ISLAMABAD: Karkey Karadeniz efforts to get the international arbitration court verdict enforced is likely to spell serious financial trouble for Pakistan, as it puts its foreign assets at risk of being taken over as security.
According to a report in Express Tribune, sources highlighted the International Centre for Settlement of Investment initiated proceedings on 23rd March 2018 in a case filed by Turkish company Karkey and it issued a ruling against Pakistan on 22nd August 2018 to pay $760 million in damages along with interest.
After the court ruling, Karkey visited Germany, US and UK to get the verdict enforced against Pakistan.
This puts the country’s foreign assets at risk of being taken over as security to enforce the court’s verdict and pay the damages to Karkey.
However, sources shared Pakistan is off the opinion that a government-to-government engagement could resolve the issue, however, no success has been attained in this regard.
And now the Pakistan Tehreek-e-Insaf (PTI) government wants to challenge the enforcement of the court decision.
In end-October, it was reported Pakistan persisted on pushing a D.C federal court to throw out the Karkey Karadeniz suit seeking to confirm an $846 million arbitral award stemming from a rental power project.
It reiterated its reasoning that the court lacks the authority to impose the award since it wasn’t properly served.
“The few facts Karkey does present are vague and, more importantly, do not establish that service is complete,” Pakistan said, reiterating arguments made in its September motion to dismiss. “Therefore, Karkey has not discharged its burden to establish personal jurisdiction.”
Also, the country stated the International Centre for Settlement of Investment Disputes (ICSID) award conferred to Karkey Karadeniz in 2017 after a discovery that it improperly seized some of the company’s investments in a ship rental power project couldn’t be imposed since the Turkish entity’s apparent efforts to provide services to Pakistan weren’t sufficient to establish the districts court’s jurisdiction under the Foreign Sovereign Immunities Act.
Pakistan put forth the reasoning that the award conferred to Karkey is suspect since the tribunal didn’t permit it to access evidence by the Turkish company that would have revealed the underlying project was tarnished by corruption.
Pakistan added in case the court refused to dismiss the case, it should pause imposition pending the result of its effort to annul the ICSID award.
In its defence to the dismissal motion, Karkey stated federal law doesn’t enforce any time limits for it to effectuate service.
It highlighted in asking the court to decide on the corruption question, Pakistan was going beyond the scope of the district court as per ICSID convention it cannot evaluate the merits of the resolution reached by the tribunal.
In June, Karkey had approached the D.C Federal judge to confirm the $846 million arbitration award issued to Pakistan for detaining power generation vessels used during a power crisis in Karachi.
It had demanded that Pakistan must pay as the court stay order is now over.
The tribunal initially ordered Pakistan to pay $501 million, however, due to nonpayment and accumulation of interest, the total has grown to nearly $846 million.