Reko-Diq Case

In 1993, Australian mining organization BHP Billiton and the Balochistan government consented to an
arrangement known as "Chaghi Hills Exploration Joint Venture Agreement (CHEJVA)" for the
investigation and mining of copper and gold at the Reko Diq Mine. According to the understanding, BHP
would hold a 75% premium on the task while the government held the excess 25% offer on a joint-
venture premise with a 2% sovereignty installment. In April 2000, BHP gave over its commitments to a
generally un renowned Australian organization Mincor Resources, which was obtained by TCC in 2006.
In 2006, the legitimateness of the understanding was tested in the Balochistan High Court because
CHEJVA was executed in opposition to the arrangements of Pakistani regulation, the gatherings had
neglected to appropriately enroll CHEJVA, and the public authority of Balochistan had inappropriately
loosened up neighborhood regulation to execute CHEJVA. Nonetheless, the difficulties were struck
somewhere around the High Court, which decided that CHEJVA was lawful and legitimate.

In February 2011, the TCC presented a Mining Lease Application to the Balochistan government yet it
was dismissed in November 2011 by the Balochistan government. The reason for the dismissal was that
the purifying and refining ought to be finished in Pakistan rather than the first arrangement were
purifying and refining would be finished external Pakistan, the eminence rates ought to be improved,
the monetary model ought to be explored and there ought to be more supportive of the nearby
population in the venture. In November 2011, TCC took the matter to the World Bank Group's
International Centre for Settlement of Investment Disputes (ICSID) to look to pay $11.43bn in punitive
fees after the Balochistan government diverted down the renting demand from the organization. As per
TCC, it had proactively contributed more than $220 million (Rs35 billion) when the local government out
of the blue would not allow them the mining lease expected to proceed with activities and guaranteed
$11.43 billion in penalties for the surprising and abrupt end of the agreement. In January 2013, the High
Court of Pakistan announced the CHEJVA arrangement as void, because Balochistan had surpassed its
abilities by marking it, and invalid since it was in opposition to public strategy. It further expressed that
TCC had no legitimate freedom to investigate and mine in Reko Diq.

In July 2017, the ICSID concluded that TCC had a genuine assumption for getting the mining lease in light
of Pakistan's confirmations in the CHEJVA, its administrative structure, and direct confirmations from its
administration authorities and that there was no bad behavior in CHEJVA - the ground on which the High
Court of Pakistan had ended the understanding and that Pakistan was responsible to pay harms. The
ICSID likewise dismissed many claims of defilement made by the Pakistan government against TCC
including one of previous Balochistan chief minister Muhammad Aslam Khan Raisani having been
offered a payoff of $1 million by TCC. On 12 July 2019, the ICSID granted $5.976bn (Rs950 billion) in
punitive fees to TCC. The ICSID found that Pakistan had unlawfully denied the TCC a rent to mine copper
and gold stores at the Reko Diq mine, penetrated the Fair and impartial treatment standard (FET) and
that state had committed an unlawful seizure under the Australia-Pakistan bilateral investment treaty.

On 20 November 2020, to implement the $6bn grant, TCC moved toward the High Court of Justice in the
British Virgin Islands and looked for a connection of Pakistani resources having a place with the Pakistan
International Airlines Investment Ltd (PIAIL) — an organization which is likewise consolidated in the
British Virgin Islands. On 16 December 2020, the British Virgin Islands high court passed a request to
connect a portion of PIAIL's resources. These remembered the organization's advantages for two
lodgings in particular the Roosevelt Inn in Manhattan, New York, and Recorder Inn in Focal Paris, and 40
percent premium of PIA in a third element, Minhal Consolidated.

In March 2022, Pakistan came to an out-of-court settlement with Barrick Gold for restoring and creating
the Reko Diq project. Canadian-based Barrick Gold and Chilean Antofagasta had shaped the consortium
TCC. Antofagasta pulled out from the venture. Barrick Gold would hold around 50% of the portions of
the new undertaking and the other half would be parted between the Baloch state-possessed
organizations and Pakistani government organizations. The undertaking would see $10 Billion
speculation and production of 8000 positions. $11 Billion worth of punishments by ICSID and the London
Court of Arbitration would be saved. The public authority was supposed to put the settlement before
parliament and the high court.

a) What basic elements of Contract law were compromised from both sides and why Pakistan
received such a heavy amount of penalty from ICSID?
 The offer and acceptance part of contract law was compromised because the
distribution of shares were not satisfactory the Baluchistan govt. would only get 25% on
the contrary BHP were had a share of 75% which is quite unfair .But still Baluchistan
govt. agreed to the terms of the contract.
 The second element was consideration that means a fair distribution of rights to both
parties and it shouldn’t be one sided contract but by looking at CHEJVA contract its
more in a favor of the BHP Billiton.
 The third element is capacity to make a contract. Baluchistan govt. didn’t have an
authority but there was a care taker govt. at that time so they had to sign a deal with
BHP.
b) Also discuss if, in your opinion, the penalty was rightly imposed on Pakistan for the breach of
contract?
Yes, it was rightly imposed by ICSID. The contract had the arbitration clause which doesn’t allow
any provincial or local court to settle the dispute. It was a matter of international court which
doesn’t consider the decisions of local courts. The decision made by high court caused severe
charges on us by ICSID.