Debevoise & Plimpton has secured an important victory for mining company Tethyan Copper Company Pty Limited (“TCC”), a joint venture between Antofagasta plc and Barrick Gold Corporation, winning an award of $4.087 billion in damages, plus $1.753 billion in pre-award interest, and $61.98 million in costs, against the Islamic Republic of Pakistan following the arbitration of claims before the International Centre for Settlement of Investment Disputes (“ICSID”). With a combined total of $5.9 billion, it is the second-largest ICSID award ever rendered.
TCC’s claims resulted from Pakistan’s denial of a mining lease for the Reko Diq project in 2011, in violation of the Australia-Pakistan Bilateral Investment Treaty. Reko Diq, located in the Pakistani province of Balochistan, contains one of the largest undeveloped copper and gold deposits in the world, with a potential mine life of more than 50 years. In 2006, based on assurances from the federal and provincial Governments, TCC entered into an agreement with Balochistan to develop the Reko Diq project. After TCC conducted extensive exploration and feasibility work, Balochistan, with Pakistan’s assistance, ousted TCC from Reko Diq so that it could do the project itself.
To obtain the award, TCC overcame repeated attempts by Pakistan to obstruct the proceedings throughout the entire arbitration, defeating jurisdictional objections, defenses on the merits, and allegations of illegality which TCC proved to be completely baseless.
Pakistan first turned to the Supreme Court of Pakistan in 2012, asking it to void the underlying joint venture contract to avoid the arbitration. The Tribunal rejected this argument, finding that the Supreme Court’s invalidation of the contract in 2013 could not have any effect on TCC’s legitimate expectations when it entered into the investment in 2006. The case went on to a jurisdiction and liability hearing in October 2014 where the witnesses detailed the Governments’ plan to take over the Reko Diq project.
In 2015, while the Tribunal’s decision was pending, Pakistan again sought to derail the proceedings, this time with corruption allegations that TCC thoroughly rebutted, and the Tribunal decisively rejected, over the course of two years of further proceedings. The Tribunal held that Pakistan’s conduct had breached multiple treaty obligations regarding fair and equitable treatment, expropriation, and non-impairment.
Finally, during the damages phase, Pakistan filed two separate challenges against the arbitrators, extending the case by several more months before they were also rejected.
Debevoise partner Donald Francis Donovan, who led the counsel team, comments: “We are enormously pleased with this result. It reflects not only the extraordinary lawyering of our team, including partners Mark Friedman, Dietmar Prager, and Natalie Reid, but the commitment of TCC and its owners, including board, management, and senior internal counsel, in a true collaboration over the course of these proceedings. The decisions at every stage, and the magnitude of the eventual award, all vindicate our strategy, affirm the integrity of TCC’s claims, and uphold the rule of law at the international level. We hope that Pakistan promptly complies with the award, so that this long dispute may be brought to a close, and the world-class asset that TCC developed at Reko Diq might be brought online to the benefit of Pakistan and the Pakistani people.”
The Debevoise team was led by partners Donald Francis Donovan, Mark W. Friedman, Dietmar W. Prager, and Natalie L. Reid, together with counsel Carl Riehl, senior associates Berglind Halldorsdottir Birkland and Elizabeth Nielsen, and former senior associate Rushmi Bhaskaran in New York; with assistance from partners Lord (Peter) Goldsmith QC and Patrick Taylor in London. Feisal Hussain Naqvi, ASC, of Bhandari Naqvi Riaz (BNR) in Lahore, Pakistan was co-counsel.
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