Pakistan has spent around 1.5 billion rupees on lawyers' fee and other expenses including officials' visits to London including those of the former Minister of Water and Power Khawaja Asif and Attorney General for Pakistan. The Turkish firm, M/s Karkey, had registered a claim with the World Bank-affiliated ICSID against the Government of Pakistan early in 2013, for purported violation of the contract of as many as $564.6 million for a period of five years, for building rental power plants in Karachi. M/s Karkey had sought compensation of $ 2.1 billion.
Informed sources told Business Recorder, the officials of Water and Power Ministry, Attorney General of Pakistan and other concerned quarters are holding meetings to finalise future strategy including filing an appeal against the award, adding that in case of appeal, the process will take at least two years and meanwhile the government will make efforts for an out of court settlement with the company.
ICSID, which offers arbitration and conciliation services for governments and private foreign investors' disputes, completed hearing in March 2016. Pakistan and Turkish firm M/s Karkey Karadeniz Electric Uretim which established a 231MW rental power offshore plant at Karachi have been in litigation at the ICSID for the last two years.
The contract was struck down in a Supreme Court's decision by then-Chief Justice Iftikhar Chaudhry on a petition by Pakistan Muslim League-Nawaz leader Khawaja Asif and Faisal Saleh Hayat, which called for shutting down all rental power projects in the country. On July 5, 2017, Business Recorder had run a story in which it was indicated by the officials of the versatile Ministry of Water and Power (now Power Division) that Pakistan's case is very weak and ISCID may give its verdict in favour of the Turkish firm M/s Karkey Karadeniz Elektrik Uretim A.S. ICSID had completed hearing on a dispute between Government of Pakistan (GoP) and a Turkish firm M/s Karkey Karadeniz Elektrik Uretim A.S and was expected to award the case last year but sought a couple of extensions in the award of the case.
However, in June 2017 ICSID Secretariat sent an email to Pakistan's Attorney General's office informing him that the case will be awarded by the end of summer and ultimately it was awarded in favour of M/s Karkey Karadeniz Elektrik Uretim A.S.
The sources said, the issue of M/s Karkey had been discussed during bilateral visits of top leadership of Pakistan and Turkey and Pakistan had offered around Rs 1 billion to M/s Karkey for an out of court settlement. However, the issue remained unsettled.
In 2014, Pakistan hired Allen & Overy, a global law firm advising national and multinational corporations, financial institutions, and governments. Pakistan was obligated to pay 90,000 pounds to Allen & Overy in addition to per hour rate during hearings. Earlier, Pakistan paid 0.2 million pounds to a London-based firm, BLP, but the government felt that this firm was not properly contesting the case at the ICSID. Total fee agreed with the law firm was 1.4 million pounds in addition to per hour case charges.
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 as a result of the loss of earnings and costs associated with the detention of its vessels by Pakistan in April 2012.
Copyright Business Recorder, 2017