ICSID refused key witness testimony in Karkey RPP case

Islamabad:  Senior government officials said International Centre for Settlement of Investment Disputes (ICSID) had ignored Pakistan’s corruption claims and refused a key witness from testifying in the rental power plants arbitration case brought up by Karkey Karadeniz, reported a local newspaper.

Profit had reported Turkish firm Karkey Karandeniz, was awarded damages worth $700m over rental power plants (RPPs) dispute in a lawsuit filed against Pakistan in International Centre for Settlement of Investment Disputes (ICSID).

This dispute dates to the previous PPP led regime, when Karkey was awarded a $560m contract to operate a ship-based power plant to overcome power outages in the country.

RPP scheme was deemed controversial and faced corruption allegations, which resulted in current foreign minister Khawaja Asif and PPP-Patriots leader filing an appeal in the Supreme Court against the contract awarded to Karkey.

All agreements were deemed null and void under the RPP scheme as per the apex court directives, which resulted in Karkey filing a case against Pakistan in ICSID for contractual violations.

While briefing journalists on Friday, the legal team responsible for managing the case in ICSID expressed their dismay for not being allowed to present key evidence regarding corruption by Karkey and neither the power and water secretary, Shahid Rafi wasn’t permitted to testify.

Regarding the $700m penalty, the legal team said ICSID had raised several objections over SC’s judgement in RPP case and added that in their opinion the fault lied with the apex court for having declared all agreements null and void.

ICSID also raised questions as to why SC hadn’t called for an individual examination of all RPP contracts, instead of declaring them all null and void in one go.

International Dispute Unit Head Ahmad Irfan Aslam said the country’s stakeholders were monitoring the situation and considering various options to cope with the situation.

Aslam added that it was standard practice for parties to sit together after the conferment of an award to agree on a mutual settlement. Journalists in attendance were apprised that no date had been reached forth for start of negotiations with Karkey regarding the settlement.

The legal remedies according to Aslam available to Pakistan include filing a plea for rectification and revision over the annulment of award, failure to follow protocol and state reasons for the penalization and improper composition of tribunal.

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