Pakistan announced on Monday that it would go into appeal and challenge multi-billion dollar damages in the Reko Diq case in international court. International court had imposed $1.2 billion damages in Karkey rental power case and $6.2 billion damages in Reko Diq case. Pakistan assets could be seized following damages imposed on Pakistan,

Minister for Energy Omar Ayub Khan said this while addressing a news conference here. The minister said that Pakistan would go into appeal against these decisions awarded against Pakistan. He blamed previous governments for taking unwise decision that resulted in such damages against Pakistan.

Besides, the country faced a burden of Rs24 trillion debt due to failed policies of the previous governments and added that people should know about those behind such heavy loans. Independent Power Producers (IPPs) and other parties went into international court against Pakistani government due to failed policies of previous governments.

He said that assets of Pakistan abroad could be seized if damages were not paid. In 2011, the Balochistan government rejected the TCC’s mining lease application because it was said to be incomplete and the company had violated the agreement. The company approached the apex court for the redressal of its grievance of cancellation of its mining rights.

The court in its 2013 judgment declared that the TCC did not have any rights over Reko Diq under the contract. It had been known for years that the judgement of the tribunal in the Reko Diq case would go against Pakistan — especially when in March 2017. Earlier, in July, the ICSID slapped a whopping award of $5.976 billion against Pakistan on a plea of petitioner Tethyan Copper Company (TCC), which originally claimed $11.43bn in damages.

The cash-strapped government is in no position to pay such a huge penalty. Another compensation award of $1.2 billion in the Karkay case is also looming. On another front, the London Court of International Arbitration has also slapped a Rs14 billion award against Pakistan on a plea of nine independent power producers.

The mining concession had already become controversial when the Balochistan High Court heard a case starting in 2007 involving allegations of wrongdoing in the case. The high court upheld the grant to the Tethyan Copper Company. But then, in 2013, the Supreme Court picked up the matter, and in a quick series of hearings, struck down the lease.

By then, the case had already landed in international arbitration, which began in 2012, when the Balochistan government denied the TCC’s application to convert its exploration licence into a mining licence. The TCC claimed this was its right in the agreement under which the exploration work was carried out. Even at this point, an out-of-court settlement would have been possible, and the deal could have been rescued because it lay within the executive’s domain.

Now the fallout from a $5.9bn judgement has to be managed. Given the massive damage that each one of these cases has done to Pakistan, perhaps it is necessary to consider how far we should allow allegations of misconduct and judicial interference to hamstring the exercise of executive power. The authorities need to do their homework before initiating a round of litigation,

which is expensive and damaging, in case we emerge from the court as loser. On the other hand, awards are huge and Pakistan may not afford such a huge fine. The cost of defaulting on these awards is even more expensive as well as embarrassing.

The minister himself is aware of the bitter fact that default on these payments results in seizure of national assets aboard. Pakistan has a history of spoiling financial matters whenever we entrust the judiciary with the corporate sector. Reko Diq is a glaring example. Before going into the appeal, the authorities must try the idea of out-of-court negotiation.