TCC likely to claim damages

Tethyan Copper Company (TCC) is expected to claim damages against Pakistan's refusal to lease out gold and copper mines in Reko Diq in Balochistan's Chagai district in International Center for Settlement of Investment Disputes (ICSID), high level sources told Business Recorder. ICSID is scheduled to announce its final verdict on damages claim by TCC during 2018.
A high level source in government told Business Recorder that the feasibility study undertaken by the TCC maintained that water would be brought from 120 km away which is impractical and therefore the company simply cannot possibly claim to have sustained any losses as losses and damages are assessed on the basis of verifiable evidence.
The source further argued that it would be very difficult for the tribunal to justify the grant of damages in the matter; but may direct the reimbursement of actual expenses incurred, including Foreign Direct Investment by TCC which was minimal in any case. He further contended it will be an uphill task for the claimants to justify their claim.
Antofagasta PLC in a press statement noted that damage phase of proceedings will begin on 22 March 2017 and the tribunal will consider submissions from the two parties to determine the amount of compensation Pakistan must pay TCC. "A ruling on the quantum of damages is expected in 2018," the statement added.
ISCID is an autonomous international arbitration institution established in 1965 for legal dispute resolution and conciliation between international investors and is funded by the World Bank. The ICSID website indicates the current status of the proceedings as "pending (the claimant files a memorial on quantum on 23 March 2017)". In January 2013, Supreme Court of Pakistan declared the Reko Diq agreement void and in conflict with the country's laws while disposing of identical petitions filed against the federal government's decision to lease out gold and copper mines in Reko Diq to TCC.
The then Chief Justice Iftikhar Muhammad Chaudhry's three-member bench had ruled that the Chagai Hills Exploration Joint Venture Agreement - signed between the Balochistan government and Australian mining company BHP in 1993 - was in conflict with the laws of the country.
According to a press release issued by Antofagasta PLC company, TCC, "prior to submission of the mining lease application, TCC had completed a feasibility study showing that Reko Diq was one of the world's largest undeveloped copper and gold deposits with potential mine life of over 50 years for an estimated initial capital investment of over $3 billion".
Attorney General for Pakistan (AGP), Ashtar Ausaf Ali, currently in London has represented Pakistan before the Tribunal; he is expected to return to the country on March 27. An insider told Business Recorder that the ICSID procedure indicates that the final verdict will not be announced before 2018. He further added that the TCC's earlier plea was that the agreement be fully honoured and the license for 99 kilometres encompassing about 14 deposits be granted as per the signed contract.
TCC also moved a stay application before the ICSID and the International Chamber of Commerce (ICC) seeking complete blockade of any activity on the mineral reserves, however, both forums turned down TCC's plea after a thorough hearing of the matter. The source maintained that the "disappointed, claimants (TCC) withdrew their pray for grant of license thereby activity on the reserves was unblocked which was a strategic victory for Pakistan".
"Earlier settlement options were explored and cannot be ruled out because Pakistan, under its own laws, is bound to provide compensation in case a contract is declared void. It is expected that at dates given by the Tribunal, the claimants will file their submission and supporting material to justify their claim", he added. According to a senior official of the Petroleum Ministry, the government of Pakistan had urged the ICSID to dismiss the plea of the claimant on grounds of maintainability however this was rejected by the ICSID. Spokesperson for Balochistan government Anwar Kakar told Business Recorder that "we have come to know about the ICSID proceedings through the national media and will call a meeting is the next couple of days to deliberate on the issue".