The government of Pakistan (GoP) is said to have provisionally lost its seemingly weak case against Turkish firm M/s Karkey Karadeniz Elektrik Uretim (KKEU) as the International Centre for Settlement of Investment Disputes (ICSID), an arm of the World Bank dealing with investment-related cases, has ordered the release of 231MW ship detained in the Pakistani waters by the authorities, well informed sources told Business Recorder.
The tribunal whose members are Yves Derains (French), Horacio Grigera Naón (Argentinian), and David A O Edward (British) held a hearing on provisional measures on October 8, 2013 in Washington D.C. The tribunal issued a decision on provisional measures on October 16, 2013. Turkish firm, sources said, has sought $700 million compensation for the losses suffered in case Islamabad loses the case.
The law firm which was contesting Pakistan''s case at the ICSID had argued that the plea of M/s Karkey Karadeniz Elektrik Uretim did not fall under the purview of ICSID as the GoP had no dispute with the Turkish company. Finance Ministry recently released Rs 260 million to the Water and Power Ministry as law firm''s and ICSID secretariat fees.
GoP filed a suit against Karkey Rental Power Plant in Admiralty Court Karachi through Lakhra Power Company aimed at formally arresting the power plant carrying-ship in the sea as the power ship''s case did not fall in the jurisdiction of civil court which is why the case was filed in the Admiralty Court.
In March 2013, Turkish company, which established a power plant in a ship berthed at Karachi port to provide electricity to the national grid, moved ICSID against Pakistan for not allowing it to move out from the port and for breaching Article VII of Bilateral Investment Treaty (BIT) inked on March 16, 1995 by the government of Pakistan and due to which it suffered a huge loss.
Water and Power Ministry had requested National Accountability Bureau (NAB) to file a case against Karkey but NAB refused to entertain the request, saying NAB is an investigating agency and cannot file a case against the power plant. However, NAB recommended that Liaquat Merchant Associates Karachi be hired to file a suit against the Turkish company in the Admiralty Court Karachi; meanwhile the Turkish company had already approached ICSID.
Turkish company, source said, had refused to bring the ship back to Korangi Creek and requested the GoP to allow it to move the ship to a safe location fearing that the forthcoming monsoon season could damage the plant. M/s Karkey had requested that the tribunal should order Pakistan to pay all costs and expenses associated with this phase of the proceeding. However, Pakistan pleaded that the tribunal should dismiss claimant''s application with costs.
Tribunal maintained that it is not appropriate to take any decision as to the costs related to the request for provisional measures at this procedural juncture and therefore the Tribunal will decide costs at a later stage of the present arbitration. The Tribunal in its order decided that pursuant to authority vested in it under Article 47 of the ICSID Convention and Rule 39 of the ICSID Arbitration Rules: (i) The State of Pakistan shall take all steps necessary to allow the vessel, Karadeniz Powership Kaya Bey the vessel, to depart into international waters and reach, before 1 November 2013, the dry dock in Dubai for inspection and repairs as determined by the Bureau Veritas (or other equivalent agency) to maintain the vessel''s flag registry and class certification; (ii) Lakhra Power Generation Company Limited shall take all steps necessary to obtain the temporary suspension of the order of the High Court of Sindh at Karachi dated 29 of May 2013 in the Admiralty Suit No 07 of 2013, which arrested the vessel, as long as the Arbitral Tribunal shall not have informed the State of Pakistan that the suspension is no longer necessary for the purposes of enabling the vessel to obtain the vessel''s flag-registry and class certification.
The Tribunal has also granted the claimant all authorisations and clearance required for the vessel''s departure including: (i) clearance certificates from Pakistan Customs; (ii) clearance of crew members of the vessel by the immigration authorities at Port Qasim; (iii) clearance from NAB, to be forwarded to all relevant authorities, including the Pakistan Maritime Security Agency, Ministry of Defence, Ministry of Ports and Shipping, Ministry of Water and Power and others necessary under the law and procedure of Pakistan; and (iv) clearance and facilitation from Lakhra, as Lakhra is the "importer for record" in terms of the amended contract.
The State of Pakistan has also been directed to take any other action necessary as required to allow the vessel to depart lawfully into international waters. M/s Karkey has been directed to proceed diligently and as rapidly as reasonably possible to obtain the necessary certificates. Turkish company shall: (i) inform the Tribunal of the date of departure of the vessel from Pakistan, its date of arrival in Dubai, and (ii) keep the Tribunal informed of the progress of the dry docking inspection and repair and of the flag-registry and class certification process.
The tribunal ordered that the company should be prepared to promptly comply with such further orders as the Tribunal may consider necessary for the return of the vessel to safe anchorage in Karachi. The tribunal has dismissed all other requests of both parties. The Tribunal will decide on the costs related to the request at a later stage of the arbitral proceedings.
Comments
Comments are closed.