Pakistan Steel Mills (PSM) has reportedly sought Law Ministry''s advice on a suit filed by M/s Sesa Goa Limited, India, against steel mills in the International Court of Justice, well informed sources in PSM told Business Recorder. Giving a background, the sources said, an agreement was executed between M/s Sesa Goa Ltd, India and PSM on July 2, 2003 for a period of five years from 2003 to 2008.
Under the agreement, M/s Sesa Goa Ltd, India, agreed to sell 750,000 MT of iron ore fine and 420000 MT of iron ore lump per year on FOB. In the course of contract performance, on or about March-2007 the Indian Government imposed the duty on exports that covered the supplied goods ie, Iron Ore Lump and Fine. In March-2007, M/s Sesa Goa Ltd, India proposed to PSM that the parties should share the burden equally - the export duty for the shipments from March, 2007 onwards.
The matter was placed before Board of Directors (BoD) of PSM in its meeting held on August 18, 2007. However, after a detailed discussion, the BoD rightly resolved that the request made by M/s Sesa Goa, India, was legally untenable and was against the relevant provision of the Contract, advising PSM to refuse M/s Sesa Goa, India, politely.
The matter was again referred to BoD on March 06, 2008 through circulation. The Board was apprised that if M/s Sesa Goa Ltd, India, did not ship remaining the 07 shipments of iron ore, the Corporation would be short of stock, resulting in interruption of the production process. In this situation, the Corporation would be left with no choice but to buy 350,000 MT iron ore consisting of 07 shipments of 50,000 MT each (4 Fine Ore + 3 Lump Ore) from Iran or open market, leading to an additional financial impact.
The signed addendum No 12 of June 11, 2008 provided by M/s Sesa Goa Ltd, India, was received by PSM, which was neither signed nor any payment in particular head was made. In the meanwhile, a notice from a British lawyer, Stephenson Harwood, sent on May 22, 2013 was received on May 27, 2013 wherein he, on behalf of M/s Sesa Goa, India, mentioned that if the outstanding amounts were not paid by June 07, 2013, they would commence legal proceedings.
With the approval of the then Chief Executive Officer (CEO) PSM, the notice was discussed with Dr Farogh Naseem, Advocate Supreme Court of Pakistan on May 28, 2013 by Captain Shamsi Hassan (Retd), APEO(P&S/A&P) who agreed to take up the matter and to take the legal course available to defend the notice .
Dr Naseem filed a suit no. 732/2013 before the Sindh High Court wherein it was prayed to restrain ICC and M/s Sesa Goa, India, from convening any arbitration proceedings. After hearing the case, a single-judge of the Sindh High Court Karachi on June 03, 2013, issued notices to the defendants ie M/s Sesa Goa, India and ICC/International Court of Arbitration and directed the parties to maintain "status quo". The copy of the suit along with orders passed by the court was also forwarded to M/s Sesa Goa, India, and ICC. The order passed by the High Court of Sindh at Karachi regarding maintaining of "status quo" is yet intact. Meanwhile, the counsel for M/s. Sesa Goa (Pvt) Ltd, India, has filed a CMA No 9683/2013 against suit no. 732/2013 filed by PSM in the High Court of Sindh at Karachi.
When proceedings were in progress in High Court of Sindh, M/s. Sesa Goa Ltd, filed application on July 09, 2013 in the ICC and as a result ICC issued notice on July 18, 2013 to PSM which was received by the latter on July 22, 2013. The said notice was discussed with Dr Naseem,. After thorough deliberations, Dr Naseem prepared a reply on July 31, 2013 which was sent to Tunde Ogunseitan, Counsel Secretariat of ICC International Court of Arbitration, France and Haris Zografakis, Counsel of M/s. Sesa Goa at London on August 01, 2013 through TCS and email apprising them that Pakistan Steel has filed a suit against M/s Sesa Goa and ICC in the High Court of Sindh and a status quo order has been given in favour of Pakistan Steel thus further arbitration proceedings may be stopped.
ICC Arbitral Tribunal has now appointed Sole Arbitrator viz Steven Philip Finizio despite the existence of a status quo order granted by the High Court of Sindh, which is still operative, and demanded of the PSM to deposit $60,000 for Sole Arbitrator''s fees and expenses as well as ICC administrative expenses up to December 2, 2013.
In view of the above compelling situation, PSM requires advice from Law & Justice Division on the following legal questions:- (i) whether PSM should respond to the notice of ICC wherein it has been directed to deposit $60,000 (the fee and expenses of the Sole Arbitrator as well as the ICC administrative expenses) before 2nd December, 2013 in the presence of status quo order granted by High Court of Sindh wherein ICC being defendant No 2 has been restrained not to proceed for arbitration upon the application filed by M/s. Sesa Goa Ltd;(ii) in case PSM has to defend the ICC proceeding, whether PSM can engage a lawyer from Pakistan or London. It is pertinent to mention that PSM made all correspondence with ICC through Dr Naseem in the instant case and a further suit filed by PSM against M/s. Sesa Goa and ICC in the High Court of Sindh through the said lawyer. "We will proceed further after we receive Law Ministry''s advice on this critical issue," the sources concluded.
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