Inter-governmental commercial transactions law: Govt deletes some proposed clauses

ISLAMABAD: The government has deleted some clauses proposed in Inter-Governmental Commercial Transactions Act, 2022, after reservations expressed by some of the cabinet members especially those from PPP on the word “binding” for provinces, well informed sources told Business Recorder.

The government intends to sell some public sector entities to friendly countries as Privatisation Commission has failed to sell-off/ materialise any key transaction.

On July 27, 2022, Law & Justice Division briefed the cabinet that there was no legislation for authorizing, negotiating and supervising inter-governmental agreements between the government of Pakistan and government of a foreign state for the purposes of entering into business agreements. As a result, the cabinet in its meeting held on July 04, 2022, constituted a sub-committee of under rule 17(3) of the Rules of Business, 1973 to establish a statutory framework for inter-governmental commercial transactions.

The sub-committee prepared a draft ordinance titled “Inter-Governmental Commercial Transactions Ordinance, 2022” and finalized its report for submission to cabinet for approval in principle of Ordinance. The federal cabinet, in its meeting held on July 15, 2022, considered the report of the sub-committee and accorded its approval in principle to the draft Ordinance.

Thereafter, a summary for the CCLC was initiated by the Cabinet Division on July 15, 2022 and draft was approved by the CCLC in its meeting held on July 20, 2022 and subsequently ratified by the cabinet.

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A summary for the Prime Minister, advising the President for promulgation of the draft Ordinance, was initiated by the Cabinet Division on July 22, 2022 and the Prime Minister, on the summary, directed that instead of promulgation of an Ordinance, a Bill may be introduced in the National Assembly. In pursuance thereof, the draft Ordinance had been converted into the subject Bill to be introduced in the upcoming session of the National Assembly.

Under the proposed law, the federal government shall constitute a Cabinet Committee on Inter- Governmental Commercial Transactions comprising of members of the federal cabinet and the primary function of the committee would be to authorize negotiations and execution of inter-governmental agreement to allow state-owned enterprises of both countries to carry out a commercial venture either in Pakistan or in a foreign country. The enactment of the proposed bill was imperative to promote, attract and encourage foreign states to have economic and business relations with the Islamic Republic of Pakistan.

The Cabinet Division on July 26, 2022 had conveyed the directions of the Prime Minister to Law Division for taking necessary action such as submission of subject Bill along with summary to the quarter concerned.

The Law & Justice Division requested the cabinet that vetted and improved draft Bill titled “Inter-Governmental Commercial Transactions Act, 2022” may be exempted for placing before the CCLC again as its Ordinance had already been considered by that forum and may be approved by the federal cabinet in terms of its mandate under rule 16(a) read with rule 27 of the Rules of Business, 1973.

During discussion, some of the members expressed reservations on clause 5 of the proposed Bill pertaining to power to issue binding instructions. It was observed that the said section was against the spirit of the 18th amendment to the Constitution and open to misuse as it undermined provincial autonomy. The Minister Law & Justice explained that the clause would have limited invocation - only to the extent of particular transactions to facilitate foreign investors and obviate delays in execution of the projects.

The members were; however, of the view that the sub-clause 2 and word “binding” in the clause 5 should be deleted.

Expressing views on clause 8 of the proposed Bill, regarding bar on jurisdiction of courts, few of the members felt that its insertion was futile as it would not bar the Superior Courts from taking cognizance under their original jurisdiction.

The Minister for Law & Justice explained that it was a standard clause present in many other laws, which helped mitigate frivolous litigation. Furthermore, similar clauses already existed in SEZS and STZs laws. He advocated that its inclusion was necessary to provide protection and comfort to the foreign investors. While agreeing that immunity to the foreign investors was necessary, the members felt that the Section 8 may be revisited.

The Minister for Law & Justice suggested that this observation may be taken up in the Standing Committee of National Assembly, where members of all parliamentary parties are represented, for consideration while discussing the proposed legislation, which was agreed.

After detailed discussion, the cabinet decided to delete the word “ binding” in clause 5, in marginal heading and the expression and sub-clause (2) of clause 5 whereas in clause 6, after the words” if any” the word “as” shall be inserted.

Copyright Business Recorder, 2022