Elektrik Uretim. The sources said Pakistan had to submit its reply to the international body by February 28, 2014 but it was delayed due to a change in legal firm.

Pakistan has refused to allow 231 MW Turkish power ship of M/s Karkey Karadeniz Elektrik Uretim to leave its territorial waters on the instructions of Sindh High Court (SHC) despite the fact that ICSID had directed the GoP to allow the ship to proceed to Dubai for necessary repair and registration.

According to sources, Pakistan has provided necessary record to the newly hired law firm which will finalise a reply to M/s Karkey’’s damage claim in consultation with Pakistani authorities for submission to the ICSID. Analysts point out that if the Turkish firm wins the case, Pakistan will have to pay heavy damages and in case Pakistan does not implement the decision, the World Bank can stop its funding.

Pakistan has hired Allen & Overy, a global law firm advising national and multinational corporations, financial institutions, and governments. Pakistan will pay 90,000 pounds to Allen & Overy in addition to per hour rate during hearings. Pakistan paid 0.2 million pounds to a London-based firm BLP but the government felt that the case was not properly contested at the ICSID. Total fee agreed with the law firm was 1.4 million pounds in addition to case charges per hour.

The Turkish firm argues that the detention of its power vessels by Pakistani authorities is illegal. The Turkish energy firm, Karkey Karadeniz Elektrik Uretim AS (Karkey), had registered a claim with the World Bank-affiliated ICSID against the Government of Pakistan early in 2013. The initial contract value of Karkey’’s power ship operations in Pakistan was $560 million for the duration of five years. The claims, as calculated by experts, sum up the damages obtained as a result of the loss of earnings and costs associated with the detention of its vessels. Karkey’’s vessels have been detained in Pakistan since April 2012.

Turkish government also took up this issue with Pakistani authorities during bilateral visits of Prime Ministers of the two countries. Pakistani authorities detained power vessels on the instructions of the Supreme Court of Pakistan. Analysts argue that both Pakistan and Turkey have to resolve the dispute out of court to ensure an amicable resolution.