News

GST LLP is pleased with an apparent settlement and termination of litigation between Pakistan and Turkey achieved by the two governments over a dispute regarding the lease of floating power plants by Turkish company Karkey to Pakistan during an energy crisis in 2006

GST LLP will defend Pakistan in an enforcement action against mining company Tethyan. An ICSID tribunal had orginally found that Pakistan unlawfully denied Tethyan a lease to mine copper and gold in Pakistan, but Pakistan alleges bribery and corruption of officials.

Quinn Smith of GST LLP agrees with move by US District court to pause litigation filed by a Turkish energy company against Pakistan, so that a World Bank arbitral institution considers allegations of corruption, namely a scheme to influence the award of the contract.

A US court said “limited” discovery was warranted in support of a pending investigation by anti-corruption authorities in Pakistan. The court ordered Arnold & Porter to answer a number of “basic questions” posed by Pakistan about the material within 30 days. Pakistan sought the material in aid of its efforts to overturn an US$850 million ICSID award issued in 2017 by a tribunal composed of Yves Derains of France, Horacio Grigera Naón of Argentina and David Edward QC of the UK.

A Washington DC federal judge granted Pakistan’s request for interrogatories related to its allegations of corruption by Turkish energy company Karkey.

Pakistan, represented by GST LLP attorneys Quinn Smith, Gary Shaw and Derek Womack, argues that Turkish energy company Karkey’s bid to confirm a prior award should be denied, that it had not been properly served, that the court lacked jurisdiction under the Foreign Sovereign Immunities Act, and importantly, that the award is suspect, as the tribunal did not permit access to evidence demonstrating corruption by Karkey.

Pakistan’s attempts to unseat members of an ICSID tribunal for their conflicts of interest regarding a dispute over mining in Pakistan filed in 2012. Ignacio Torterola of GST LLP in Washington, D.C., counsel for Pakistan, expressed that “Pakistan’s only hope was to have an independent and impartial tribunal in a case as important as this one, in which the future of an underdeveloped part of the world is at stake.”

GST LLP argues that Pakistan was deprived of its due process in proceedings awarding Turkish energy company Karkey an award of nearly US$846 million. They assert that documents proving corruption were refused consideration by the ICSID tribunal.

Failure to disclose conflicts of interest have led to a bid by Pakistan to disqualify all three members of an ICSID tribunal from hearing a claim brought by Tethyan Copper Company. GST LLP shares that it has documentation indicating that Bulgarian arbitrator Stanimir Alexandrov provided expert services in which a particular cash flow valuation calculation method was used.

GST LLP’s Diego Gosis and Ignacio Torterola reported that a stay in execution of an award to Turkish energy firm Karkey would ultimately convert to annulment, given the strong grounds put forward in their defense of Pakistan.

Pakistan has retained GST LLP in its application to annul an ICSID award ordering it to pay $800 million - one of the highest damages sums in the center’s history - for detaining power generation vessels used during a power crisis in Karachi. GST LLP’s Ignacio Torterola reports that the award, in favor of a Turkish company who leased the vessels “is as flawed as it gets,” failing to offer reasons for the damages which include ordering payment of interest relating to a matter occurring two years later.

Regarding an $800 million award that the ICSID issued to Turkish energy firm Karkey against Pakistan, GST LLP attorneys were quoted saying they have “never seen an award with flaws that are so numerous.” They immediately filed a petition to annul, with Gosis stating further “Arbitrators failed to apply the applicable law, exceeded their jurisdiction and decided on things not at issue resulting in inflated damages.”

The bid to disqualify an arbitrator who Pakistan alleges has a conflict of interest in deciding a dispute with Tethyan Copper Company will go to an outside arbitral institution for an opinion. GST LLP partner Diego Gosis submitted on behalf of Pakistan that an arbitrator appointed by Tethyan uses the same experts and methods of valuation used by that company and would have an interest in defending their validity.

As an ICSID claim moves to the damages phase, Pakistan has applied to disqualify a Bulgarian arbitrator because the claimants are relying on a rare valuation method involved in another case where the arbitrator is acting as counsel. Diego Gosis, a partner at GST LLP in Miami, states that “The thrust of Pakistan’s concern lies with the stance adopted by the arbitrator – that he felt no disclosures were necessary even in the face of outrageous conflicts of interests.”

Diego Gosis confirmed on behalf of his client, Pakistan, that there exists a single publicly available case in a claim against Peru by a Canadian mining company in which aritral committee member Alexandrov relies on a “very peculiar” form of discounted cash flow-based valuation to quantify damages. This method is proposed by the Canadian claimants Tethyan in its current proceeding against Pakistan. He stated “The fact that some arbitrators are making the same arguments as counsel that they are accepting to decide on as arbitrators is very problematic in this sense, and any failure to make all necessary disclosures of those overlaps puts the feasibility of the entire system at risk.”