Summary: (a) Arbitration Act (X of 1940) – Ss. 8, 30 & 33 – Invalid Appointment of Umpire – Legal Misconduct: Dispute arose between a construction contractor and the AJK Government over a claim of Rs. 3,39,67,353—Parties agreed to arbitration during trial—Two arbitrators were appointed, but they issued contradictory reports—Trial Court, instead of following due procedure, appointed an Umpire (Syed Nisar Hussain Shah) without proper legal authority—Held, under Section 8 of the Arbitration Act, the appointment of an umpire must be preceded by a proper notice from a party and a failure by the arbitrators to appoint an umpire within 15 days—Since no such process was followed, the Trial Court lacked jurisdiction to appoint the Umpire—Therefore, the award issued by the Umpire was legally void—Reliance placed on PLD 1983 SC 243, PLD 1967 SC 314. (b) Arbitration Act (X of 1940) – S. 30 – Legal Misconduct – Failure to Answer Reference Questions: The Umpire failed to answer both reference questions provided by the Trial Court—While the Umpire answered the first question regarding the contractor’s entitlement to damages, he ignored the second question about the maintainability of the suit—Held, an arbitrator must respond to all reference points issued by the Court—Failure to do so amounts to legal misconduct under Section 30—Reliance placed on PLD 2000 Lahore 314, 2000 YLR 253. (c) Estoppel – Submission to Umpire’s Jurisdiction – No Bar on Challenging the Award: Appellants (Government of AJK) participated in the arbitration proceedings before the Umpire—Respondents argued that this barred them from later challenging the Umpire’s authority—Held, a party cannot be estopped from challenging an award if the appointment of the Umpire was made without jurisdiction—The Trial Court's appointment was inherently illegal, and participation in an unlawful process does not cure the legal defect—Reliance placed on PLD 1983 SC 243, PLD 1967 SC 314. ----Disposition: Appeal allowed—Judgment and decree of Trial Court set aside—Case remanded for either (i) a fresh arbitration following the proper procedure or (ii) continuation of the civil suit if arbitration fails.

Summary: (a) Civil Procedure Code (V of 1908): ---- S. 151 Inherent powers of the court—Correction of judicial errors—Arbitration award—Petitioner filed for execution of a decree based on an arbitration award—Trial Court, instead of making the award the rule of the court, passed a partial decree in favor of the plaintiff, leading to prolonged litigation—Execution petition was entertained despite the legal requirement to first rectify or confirm the decree—Held, that the trial court’s order lacked judicial reasoning and fell under the doctrine of Act of the Court, which should not prejudice any party—Courts have inherent powers under S. 151, CPC to correct their own mistakes in the interest of justice—Case remanded to the trial court for proper adjudication and passing of a decree in terms of the award. (b) Northern Areas Council Legal Framework Order, 1994: ---- Art. 19-A Right to fair adjudication—Judicial oversight—Failure of subordinate courts to apply judicial reasoning—Trial Court and Additional District Judge failed to correctly interpret the arbitration award, leading to erroneous execution proceedings—Chief Court rightly identified the flaw but erred in dismissing the orders based on counsel’s refusal to concede to remand—Held, that courts must act independently of the preferences of parties and ensure that proceedings are conducted in accordance with law—Matter remitted for proper adjudication. ----Disposition: Appeal allowed—Orders of Chief Court, Additional District and Sessions Judge, and Trial Courts set aside—Case remanded to Civil Judge, Nagar, with directions to pass a decree in terms of the arbitration award under S. 151, CPC—No order as to costs.

Summary: Civil Revision under Section 115 CPC--- Appointment of General Power of Attorney--- Said Attorney entered into agreement to sell with his own real brother qua land of the principal--- Thereafter both brothers entered into an arbitration agreement--- Appointed Arbitrator who renders the award--- principal/ executant of the general power of attorney died. Application under Section 14 & 17 of the Arbitration Act for making award as rule of the court was filed --- Attorney made conceding statement and award made rule of the court--- Application under Section 12(2) CPC for setting aside the judgment and decree filed and same was contested, issues were framed and both parties lead evidence. Held that after the death of the principals, the general power of attorney by operation of law became redundant and thereafter any transaction made by the said attorney on the basis of said defunct instrument (General Power of Attorney) that would be considered as void, illegal and fraudulent in nature. Consequently all the proceedings including the arbitration agreement and arbitration, award and making award as rule of the court were initiated against the dead persons, which are declared as nullity in the eyes of law. Petition dismissed with heavy cost. ------- 1. Arbitration Proceedings – Fraudulent Basis – Legal Nullity (Sections 14 & 17, Arbitration Act, 1940; Section 12(2), CPC) Arbitration proceedings initiated on behalf of deceased persons, based on a defunct General Power of Attorney, are fraudulent and void ab initio. Fraudulent actions vitiate even the most solemn proceedings, and any structure built on such proceedings is legally untenable. (Hafiz Brothers (Pvt.) Ltd. v. PICIC, 2001 SCMR 1; Muhammad Yar v. Muhammad Amin, 2013 SCMR 464). -------2. Fraudulent Transactions – Principle of Fraud Vitiating Proceedings Transactions executed after the death of principals through a defunct General Power of Attorney constitute fraud and misrepresentation. Such transactions, including arbitration agreements and awards, are null and void. (Nawab Syed Raunaq Ali v. Chief Settlement Commissioner, PLD 1973 SC 236; Sindh Irrigation and Drainage Authority v. Government of Sindh, 2022 SCMR 595). -------3. Dead Persons as Parties – Legal Proceedings (Section 12(2), CPC) Any legal proceedings instituted against deceased persons are a nullity and incurable in law. Orders passed against deceased individuals have no legal effect. (Farzand Ali v. Khuda Bakhsh, PLD 2015 SC 187; Hafiz Brothers (Pvt.) Ltd. v. PICIC, 2001 SCMR 1). ------- 4. Limitation – Knowledge of Fraud – Timely Filing of Application (Section 12(2), CPC) Applications under Section 12(2) CPC filed upon discovering fraud are not barred by limitation if the applicant establishes prompt action upon gaining knowledge of the fraudulent acts. ------- 5. Concurrent Findings of Fact – Revisional Jurisdiction The concurrent findings of the lower courts regarding fraud and misrepresentation were upheld. Revisional courts do not interfere with such findings unless material irregularities or jurisdictional defects are established. (Mst. Zaitoon Begum v. Nazar Hussain, 2014 SCMR 1469). ------- 6. Frivolous Litigation – Imposition of Costs Frivolous and vexatious litigation without justifiable grounds warrants imposition of substantial costs. In this case, the petitioners were burdened with a cost of Rs. 10,00,000/- to discourage misuse of judicial forums. (Capital Development Authority v. Ahmed Murtaza, 2023 SCMR 61; Province of Punjab v. Zulfiqar Ali, 2024 SCMR 22). ------- Disposition: Civil Revision Dismissed: The revision petition was dismissed as devoid of merit. Costs Imposed: Special costs of Rs. 10,00,000/- were imposed on the petitioners to be recovered as arrears of land revenue and deposited with Akhuwat Foundation. Order accordingly.

Summary: (a) Alternative Dispute Resolution (ADR) – Encouragement of Mediation in Civil Litigation The Supreme Court emphasized the need for mediation as an effective alternative dispute resolution (ADR) mechanism, citing the overwhelming backlog of 2.22 million pending cases in Pakistan's courts. Mediation is seen as a preferred and efficient method to resolve disputes amicably, cost-effectively, and expeditiously, aligning with international legal standards and best practices. (b) Jurisdiction and Enforceability of Arbitral Awards The Court examined the arbitral process under the Arbitration Act, 1940, wherein a two-member tribunal's unanimous arbitral award was initially made the Rule of Court by the Civil Court but later set aside by the Lahore High Court. The Supreme Court, instead of directly adjudicating on the appeal, referred the matter for mediation, recognizing ADR as a more practical and timely solution to commercial disputes. (c) Mediation as a Fundamental Right of Litigants The Court ruled that mediation should be considered an integral right of the litigants, allowing them to resolve disputes efficiently, autonomously, and without unnecessary adversarial consequences. It held that access to justice is not limited to litigation but includes the right to seek resolution through ADR mechanisms, reinforcing the principle of procedural justice. (d) Constitutional and Legislative Framework for Mediation in Pakistan The Court referenced the Alternative Dispute Resolution Act, 2017, and provincial ADR laws, including the Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan ADR Acts, which empower courts to refer disputes to mediation. Additionally, it highlighted the Mediation Accreditation (Eligibility) Rules, 2023 and the Mediation Practice Direction (Civil) Rules, 2023, which standardize mediation procedures in Pakistan’s judicial system. (e) Comparative and International Legal Standards on Mediation The Court acknowledged international instruments supporting mediation, particularly the Singapore Convention on Mediation (2018), which provides a global framework for enforcing mediated settlements akin to the New York Convention on Arbitration (1958). The Court recommended that Pakistan ratify the Singapore Convention, underscoring its benefits in reducing litigation backlog and promoting commercial dispute resolution. (f) Mediation Centers and Institutional Development The Court commended the establishment of court-annexed mediation centers, such as the Islamabad High Court Mediation Center, and private institutions like the Musaliha International Center for Arbitration and Dispute Resolution. It encouraged further expansion of mediation facilities across Pakistan, urging courts to adopt a pro-mediation bias to reduce litigation. (g) Economic and Social Benefits of Mediation The judgment outlined the economic and social advantages of mediation, including: Cost-effectiveness – Lower legal expenses and faster resolutions. Time efficiency – Avoidance of prolonged court proceedings. Confidentiality – Unlike public trials, mediation remains private. Preservation of relationships – Particularly in business and family disputes. Control over outcomes – Parties directly shape their settlements. (h) Referral of the Case for Mediation Considering the nature of the dispute between M/s Mughals Pakistan (Pvt.) Ltd. and EOBI/PRIMACO, the Court ordered the referral of the matter for mediation. However, it allowed the parties to re-approach the Court if mediation fails, ensuring that their right to judicial determination remains intact. (i) Disposition Appeals referred to mediation in line with the Supreme Court’s pro-mediation stance. If mediation fails, parties may request re-fixation of appeals before the Supreme Court. Attorney General for Pakistan directed to consider ratification of the Singapore Convention on Mediation.

Summary: Background: This case pertains to a civil revision petition filed against a judgment from a lower appellate court. The petition challenged the decision that allowed the stay of a civil suit concerning the sale and transfer of land, pending the outcome of arbitration proceedings. The case involves two agreements to sell a land plot and subsequent disputes between a first purchaser and a second purchaser. The initial dispute arose over the allotment and sale of a plot of land by the original landowners, represented by an attorney. After multiple transactions and legal complications, the matter was referred to arbitration. -----Issues: 1- Whether the application for stay under Section 34 of the Arbitration Act, 1940, was valid in the absence of an arbitration clause in the agreement. ----2- Whether the arbitration proceedings should take precedence over the civil suit for specific performance. ----3- Whether the appellate court correctly allowed the stay of proceedings in the civil suit until the arbitration was completed. -----Holding/Reasoning/Outcome: The court held that the appellate court's decision to stay the civil suit was valid. It reasoned that despite the absence of an explicit arbitration clause in the agreement, the parties had agreed to refer their dispute to arbitration. The petitioner had already participated in the arbitration proceedings, and an award had been rendered. The court found no illegality in the appellate court’s decision to allow the stay under Section 34 of the Arbitration Act. The civil revision petition was dismissed, and the parties were instructed to proceed with the arbitration outcome. -----Citations/Precedents: Farid Virani v. Feroz Virani (PLD 2013 Sindh 386) – Stated the purpose of Section 34 to enforce arbitration agreements and prevent unnecessary court litigation. Mrs. Rubby Hameedullah & others v. Dr. Arif & others (2010 YLR 3331) – Emphasized that disputes subject to an arbitration agreement must be resolved through arbitration, not court proceedings. Sqn. Ldr. (R.) Khurram Zaman v. Mrs. Afia Zafar & others (2008 CLD 662) – Affirmed the right to stay legal proceedings when an arbitration agreement exists and arbitration is initiated. Halsbury's Laws of England, Fourth Edition, Volume-II – Defined arbitration as a process for dispute resolution outside of court. The court upheld the sanctity of arbitration agreements and affirmed that parties are bound by their contractual commitments to resolve disputes through arbitration.

Summary: Background: This case involves a dispute between M/S 7Sky Digital Marketing Pvt. Ltd. (petitioner) and M/S ASR Builders (respondent) regarding the construction and marketing of a multi-storey building project, IRENIC-II. The petitioner was responsible for the advertising, marketing, and sales, while the respondent was responsible for construction. Disputes arose between the parties, leading to civil and criminal litigation. Both parties agreed to arbitration, appointing an arbitrator (respondent No. 2) to settle the dispute. The petitioner filed a petition under Section 14 and Section 17 of the Arbitration Act, 1940, seeking a direction for the arbitrator to issue an arbitration award. In response, the respondent filed a petition under Sections 5 and 11 of the same Act. The Civil Judge consolidated the petitions and framed consolidated issues, which the petitioner challenged. ----- Issues: ----- 1) Whether the consolidation of two petitions under the Arbitration Act, 1940, is permissible. ----- 2) Whether the provisions of the Civil Procedure Code (CPC) apply to proceedings under the Arbitration Act, 1940, particularly with respect to framing consolidated issues. ----- Holding/Reasoning/Outcome: The court dismissed the petitioner’s challenge to the consolidation of the petitions and the framing of consolidated issues. It held that: The Arbitration Act, 1940, does not prohibit the consolidation of petitions and permits the application of the Civil Procedure Code (CPC) under certain provisions, particularly Section 41. Section 33 of the Arbitration Act, 1940, allows for disputes about arbitration agreements or awards to be resolved based on affidavits, and the CPC can apply to these proceedings to ensure justice. The petitioner, having previously sought additional issues under the CPC, was estopped from challenging the application of the CPC in this case. The court found that the consolidation of the petitions and the framing of consolidated issues were valid under the law. ----- As a result, the court dismissed the petition and upheld the consolidation order. ----- Citations/Precedents: Arbitration Act, 1940 (Sections 5, 11, 14, 17, 33, 41) Civil Procedure Code, 1908 (Order XIV, Rule 5) Qanun-e-Shahadat Order, 1984

Summary: ----- Background: Sadiq Poultry Farms (Private) Limited filed a suit under Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, seeking recovery of Rs. 285 million plus profit from First Habib Modaraba, claiming non-fulfillment of obligations under a sanctioned finance facility. The defendant, First Habib Modaraba, raised an objection to the jurisdiction of the Lahore High Court, Rawalpindi Bench, on the basis that the agreements between the parties contained an exclusive jurisdiction clause, granting authority to the courts in Karachi. ----- Issues: ----- 1) Does the Lahore High Court, Rawalpindi Bench, have jurisdiction to entertain the suit given the exclusive jurisdiction clause in the agreements? ----- 2) Are the jurisdiction and arbitration clauses in the agreements enforceable, and do they mandate the dispute be resolved in Karachi? ----- Holding/Reasoning/Outcome: Exclusive Jurisdiction Clause: The court evaluated Clause 12 of the Diminishing Musharakah Agreement, which specifically stated that any disputes arising from the agreement would be resolved exclusively by the courts in Karachi. The plaintiff had filed the suit in the Rawalpindi Bench, but the defendant objected, citing the agreed-upon jurisdiction clause. The court observed that both parties had mutually agreed on the jurisdiction at the time of signing the agreements, making it binding. ----- Arbitration Clause: Although the case revolved primarily around the jurisdiction of courts, the court also briefly addressed the issue of arbitration as it pertained to the enforceability of the dispute resolution mechanism stipulated in the agreements. The court acknowledged that parties often agree to arbitration clauses to resolve disputes, especially in commercial contracts. In this case, however, no specific arbitration clause was invoked or enforced, and the matter focused solely on the jurisdictional clause. The court reiterated that where parties mutually agree to settle disputes in a particular forum or court, including through arbitration, such clauses must be respected unless they are against public policy or contravene any statutory provision. The court held that the exclusive jurisdiction clause must be enforced and deferred the arbitration issue as the parties had not pursued arbitration. ----- Precedents on Jurisdiction and Arbitration: The court referred to several Supreme Court judgments supporting the enforceability of exclusive jurisdiction and arbitration clauses: ----- State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem (1987 SCMR 393): It was established that parties can agree on exclusive jurisdiction, and such agreements do not contravene public policy. Eden Builders (Pvt.) Ltd. v. Muhammad Aslam (2022 SCMR 2044): The court reiterated that parties can mutually agree to restrict jurisdiction to a specific court, and such agreements should be upheld. Messrs Kadir Motors (Regd.) v. National Motors Ltd. (1992 SCMR 1174): This case reinforced that parties can select a particular court or arbitration forum through mutual agreement. Application of Arbitration or Jurisdiction Clauses: The court further elaborated that even if there was an arbitration clause or an exclusive jurisdiction clause, it would take precedence over the general jurisdiction of the courts unless it violated legal norms. In this case, since the agreements were clear on the jurisdiction of Karachi courts and there was no invocation of any arbitration mechanism by either party, the jurisdiction clause had to be enforced. Arbitration, if stipulated, would have similarly required the parties to adhere to it unless contested on legal grounds. ----- Return of the Plaint: After considering the jurisdiction clauses, the court concluded that it lacked territorial jurisdiction to hear the case. In accordance with the jurisdiction clause in the agreements, the court returned the plaint under Order VII Rule 10 of the Civil Procedure Code (CPC), directing the plaintiff to present the suit before a court of competent jurisdiction in Karachi. ----- Outcome: The court returned the plaint, requiring the plaintiff to file the suit in the appropriate court in Karachi as per the exclusive jurisdiction clause in the agreements. Although arbitration was discussed in general, the focus of the decision was on enforcing the jurisdiction clause, as arbitration was not pursued by the parties. ----- Citations/Precedents: State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem (1987 SCMR 393) Eden Builders (Pvt.) Ltd. v. Muhammad Aslam (2022 SCMR 2044) Messrs Kadir Motors (Regd.) v. National Motors Ltd. (1992 SCMR 1174) Faysal Bank Limited v. Messrs Usman Enterprises (2023 CLD 1563) MCB Bank Limited v. Adeel Shahbaz Steel Mills (2023 CLD 655)

Summary: Arbitration Act (X of 1940)--- ----S. 17---Civil Procedure Code (V of 1908), S. 12(2)---Arbitration proceedings---Arbitration Award made Rule of the Court on basis of conceding statement of one of the defendants---Plea of fraud and misrepresentation---Proof---Dispute arose between sons over gift of property made by their father in favour of one of the sons---By way of the Arbitration Award, plaintiff-son was held to be the owner of the property in dispute on the basis of a gift in his favour by the father---Said Award was made the Rule of the Court on the basis of the conceding statement of the father ---Defendant-son filed an application under S. 12(2), C.P.C. alleging fraud and misrepresentation---Held, that the question as to whether judgment and decree was obtained fraudulently by the plaintiff-son would depend primarily upon the fact whether the father actually appeared in court and conceded the case of plaintiff-son of making the Award, the Rule of the Court--- Judgment and decree sought to be set aside through the application under S. 12(2), C.P.C. was passed on 9-1- 1979 against the father who died on 11-10-1990---On the basis of the said judgment and decree, a mutation had also been effected---During his lifetime, the father never challenged the said judgment and decree---As per the record, the Award was filed in court where the father entered appearance and stated that he had no objection if the Award was made, the Rule of the Court---Statement of father was recorded and thumb impression was obtained---Defendant-son was unable to bring any evidence on record to disprove the thumb impression of the father---No evidence was brought on record to suggest that the father did not appear and concede the case of plaintiff-son---Defendant-son in his own statement did not specifically spell out that fraud had been allegedly committed or that the father did not appear in court, and his entire evidence was based on hearsay---Stamp vendor from whom the stamp paper for the Arbitration Agreement was purchased, also entered the witness box along with his register---Counsel who represented the father also appeared as a witness and supported the case of the plaintiff-son---Defendant-son conceded in his cross-examination that plaintiff-son was in possession and cultivated the part of the land in dispute---Record also showed that the defendant-son had been involved in a murder case, giving support to the claim of plaintiff that the father and defendant-son were estranged---Application filed by defendant-son under S. 12(2), C.P.C. had been rightly dismissed---Appeal was dismissed accordingly. ----- Background: This appeal arises from an order of the Lahore High Court dated May 25, 2004, which dismissed the writ petition filed by the appellant. The appellant sought to set aside a judgment and decree dated January 9, 1979, which had made an arbitration award the rule of the court. The arbitration involved a property dispute between the appellant’s father, Muhammad Nawaz, and Respondent No. 3, who was declared the owner of the disputed property based on a gift from Muhammad Nawaz. The appellant challenged the judgment and decree under Section 12(2) of the Civil Procedure Code (C.P.C.), alleging fraud and misrepresentation, but his application was dismissed by the trial court and upheld by the appellate and revisional courts. --- Issues: 1) Whether the judgment and decree making the arbitration award the rule of the court were obtained through fraud or misrepresentation. ---2) Whether the arbitration agreement and award were validly executed. ---3) Whether Muhammad Nawaz, the appellant's father, appeared in court and consented to the award. ---4) Whether the lower courts erred in dismissing the application under Section 12(2), C.P.C. ---- Holding/Reasoning/Outcome: The Supreme Court dismissed the appeal, affirming the findings of the lower courts. The court held that the appellant failed to prove that the judgment and decree were obtained by fraud or misrepresentation. The evidence presented, including the recorded statement and thumb impression of Muhammad Nawaz, supported the conclusion that he had consented to the award. The appellant's claims were based on hearsay, and no cogent evidence was provided to disprove Muhammad Nawaz's appearance in court or the validity of the arbitration agreement. The concurrent findings of fact were upheld, and the court found no grounds for interference, as no misreading or non-reading of evidence was established. ---- Citations/Precedents: Abdul Rasheed through L.Rs. and others v. Manzoor Ahmad and others (PLD 2007 SC 287) Habib and 8 others v. Haji Muhammad and 3 others (PLD 1970 Karachi 495) Peer Baksh through LRs and others v. Mst. Khanzadi and others (2016 SCMR 1417) Muhammad Iqbal and others v. Khair Din through L.Rs and others (2014 SCMR 33) Mst. Fateh Bevi and others v. Additional District Judge, Khushab and others (2008 SCMR 1262)

Summary: Background: M/s Staco Shahid Builders (Appellant) was awarded a contract by the Lahore Cantonment Board (Respondent) for constructing a 250-bed family wing hospital, which was later expanded to a 500-bed teaching hospital. A dispute arose over price variations, leading the appellant to file an application under Section 20 of the Arbitration Act, 1940, requesting the appointment of independent arbitrators. The learned Civil Judge/Special Court for Administrative Commercial Cases, Lahore, dismissed the application, stating it was premature and referred the matter to the already appointed arbitrator, the Director of Military Lands and Cantonments (DML&C), Lahore Region. The appellant challenged this order in the present appeal. ----Issues: 1) Whether the arbitrator, the Director of Military Lands and Cantonments, Lahore Region, is impartial, considering his connection with the respondent. ---2) Whether the trial court erred in referring the matter to the pre-appointed arbitrator instead of appointing independent arbitrators as requested by the appellant. ----Holding/Reasoning/Outcome: Arbitration Clause: The contract between the parties, signed on August 23, 2018, included an arbitration clause naming the DML&C as the sole arbitrator. The Court found that the parties were bound by this agreement, and the appellant could not later claim impartiality issues with the appointed arbitrator. It held that known relationships between an arbitrator and one of the parties do not automatically invalidate the arbitration agreement. --- Court’s Role in Arbitration: Under Section 20 of the Arbitration Act, the court’s role is limited once an arbitrator is named in the contract, and it cannot substitute its choice unless the appointed arbitrator refuses to act or is incapable of acting. The appellant’s claims that the DML&C is biased were deemed hypothetical and unsupported by evidence. --- Appointment of Arbitrator: The Court concluded that the appellant had willingly entered into the contract, which explicitly named the DML&C as arbitrator. Therefore, the Court upheld the trial court’s decision to refer the matter to the appointed arbitrator, as the appellant failed to show sufficient cause for appointing a different arbitrator. --- Legal Precedents: The Court cited precedents supporting the binding nature of arbitration agreements and the limited grounds for replacing arbitrators. It held that the appellant could approach the Court to challenge the arbitrator’s conduct only after arbitration if there were any signs of misconduct or bias. --- -Outcome: The Lahore High Court dismissed the appeal, ruling that the appellant must proceed with the arbitration under the originally appointed arbitrator (DML&C) as per the contract’s terms. ---- Citations/Precedents: Messrs Commodities Trading International Corporation vs. Trading Corporation of Pakistan Ltd. (1987 CLC 2063) Messrs Allied Engineering Consultants (Pvt) Ltd. vs. Sui Gas Transmission Company Ltd. (1989 CLC 1143) Director Housing, AG’s Branch, Rawalpindi vs. M/s Makhdum Consultants Engineers and Architects (1997 SCMR 988) Engr. Inam Ahmad Osmani vs. Federation of Pakistan (2013 MLD 1132) University of Engineering and Technology, Lahore vs. Messrs Upright Engineers (Pvt) Ltd. (2021 CLC 596) Lahore Stock Exchange Limited vs. Fredrick J. Whyte Group, Pakistan Ltd. (PLD 1990 SC 48) Saudi Pak Industrial and Agricultural Investment Company (Pvt) Ltd. vs. Allied Bank of Pakistan (PLD 2003 SC 215) M.A. Ghani Sufi & Sons vs. Federation of Pakistan (PLD 1957 (W.P) Lahore 363) Pakistan Medical Commission vs. Construction Experts (Pvt) Ltd. (PLD 2023 Islamabad 01)

Summary: Detailed judgment in Reko Diq cae ---- Short Order Citation: 2022 SCP 340 --- ---- Background: The case revolves around a dispute over the Reko Diq project, a large copper and gold mining venture in Balochistan. The Balochistan Development Authority (BDA) entered into an agreement with a foreign investor in 1993, giving the foreign entity a 75% share in the project. Over time, this foreign entity was replaced by the Tethyan Copper Company Pty. Ltd. (TCCA), and later Barrick Gold Corporation and Antofagasta became involved. In 2011, the Balochistan government denied TCCA's mining lease application, leading to arbitration proceedings initiated by TCCA under the Pak-Australia Bilateral Investment Treaty and at the International Chamber of Commerce (ICC). Meanwhile, the Supreme Court of Pakistan, in 2013, declared the original agreement (CHEJVA) void for lacking lawful authorization. Subsequent ICSID arbitration led to Pakistan being ordered to pay nearly $6 billion in damages. After lengthy negotiations, a settlement was reached, leading to the reconstitution of the project with new terms, including a financial settlement with Antofagasta. -----Issues: 1- Whether the original joint venture agreement (CHEJVA) was lawful and transparent. 2- Whether the financial liabilities arising from the ICSID and ICC awards could be settled through the negotiated agreements between the parties. 3- Whether the restructured Reko Diq project terms were in compliance with Pakistani law and in the country's best interest. -----Holding/Reasoning/Outcome: The Supreme Court’s opinion addressed the legality of the negotiated settlement following the ICSID arbitration award. The Court recognized the settlement as a lawful resolution of the financial liabilities and disputes stemming from the Reko Diq project. The restructured terms of the project, with 50% equity for local Pakistani entities and Barrick as the operator, were seen as compliant with legal standards. The financial settlement and the reorganization of the project were endorsed, subject to the fulfillment of certain conditions by December 15, 2022, as laid out in the agreement. -----Citations/Precedents: Abdul Haque Baloch vs. Government of Balochistan (PLD 2013 SC 641) The judgment that declared the CHEJVA agreement void due to lack of lawful authorization and transparency. ICSID Arbitration Decision (12.07.2019) The final award in which TCCA was granted approximately $5.9 billion in damages and costs. International Chamber of Commerce (ICC) Proceedings Ongoing proceedings related to the Reko Diq project, with a potential additional award of $2-3 billion against Pakistan. These precedents and decisions shaped the Court’s reasoning in affirming the negotiated settlement and restructuring of the Reko Diq project.