Pakistan

Pakistan Secures Arbitration Clause with Saudi Arabia and Qatar for Mega Projects

Pakistan has secured a favourable arbitration clause with Saudi Arabia and Qatar for the resolution of any disputes that may arise from the multibillion-dollar investments that the two Gulf countries plan to make in various projects in Pakistan.

Pakistan has negotiated to include a graduated approach for settlement of investment disputes between the state and investors, which will give a mandatory period of eight months to resolve the issues at the domestic forums before resorting to international arbitration.

Pakistan has agreed to allow Saudi Arabia and Qatar to approach the Permanent Court of Arbitration (PCA) or the International Centre for Settlement of Investment Disputes (ICSID) as the international forums of arbitration in case of non-resolution of disputes at the domestic level.

The arbitration clause will be part of the investment chapter that can be annexed with a Free Trade Agreement (FTA) to be signed with the Gulf Cooperation Council (GCC) countries, which will also include the process of investor and state dispute settlement through the ICSID as agreed with Saudi Arabia and Qatar.

The arbitration clause was also shared with the GCC Secretariat, which informed Pakistan that the legally cleansed draft of the FTA will be shared with Pakistan in due course of time. The Pakistani ambassador has been assigned to follow up with the GCC Secretariat and update the Special Investment Facilitation Council (SIFC) before its next meeting.

The arbitration clause was a major breakthrough for Pakistan as it would provide a legal framework and a level of confidence for the investors from Saudi Arabia and Qatar, who have expressed their interest in investing in several projects in Pakistan, especially in the mining, energy, and industrial sectors.

One of the most prominent projects that Saudi Arabia and Qatar are interested in is the Reko-Diq gold and copper mining project in Balochistan, which has been mired in legal disputes for years. The sources said that the two sides are holding talks on the exact valuation of the project and Manara Minerals, a joint venture between the Saudi Arabian Mining Company (Ma’aden) and the Public Investment Fund (PIF), is finalising the term sheet and valuation.

The sources said that Manara Minerals is a new venture that will invest in mining assets globally and support the development of resilient global supply chains. On Pakistan’s side, the Reko Diq Mining Company (RMDC) has been tasked to hire levies and payment mechanisms defined for Balochistan.

Another major project that Saudi Arabia is keen to invest in is the Aramco Refinery Project, which is expected to be one of the largest oil refineries in the region. The sources said that the SIFC has decided to follow up on the project to materialise it as soon as possible.

In another major development, the SIFC has given approval in principle for the establishment of the National Industrial Development & Regulatory Authority (Nidra), which will be a one-stop shop for the facilitation and regulation of all industrial and economic zones in the country.

The modalities of Nidra will be finalised in consultation with the provinces and the Board of Investment (BOI) has been assigned to initiate the process of legislation for the proposed model under Article 147 in consultation with the provincial governments and stakeholders.

The sources said that Nidra will also formulate a framework for the unification of all existing economic and industrial zones by March 2024. Till the legislation is passed, the proposed model will be worked on in consultations with the provincial governments.

Back to top button