Published On: Thu, Sep 21st, 2017

Pakistan Struck with $700 million Fine in RPP Case


RPP CaseA Turkish company that is responsible for construction and operations of rental power plants (RPPs) has been awarded $700 million in a damages suit against Pakistan. The International Centre for Settlement of Investment Disputes (ICSID) announced the amount to be paid to Karkey Karadeniz Elektrik Uretium AS in the RPP case.

On the ICSID website, it was announced on 22nd August however the verdict was given in March 2016 and the quantum of the award has been decided by the tribunal to be Rs. 74 billion now.

Not only Pakistan kept the award as a secret but rumoured reports say that Pakistan even asked Turkish firm to keep the details of the award undisclosed.

After the Supreme Court’s ruling in the RPP case in 2012, the Karkey had filed their damages suit against Pakistan at the ICSID in February 2013.

In order to overcome an increasing power crisis in Pakistan, Karkey had been awarded a $560 million contract for power ship operation in the country. The contract was for five years, initially. However the current foreign minister Khawaja Asif and the PPP-Patriots leader Faisal Saleh Hayat approached the top court against this contract since it was awarded by the then PPP government.

Back then the NAB prosecutor General KK Agha tried to settle thing with Karkey but the then chief justice Iftikhar Chaudhry intervened and blocked his efforts and warned NAB against strict action be taken if an agreement or settlement would be reached with the Turkish firm in the RPP case.

At present, accountability courts are adjudicating corruption references filed over the RPP issue against several senior officials, including former prime minister Raja Pervez Ashraf. A senior official feared the ICSID verdict might affect NAB’s proceedings in these cases.

Karkey’s case is not the only one where Pakistan had to pay such awards. In the Reko Diq case, the ICSID dismissed Pakistan’s allegations of corruption against the Tethyan Copper Company Pty Ltd (TCC). Later, the TCC made a claim of $11.5 billion but Pakistan’s rejected it. Now the quantum stage has started, with both federal and Balochistan governments involved, and the TCC may agree to an out-of-court settlement.

Sources said the quantum phase of the arbitration is a prolonged, self-contained phase in itself, in which the office of the attorney general for Pakistan is actively participating in defence of the country.

At present, AGP Ashtar Ausaf is abroad to deal with several issues, as Pakistan faced international litigations in a number of cases, including Indian spy Kulbhushan Jadhav’s case at the International Court of Justice.

Last week, Pakistan requested the World Bank to establish a court of arbitration to decide on Pakistan’s objection over two dam projects of India. It is learnt that Pakistan has spent more than Rs1.3 billion on lawyers’ fees to contest the cases which are recently being adjudicated before the ICJ.

Raheel Kamran Sheikh, an executive member of the Pakistan Bar Council, said it was a matter of concern that Pakistan’s success rate in international arbitration cases was 2 per cent, while India’s success rate was 60 per cent.

About the Author

- An enthusiast working in Dubai as an Assistant Operations Manager. Writing about Pakistan and the latest happenings, trends around the globe is my passion. A dreamer, learner and a major foodie.