The Ministry of Law and Justice has raised questions over some of the clauses of the proposed agreement to be negotiated between GoP and 'Emaar' for the $43.165 billion Diamond Bar Island City, advising the government to be very careful in negotiating terms and conditions for the project, official sources told Business Recorder.
However, the Board of Investment (BoI), headed by Umar Ghumman, supported the proposal, provided Pakistan Navy, one of the major stakeholders, is to be taken on its Board, sources added. They said that the Law Ministry examined the documents and observed that land would be provided by Port Qasim Authority (PQA) in return of 15 percent of the net profit.
According to the draft agreement, the authorised and initial share capital of the joint venture and the nominal value per share would be decided by the UAE-based firm Emaar. The management would consist of seven directors, of which, two would represent PQA. Even their role is also restricted under Article 2.2 of the proposed agreement while the reading of Article 4 is arbitrary. The ministry further observed that land would be leased out for 99 years, automatically renewable for another 99 years.
Emaar would have the right to sub-lease to other parties without any payment to PQA. The GoP would provide land free of any encumbrance, third-party rights and environment contamination to soil and water which, according to the Law Ministry, may affect the project and ensure the registration of the lease agreement to Emaar.
"Such lease by PQA shall be unconditional, irrevocable and irreversible, and PQA would indemnify against all loses, damages, costs etc in the event that Emaar is deprived of its right to quit possession, lease hold, sub-lease, etc" the ministry said.
The ministry has also observed that under Article 4.2, GoP would secure statutory and regulatory approval even to third parties having jurisdiction over the project and undertakes that no such approval shall be withheld or delayed. Sources quoted the ministry as saying that Article 4 (GoP's obligations), Article 5 (EIL and Emaar obligations) need to be negotiated from GoP's viewpoint, as well.
Regarding representation and warranties, the Law Ministry was of the view that GoP has to be very careful in granting this warranty. Before initiating negotiation on the agreement, the concerns of all Ministries and Divisions have to be taken into account.
The sponsors of the project have proposed that rules of London Court of International Arbitration would be applied in case of any dispute, and the Law Ministry asked the government to look into this aspect also.
The Board of Investment, in its comments on the proposal said that in addition to PQA directors, one of the directors might be taken from Pakistan Naval HQ on management as an ex-officio director.
Sources said that four firms/consortia, Emaar Properties, Dubai, UAE, ETA Star Property Developers, UAE, Mazyood Giga International, UAE and Al-Ameera Arif Habib (Pvt) Limited, Pakistan submitted their Expressions of Interest (EoI). However, after detailed evaluation of the documents, Emaar was pre-qualified with the approval of Ministry of Ports and Shipping. The 'city' would be developed at Bundal and Buddo islands in 13 years.
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