Pak loses another case

GOVERNMENT of Pakistan has lost another critical case of international arbitration, this time involving nine domestic private power producers. London Court of Arbitration has in its final award asked Pakistan to pay more than Rs 14b to the nine power producers.
The nature of the dispute itself is highly technical. In a nutshell, in the year 2011 onward, as the circular debt skyrocketed government failed to make payments to many power producers, causing them to shut down periodically because without payment, they could not afford to pay for fuel. As a result, government imposed a penalty amounting to about Rs11billion that power producers contested, saying they should not be penalised because the government failed to make its payment. The matter was partially settled when the present government came to power in 2013, and the undisputed amounts involved in the matter were all settled. But the penalty had already been deducted at source, and the government did not reimburse this, so the matter first went to local courts, then to international arbitration after a neutral expert determined that the government could not charge a penalty for its own payment default. Anyway the judgment against Pakistan itself speaks failure of our different public sector departments especially the ministry of power that a number of hefty awards were issued against the country within the past few months raising many questions why Government of Pakistan always loses in international arbitration cases? The same failure we saw in the Rental Power Case involving a Turkish company in which Pakistan was slapped a fine of $700m by the international litigator. In the Reko Dik case, it is also expected that the country will be asked to pay for the damages. Also in the water disputes with India, we failed to get the kind of victories we sought. These repeated failures at international courts clearly reflect that our relevant departments are not doing their homework properly and ultimately facing one defeat after another. On the one hand, the failure is costing the country money in terms of payment of heavy damages and on the other hand it is also tarnishing our image in the world. Therefore it is time for the authorities concerned to wake up and get ready to contest the upcoming cases including that of Kulbhushan Yadav with full preparations and presence of mind in order to avoid further embarrassment.

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