Relief in Karkey case
Pakistan has been saved from paying $1.2billion to a Turkish company, Karkey Karadeniz Elekrik Uretin, a penalty imposed by the International Centre for Settlement of Investment Disputes (ICSID). Prime Minister Imran Khan must be credited with winning the concession with the help of great Turkish friend of Pakistan, President Recep Tayyip Erdogan. Though short on detail, the news was shared by PM Khan in a tweet: “PTI Govt, with the help of President Erdogan, has amicably resolved the Karkey dispute and saved Pak USD 1.2 billion penalty imposed by ICSID. I want to congratulate the government’s negotiating team for doing an excellent job in achieving this.”
Karkey, an electric power supply vessel, was awarded a power supply contract by the government in 2008-09 to overcome the energy crisis. Soon, a media campaign hounded the company, attracting the attention of the National Accountability Bureau and suo motu-infested Supreme Court. Initially, the company was ready for an out-of-court settlement but the court’s interference forced it to invoke the ICSID’s jurisdiction in 2013, and the rest is history. The hard-won deal is a matter of respite for the government, as well as a point to ponder. A lot of diplomacy was involved in the Turkish company case, but what will the government do in the cases of Reko Diq and a cartel of private power suppliers where hostile decisions have imposed heavy penalties on the government. Minister for Power Omer Ayub said the government will challenge the decisions of the ICSID in Reko Diq case against Pakistan when in July, Pakistan was told to pay a whopping award of $5.976 billion to petitioner Tethyan Copper Company (TCC) for breaching an accord. The present government should not be blamed for spoiling the accord with the TCC. These cases landed in international courts years ago, thanks to our court’s interference and government’s inability to honour the terms.
Harsh penalties from international forums hurt the respondent country’s repute among investors. Recent developments underscore the need for evolving a mechanism to standardise contracts with international and local firms, and win the best deals. Once a contract is signed, there should be minimum or no interference of local courts. Despite the best pre-contract arrangements, some dispute may need third-party interference or even land in international courts. The best course to tackle such issues is to prepare local experts to fight such cases.
Well, now when the Karkey case is closed, we expect the government to clinch such deals from TTC and private power suppliers too.
When journalists become bad news