Pakistan reportedly suffered Rs 900 million financial loss due to the deliberately detained shipping of raw material for Pakistan Steel Mills (PSM) in Canada by Indian company Fomento some months ago. This is the crux of the discussion in the Board of Directors (BoD) meeting held on January 12, 2012 in Islamabad in which the role of local agents and Indian company Fomento was discussed in detail.
"Out of court settlement was negotiated in complete defiance of instructions given to the lawyers," said one member of BoD. Fomento had allegedly provided substandard iron ore to Pakistan Steel in 2004, and, by using a provision of the signed agreement between the two, the Pakistan Steel terminated the agreement with Fomento in 2005.
Fomento filed a case against Pakistan Steel at the International Court of Arbitration in London, which gave a ruling in favour of Fomento and put a penalty of around $10 million on Pakistan Steel. The Board agreed with the argument that award attained finality because PSM did not file appeal against the award in the given time, but there is a further step for making the award a rule of the court. So Pakistan can raise objections at this stage. The question as to why Pakistan was not going for that option was also raised by Incharge Law. He added: "Every time we hear that we have to rush and only two days are left before decision has to be taken, otherwise it would be adverse to PSM interests".
Additionally, Incharge law questioned Mirza Mehmood, the PSM lawyer that if the award is claimed so easily by the party then what has stopped them from doing so till now. Sources said that Mirza Mehmood Ahmed could not satisfy the Board, saying that he assumed the party may not like to engage in further fees for claiming the award, but he remained unclear about the specific queries of Incharge Law.
Engineer Abdul Jabbar Memon, who is also a Director at the PSM Board, pointed out that the court order passed by British Colombia was not timely intimated to PSM. It was passed by the court on April 21, 2011 but communicated to PSM, with deceptive approach, on May 11, 2011 ie the day when the ship was arrested.
Further, the award was announced 2:1 which is an inherent weakness in the award and on the basis of other weaknesses like delayed serving of the court order by the lawyer of Fomento, deceptive manner used during the exercise of the issue without notifying PSM, would include but not limited to various other reasons to have placed PSM in a better position of defence against the stance of Fomento.
Engineer Abdul Jabbar also argued that when the port authorities had also advised the party and its lawyer that using such a deceptive manner is not favoured by them suggesting that the PSM should be taken on board would add to the strength of PSM case to contest if would be evaluated on the merits of the situation surrounded by the circumstances.
"In addition, there appears to be another conspiracy between the agent and master for using the BL on the same date of the arrest of the ship together does merit the consideration of the whole issue as possible connivance and agitation, if PSM could have worked out its case properly," he maintained. Engineer Jabbar had advised acting CEO to visit Canada and assess the confirmations of what the Board had been told through exchange of electronic messages and moreover Mirza Mehmood has not been able to satisfy on various issues and questions raised in this respect in the Board meeting.
He said that he is still waiting for proper understanding of the situation and some of the questions remain un-replied, and promised to be arranged for a reply from Mirza Mehmood Ahamd. "In this situation we have to think why we cannot agitate this basket of weakness in the court by filing our objections," he continued.
The arrangement, suggested by the lawyers, seems that PSM is not getting anything from the way forward arrangement and is at losing end. There is also another point to be taken for consideration that PSM accepted the documents in the situation when the ship was already arrested on May 5, 2011 and understandably the documents were accepted on May 31, 2011. Engineer Abdul Jabbar commented that although port authorities were asking to inform the affected parries but it was not done and every step was taken in a dishonest and immoral manner by Fomento, so what is the sanctity of such order.