‘Nothing illegal’ in new Reko diq mine deal: supreme Court

ISLAMABAD         -        The Supreme Court of Pakistan on Friday declared that the settlement agreement between mining company Barrick Gold and the government of Pakistan in the Reko Diq mining project is legal. Chief Justice of Pakistan (CJP) Umar Ata Bandial announced the 13-page short opinion. A five-member larger bench of the apex court had reserved its decision on November 29 in the presidential reference. The order stated that the law did not allow agreements on national resources in violation of the Constitution and that provinces could amend laws pertaining to minerals. The court observed that the Balochistan Assembly was briefed on the matter and elected representatives did not raise any objections. It further stated that the agreement met environmental requirements and Barrick Gold Corporation assured that labour rights would be considered during the implementation of the project. Barrick Gold Corporation assured that laws for wages would be abided by and most of the labour force would be recruited from Pakistan, the order said. The court was further told that the project would be used for investing in social initiatives and skill development schemes would also be launched under it, the order added. There was nothing illegal in the new Reko Diq agreement, the court order concluded. The five-member bench of the apex court headed by Chief Justice of Pakistan Justice Umar Ata Bandial and comprising Justice Ijaz ul Ahsan, Justice Munib Akhtar, Justice Yahya Afridi and Justice Jamal Khan Mandokhail announced its reserved opinion on the Reference sent by President Dr Arif Alvi under Article 186 of the Constitution on two questions; “i) Whether the earlier judgment of this Honourable Reference No.2/2022 6 Court reported as [Maulana] Abdul Haque Baloch v. [Government of Balochistan], PLD 2013 SC 641 or the laws, public policy or Constitution of Pakistan prevent the GoB and the GoP from entering into the Implementation Agreement and the Definitive Agreements [Agreements] or affect their validity? ii) If enacted, would the proposed Foreign Investment (Protection and Promotion) Bill, 2022 [FI Bill 2022] be valid and constitutional?” The 13-page opinion stated that the process for the reconstitution of the Reko Diq project has been undertaken transparently and with due diligence. It stated, “The Agreements are being signed by authorities duly authorized and competent to do so under the law. To ensure transparency and fairness, expert advice on the financial, technical and legal issues involved has been sought from both local as well as independent international experts/consultants on the terms settled in the Agreements.” “The Agreements have been put in place after due deliberation and have not been found by us to be unconstitutional or illegal on the parameters and grounds spelt out in Abdul Haque Baloch’s case (PLD 2013 SC 641),” added the Court. About the second question, the apex court declared that the rationale, basis, legality and vires of the FI Bill 2022 as well as the amendments to its schedules and annexures and the amendments incorporated through SROs, provided the resolutions are passed by the Sindh and Balochistan Provincial Assemblies and the Bill is passed by the Parliament after following due process, shall be duly enacted as required under the Constitution. And such laws and regulatory measures do not in any manner violate the Constitution or the Law. In detail, the Court answered the Reference in terms that; i) It is settled law that while disposal of public assets through a competitive process is the ordinary rule, it is not an invariable rule. The Constitution does not forbid disposal of public assets other than through a competitive process so long as such disposal has the support of the law and is justified on rational grounds, as is the case here. ii) Ever since the enactment of the Constitution, legislative competence to deal with mines and mineral development (other than minerals used for nuclear energy) has rested exclusively with the Provincial Assemblies. Therefore, the Provincial Assemblies of Sindh and Khyber Pakhtunkhwa have already enacted comprehensive statutes dealing with mines and mineral development (other than minerals used for generation of nuclear energy). It follows from the legislative ambit of the Provincial Assemblies under the Constitution that they are competent to “alter, amend or repeal” any existing law to the extent that it deals with mines and mineral development. The Court said as far as the amendment incorporated in the Regulation of Mines and Oil fields and Mineral Development Reference No.2/2022 8 (Government Control) Act, 1948 (1948 Act) is concerned, which has been introduced by way of the 2022 Act, to the extent that the said statute applies to the Province of Balochistan it is intra vires the Constitution and the rules framed by the GoB under Section 2 of the 1948 Act. The 2022 Act can therefore be treated as a standalone provision that operates alongside the 1948 Act and the rules insofar as the subject of mines and minerals development (other than oil fields and mineral resources necessary for generation of nuclear energy) falls within the exclusive legislative competence of the provincial legislature. It said that the Balochistan Cabinet has approved the decision to enter into the Agreements on the basis of a detailed summary, which considers ‘public interest’ inherent in the negotiated agreement and since the Agreements pertain to an ‘international obligation’ in terms of the 2022 Act (i.e., Pakistan’s obligation to make payment of approximately US$ 6 billion under an ICSID award dated 12.07.2019), the formal obligations required under the 2022 Act for entering into a negotiated agreement stand fulfilled. The opinion said that prima facie, the Agreements cannot be faulted for lack of due diligence on the part of State authorities. The Agreements do not, prima facie, violate any of the findings recorded in the Abdul Haque Baloch case (PLD 2013 SC 641). Unlike CHEJVA, the decision to enter into the Agreements is backed by law and has been taken on the basis of careful negotiations during which authorized representatives of GoP/GoB were duly assisted by independent international consultants. The Court said that the Agreements require Barrick to act in accordance with both international environmental standards and domestic laws. On the second question, the Court opined provided that the draft resolutions are passed by the Provincial Assemblies of Sindh and Balochistan, Parliament will be competent to enact the FI Bill 2022, including the notified exemptions specified in the Bill and the protected benefits listed in the Third Schedule. “The provisions of Section 3 of the FI Bill 2022 do not in our opinion fetter the sovereignty of Parliament. It appears that the FI Bill 2022 represents a version of the Protection of Economic Reforms Act, 1992. It allows the Federal Government to notify certain benefits which may not be withdrawn to the prejudice of an investor.” The Supreme Court noted that the FI Bill 2022 is not limited exclusively to the Reko Diq project. Instead, it provides a framework for grant of investment incentives which will, subject to the provisions of the Bill, be available to all investments of US$ 500 million or more. The fact that the Reko Diq project is the first to be identified as a “Qualified Investment” under the FI Bill 2022 does not render the statute as “person-specific.” The Court noted that the proposed FI Bill 2022 will not only pave the way for implementation of the Reko Diq project in its present form but will also facilitate and encourage direct foreign investment in similar mining projects and other high capital intensive industries in which direct foreign investment is required to be encouraged through guarantees assured by laws and regulatory measures. The Court expected that Barrick would contribute substantially towards Corporate Social Responsibility by dedicating a percentage of its returns towards provision of fresh drinking water, health facilities, schools and local infrastructure to the people of Balochistan. In addition, most of the labour force will be employed from amongst the local population of the Province. In addition, programs for development of skills will also be put in place, and the applicable minimum wage laws will be fully observed.

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