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England and Wales High Court (Commercial Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Province of Balochistan v Tethyan Copper Company Pty Ltd [2021] EWHC 1884 (Comm) (06 July 2021) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2021/1884.html Cite as: [2021] EWHC 1884 (Comm), [2022] 2 All ER (Comm) 86, [2021] 2 Lloyd's Rep 443 |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QUEEN'S BENCH DIVISION)
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| PROVINCE OF BALOCHISTAN |
Claimant |
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| - and - |
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| TETHYAN COPPER COMPANY PTY LIMITED |
Defendant |
____________________
Lord Goldsmith QC, Patrick Taylor and Tom Cornell (instructed by Debevoise & Plimpton) for the Defendant
Hearing dates: 1 - 3 March 2021
____________________
Crown Copyright ©
Robin Knowles J:
Introduction
Context
"The consequence is what we are witnessing; identical claim is made before ICSID along with one in ICC. This issue is required to be considered by the Federal Government before signing any further BITs ".
The Corruption Allegation and the Issues for Determination
(1) Whether the Corruption Allegation is precluded by section 73(1) of the 1996 Act (Preliminary Issues Order paragraph 2.1, first part).
(2) Whether the Corruption Allegation is precluded pursuant to the doctrine of waiver by election (Preliminary Issues Order paragraph 2.1, second part).
(3) Whether TCCA is precluded by an issue estoppel arising from the Judgment of the Supreme Court of Pakistan from alleging separability of the arbitration agreement (Preliminary Issues Order, paragraph 2.2(a)).
(4) Whether TCCA is precluded by an issue estoppel arising from the Judgment of the Supreme Court of Pakistan from denying that the arbitration agreement is governed by the law of Pakistan (Preliminary Issues Order, paragraph 2.2(b)).
(5) Whether the Province of Balochistan is precluded by section 73 of the 1996 Act from denying separability of the arbitration agreement (Preliminary Issues Order, paragraph 2.2(c)).
(6) Whether the Corruption Allegation seeks impermissibly to challenge the ICC tribunal's decision on the merits of the claim before it (Preliminary Issues Order, paragraph 2.3).
(7) Whether the Province of Balochistan cannot pursue the Corruption Allegation on the basis that it was not included in the Arbitration Claim Form (Preliminary Issues Order, paragraph 2.4).
(8) Whether an application dated 21 January 2021 by the Province of Balochistan to amend the Arbitration Claim Form should be granted?
(9) Which law governs the issue of separability of the arbitration agreement and, in particular, whether section 7 of the 1996 Act applies in this case? (Preliminary Issues Order, paragraph 2.2(d))
(10) If English law applies to separability of the arbitration agreement, which of the Province's grounds of objection to the jurisdiction of the ICC tribunal thereby fall away? (Preliminary Issues Order, paragraph 2.2(e))
The Judgment of the Supreme Court of Pakistan (10 May 2013)
The concluding paragraph
"Above are the reasons in support of the short order passed by this Court, by which the titled CPLA was converted into appeal, and the appeal as well as the Constitution Petitions under Article 184(3) of the Constitution were allowed with costs throughout whereas the Miscellaneous Applications were disposed of. In consequence, the Chagai Hills Exploration Joint Venture Agreement dated 23.07.1993 was held to have been executed contrary to the provisions of the Mineral Development Act, 1948, the Mining Concession Rules, 1970 framed thereunder, the Contract Act, 1872, the Transfer of Property Act, 1882, etc., which was even otherwise not valid, therefore, the same was declared to be illegal, void and non est. In pursuance of the above declaration, Addendum No. 1 dated 04.03.2000, Option Agreement dated 28.04.2000, Alliance Agreement dated 03.04.2002 and Novation Agreement dated 01.04.2006, which were based upon, and emanated from, CHEJVA were also held to be illegal and void. It was further held that all those instruments did not confer any right on BHP, MINCOR, TCC, TCCP, Antofagasta or Barrick Gold in respect of the matters covered therein. It was lastly held that [exploration licence] EL-5 was tantamount to exploration contrary to rules and regulations as the claim of TCCP was based on CHEJVA, which document itself had been held to be non est. Therefore, before exploration it was incumbent upon it to have sought rectification of its legal status."
The parties
The law applicable to the CHEJVA
The statutory framework of mining law in Balochistan
"Section 2 of the [Mineral Development] Act of 1948 provides that the appropriate Government shall have the power to make rules to provide for all or any of the matters stated therein. BMCR 1970 were framed in exercise of the power conferred by section 2 "
"Any exemptions made under the BMCR 1970 must conform to the provision of the Act of 1948 " (paragraph [21])
It referred to section 5 of that Act of 1948 under which:
"[in] the case in hand, the power to grant exemptions in relation to a mineral or any class or description of minerals lay with [the Government of Balochistan]" (paragraph [21]).
BMCR 1970
"Rule 98 [] provides that the Government shall have the power to relax any or all the provisions of these Rules in cases of individual hardship and under special circumstances to be recorded in writing and on terms and conditions to be fixed by it.
[W]hile invoking the provision of relaxation, the party seeking it is required to make out a case of hardship and also show the special circumstances warranting exercise of such power, and in turn, the Authority granting such relaxation is required to record reasons for the exercise of such power." (paragraph [21-22]).
" neither BHP nor BDA in seeking relaxation of the rules fulfilled the requirements stated in rule 98, namely, showing hardship and special circumstances, " (paragraph [23])
"[The] notification dated 20.1.1994 granting the said relaxations recited that [the Government of Balochistan], in exercise of the powers conferred by rule 98, was pleased to grant those relaxations as a special case, again making no mention of hardship of whatever nature, or the existence of any special circumstance making out a case for invoking the provision of said rule. The competent authority also failed to determine the terms and conditions to be fixed in granting the relaxations sought for." (paragraph [23])
" [T]he competent authority issued the relaxations in the form of a bulleted list without explaining what terms and conditions governed the extent of the relaxations as required under rule 98 The letter presents no explanation of what was the hardship and what were the special circumstances warranting the grant of relaxations. It is equally silent on the terms and conditions being fixed on the grant of such relaxations. In the instant case, the relaxations granted by the Provincial Government to the Joint Venture [were] against the letter and spirit of rule 98 illegal relaxations". (paragraph [26]).
"In this view of the matter, in absence of the requirements of rule 98 being fulfilled in the instant case, all relaxations were granted in excess of authority and were entirely beyond the scope of the provisions of the law, and therefore ultra vires the powers granted under rule 98 of BMCR 1970 read with section 5 of the Act of 1948, and thus void. Shorn of the relaxations so granted, CHEJVA has no legal sanctity and consequently remains an agreement entered into against the provisions of law, hence not enforceable." [paragraph [23], original italics)
"As all the key provisions of CHEJVA were made subject to a reliance on relaxations that were illegal and void ab initio, the illegality of the agreement seeps to its root. As such no operative part of the agreement survives to be independently enforceable and the principle of severability [sic] cannot be applied to save any part thereof. The agreement is, therefore, void and unenforceable in its entirety under the law". (paragraph [24])
" BHP and BDA exceeded their mandate by going beyond the scope of the actions envisaged in Article 2.1 (i) and (ii) of CHEJVA, namely, the parties seeking/receiving from the relevant competent authorities in the Federal and/or the Provincial Government within six months of the date of agreement 'all consents and approvals necessary under Pakistani law' and 'all assurances as to fiscal parameters for investment in any future mining venture'.
BHP/BDA's representations, rather misrepresentations led the [Government of Balochistan] authorities to issue the relaxations, inasmuch as the terms 'consents', 'approvals' or 'assurances as to fiscal parameters' used in the aforesaid sub-clauses of CHEJVA are not synonymous with the term 'relaxation'.
[S]ub-clause 24.6.2 of CHEJVA provides that the parties shall be just and faithful to one another and will not do or omit to be done anything, which prejudices the interests of the Joint Venture.
[U]nder clause 2.2 of CHEJVA, BHP could have sought only 'consents', 'approvals' or 'assurances', and not the 'relaxation' of any rule.
Unfortunately, in respect of every provision of CHEJVA, which ran contrary to the provision of any rule of BMCR 1970, relaxation in the name of [consent, approval and assurance] was sought. BHP, therefore, could not be said to have been acting justly and faithfully from the very inception of their relationship with BDA as contemplated by the parties in sub-clause 24.6.2 of CHEJVA." (paragraph [25]).
(a) Clause 5.10 of CHEJVA "negatived" rule 28 and 42 of BMCR 1970. In particular:
"What was done in the instant case was that initially an area of 50 sq km was granted to the licensee for exploration, which was illegally extended to 1000 sq km pursuant to the request made by BHP-BDA. This part of the CHEJVA was also entered into against the letter and spirit of the law." (paragraph [32]).
(b) Parts of Clause 5 and 6 of CHEJVA were contrary to rules 3 and 53 of BMCR 1970. In particular:
"BHP-BDA applied for relaxation of these along with a host of other rules, though under clause 2.2 of CHEJVA they could only have sought 'consents', 'approvals' or assurances' and not the 'relaxation' of rules. No previous sanction of the Government was sought in terms of rule 3 for issuance of a prospecting licence otherwise that in accordance with BMCR 1970. It was a mandatory requirement, non-fulfilment whereof rendered the whole exercise a nullity in the eyes of the law." (paragraph [33]).
"These relaxations being in the nature of exemptions being granted from the application of the Rules to BHP and the entire CHEJVA project without a reference having been made to the provision of rule 3 of BMCR 1970 rendered nugatory BMCR 1970 in all substantial aspects" (paragraph [21]).
(c) Clause 18.1 of CHEJVA (confidentiality) "runs contrary to the provision of rule 39" of BMCR 1970 (paragraph [37]).
(d) As regards royalties:
"From a perusal of the relaxation sought and the provision of [rule 65 of BMCR 1970], it is clear that the entire procedure to be followed in case of non-payment of royalty was done away with under CHEJVA. Such a relaxation too could not be sought and granted in the name of 'consent, approval or assurance' It was an illegal exercise." (paragraph [38]).
(e) Further:
" [C]lauses 5.2, 5.3 and 5.4 [of the CHEJVA] clearly violate rules 30, 31 & 32 of BMCR 1970." (paragraph [28].
Clause 5.6 of CHEJVA extended beyond what was permitted by rule 27 of BMCR 1970. And Clause 5.9 beyond what was permitted by rule 38. (paragraphs [29]-[30]).
"[P]rospecting licences were renewed for a period of one year in 1998 and in 1999 and [one] respondent was extended the facility of prospecting licence for a period of 5 years as against 3 years provided under rule 31, which provides that no further extension beyond 3 years will be granted.
This provision was attempted to be circumvented by issuing a fresh prospecting licence (PL-14) on 21.02.2000 for the same area of 240,620.20 acres for 2 years wherein the licensee was given the option to retain the area beyond one year subject to their giving one month's notice
This was contrary to rule 30 of BMCR 1970, which stipulates grant of PL for a period not exceeding one year." (paragraph [34])
BMR 2002
" licences and leases granted prior to the notification of BMR, 2002 and continuing at that time were protected by means of rule 125 of the BMR 2002, which stipulates that any licence or lease granted, renewed or saved under any law for the time being in force and existing immediately before the coming into force of these Rules shall be deemed to be granted, renewed or saved for the subsisting period.
It is noteworthy that BHP did not have any mineral title at the time of notification of BMR 2002 as PL-14 had already expired on 21.02.2002 and was not further renewed." (paragraph [35])
The Addendum, the Novation Agreement and Others
"As held hereinbefore, CHEJVA itself was a void agreement from its inception.
[T]o cure the invalidity of CHEJVA, BHP in the name of Addendum unsuccessfully attempted to enter into a new agreement, where in place of the original two parties, three parties were attempted to be introduced.
CHEJVA having been found and declared to be a void agreement in the earlier part of this judgment, there was no room left for BHP to build the superstructure on its basis, namely, [Addendum Agreement], Option Agreement, Mincor Option, Alliance Agreement, Novation Agreement, or the subsequent share-purchase agreements. Consequently, the transfers of interest from BHP to Mincor NL to TCC to Atacama to Barrick Gold to Antofagasta to TCCP all were illegal transactions entered into by the concerned parties at their sole risk and cost, and are so declared hereby." (paragraph [36]).
The Directorate of Mineral Development/ Industries, Commerce and Mineral Resources Department (1994)
"The undue favours being extended to BHP in the transaction further continued and the already inadequate consideration of CHEJVA (25:75 percentage interests [25 to Balochistan]) was being mitigated in many untold ways
.
Here, it may be mentioned that the Directorate of Mineral Development vide letter dated 19.07.1994 informed BDA that the Licensing Authority had accepted the request of BDA/BHP for reservation of gold area in relaxation of the limits of the area as fixed under Annexure-IV to BMCR 1970 and also approved the plan for period of three years, and permitted it to start the prospecting/mining operation for gold mineral over an area of 33,47,226 (thirty three lac forty-seven thousand two hundred twenty-six) acres situated in Chagai District on [specified] terms and conditions.
In the aforesaid letter, it was further mentioned that in case of acceptance of the terms and conditions, if needful was not done strictly within the stipulated time, the reservation of the area would be treated to have lapsed without any notice and they would be required to apply afresh if they still desired to get the prospecting licence/mining lease, and such application would be considered de novo and decided in accordance with the relevant rules.
Surprisingly, though BHP failed to comply with the above said terms and conditions, including the payment of annual fee within the stipulated period, but instead of treating the reservation to have lapsed, the Mineral Department vide letter dated 10.09.94 pursuant to BDA's letter dated 11.08.1994 granted further period of 20 days to comply with the said terms and conditions with the condition that in case of failure to do the needful in the extended period, letter dated 19.07.1994 would stand withdrawn.
It appears that the aforesaid terms and conditions were not complied with and the Industries, Commerce and Mineral Resources Department, instead of acting upon their letters dated 19.07.1994 and 19.09.1994, by their letter dated 16.11.1994 waived off the annual fee of Rs.3.347 million for gold exploration in an area of 33,47,226 acre for a period of three years.
Quite strangely, as in the case of grant of large scale relaxation of the rules, the authority here too does not mention the circumstances in which it had become inevitable to relax the provision regarding allocation of exploration area. It also fails to mention why it was necessary to exempt BHP from paying the annual fee, or other dues.
It appears that neither did BHP-BDA pay the annual fee nor did it comply with other conditions so prescribed, and the Department suddenly by its aforesaid letter dated 16.11.1994 conveys the approval of the competent authority to the waiving of annual fee of Rs 3.347 million mentioning once again no justification for the said waiver, as was done in granting relaxation of bulk of the provisions of BMCR 1970.
[T]he undue favours being extended to BHP are further established from the contents of the aforesaid letters. The Directorate of Mineral Development, in its letter dated 19.07.1994 states that BHP has been exempted from the payment of annual fee @ Rs.5/- per acre in relaxation of rule 33 of BMCR 1970, as a result whereof BHP will be required only to deposit a some of Rs.33, 47, 226/- on that account at the nominal rate of Rs.1/- per acre instead of Rs.5 per acre. Then the Industries Department in its letter dated 16.11.1994 waives the already reduced amount from Rs.5/- per acre to Rs.1/- per acre. It was an extraordinary treatment meted out to BHP whereby a loss of Rs.1,67,36,130/- per annum was caused to the public exchequer without any justification whatsoever having been brought on the record" (paragraphs [39]- [41])
Contract Act 1872
"It is noteworthy that section 23 of the Contract Act 1872 provides that the consideration or object of an agreement is lawful, unless it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful, and every agreement of which the object or consideration is unlawful is void.
In the instant case, CHEJVA was entered into in violation of a large number of provisions of BMCR 1970. It is, therefore, opposed to public policy, which calls for across the board enforcement and application of the laws of the land. CHEJVA is hit by section 23 of the Contract Act, on this score." (paragraph [44]).
" Various recitals in CHEJVA, Addendum, Novation Agreement, Mincor Option, Alliance Agreement, all have purported to bind the Government and its functionaries in the discharge of their statutory duties, which is not permissible. This aspect too is opposed to public policy in terms of section 23 of the Contract Act, 1872. Accordingly, all the said instruments are void and not enforceable in the courts of law." (paragraph [47])
(In the course of his argument before this Court, Mr Hancock QC drew attention to one of a number of illustrations that are included in section 23 of the Contract Act 1872 of Pakistan. This illustration (f) is in these terms: "A promises to obtain for B an employment in the public service, and B promises to pay 1000 rupees to A. The agreement is void, as the consideration for it is unlawful."
" [A]according to clause 5.3.1 of CHEJVA, the aggregate prospecting area shall not be more than 50 sq km. However, by virtue of clause 5.10, the map covering an area of 13,000 sq km, annexed with CHEJVA as "Schedule B", may be revised so as to accurately represent the current status of the area from time to time. It clearly establishes that the area is not final and constitutes uncertainty within the ambit of section 29 of the Contract Act." [72]
"Section 62 of the Contract Act 1872, which deals with novation, rescission and alteration of contract, provides that if the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. EL-5 and other rights under the Alliance Agreement were all rights that depended on the existence of CHEJVA for their existence. A necessary element for the execution of a valid novation of contract is the validity of the original agreement that is to be substituted. Where an agreement is void, all subsequent alterations, variations or novations based upon such agreement will also be invalid. When a contract is unlawful or illegal as being prohibited by a specific provision of the statute, it could not be enforced, although the parties might have entered into a novation of the contract on the basis of such unlawful or illegal consideration. [I]t has been held that a court of law should decline to enforce even a perfectly innocent and legal contract where it arises out of a collateral illegal contract or an immoral contract or any legal contract which has for its basis an earlier illegal or immoral contract, in spite of the fact that the parties may have entered into a novation. And if there is a direct connection between a fresh contract after novation and the earlier illegal contract or the earlier collateral contract, the novated contract would still continue to be illegal or immoral and the court would refuse to enforce the same in view of the provisions of section 23 of the Contract Act. It was further held that in the case of an illegal contract, both parties being in the position of guilty persons, the court should refuse assistance to any one of them on the basis of an illegal contract or on the basis of a novated legal contract, which has for its basis an earlier or a collateral illegal contract. CHEJVA having been held to be void for the reason stated above, the entire superstructure built upon it also falls to the ground." [87]
The Transfer of Property Act 1882
" [I]n the instant case, CHEJVA itself has been declared to be void in terms of various provisions of the Contract Act, 1872, including sections 20, 23, etc., and consequently unenforceable. No transfer or assignment of an interest under a void agreement can be made by any of the parties to such agreement under any principle of law. This appears to be violative of the principle contained in section 7 of the Transfer of Property Act, 1882, which provides that only such person is competent to transfer property who is competent to contract and entitled to transferable property or authorized to dispose of transferable property." [90]
The Registration Act 1908
" Section 17(1)(b) of the [Registration Act 1908] provides that an instrument, which purports or operates to create, declare, assign, limit or extinguish, whether in present or in future any right or interest of the value of one hundred rupees and upwards to or in immovable property shall be registered.
In the instant case, BHP-BDA failed to get CHEJVA registered under section 17 of the Registration Act. Similarly, subsequent assignment of rights under CHEJVA as purported to be done under the Alliance Agreement was also not registered in terms of said section 17. Here too, the law of the land applicable to the agreement as per its own clause was not followed." [57]
UNIDROIT Principles of International Commercial Contracts
"The respondents attempted to take undue advantage out of the political instability prevailing at that time, inasmuch as at that time, a Caretaker Government was in place. The foreign companies by means of CHEJVA, Addendum No. 1 and other agreements preyed upon the huge gaps in understanding on the part of [the Government of Balochistan] of large scale mineral extraction and were in a distinct position to manipulate and dominate the will of [the Government of Balochistan].
Under article 3.2.7 of the principles of the UNIDROIT Principles of International Commercial Contracts under the title of gross disparity, a contract which has been conceived by a party seeking to take unfair advantage of the other party's dependence, economic distress or its improvidence, ignorance, inexperience and lack of bargaining skill cannot be enforced." (paragraph [45]).
Apparent absence of tenders and public advertisement
"We have scanned the record made available to the court to find out whether at any stage prior to the award of CHEJVA, any tender was floated by the BDA, but unfortunately we have not come across any document showing any initiative taken by the BDA or any other department of [the Government of Balochistan] to publish advertisement in the press and invite tenders with a view to providing opportunity to other investors in the field of mining to come forward and to compete with others.
No doubt foreign investment in any modern economy is to be encouraged by all means, but all such activities are required to be carried out observing due process of law, which alone is a sure guarantee of the protection and promotion of the public interest. In the instant case, it appears that BDA entered into negotiations with BHP and took up the issue of grant of exploration rights with [the Government of Balochistan] in a most haphazard manner.
The processing of the matter by [the Government of Balochistan] substantiates that public advertisements were not resorted to in the interest of transparency and to obtain the best competitive price for the disposal of public property, i.e., mineral resources in Reko Diq, and thereby denied participation to other investors of the field to the detriment of the general public, and especially the people of Balochistan. Such a handling of an issue of great public importance was against public policy as well because it certainly caused injury to the public good and, therefore, provides a basis for denying the legality of the transaction in question." (paragraph [44])
"[The Government of Balochistan] was empowered under rule 67 of BMR 2002 to invite bids to tender for award of exploration licences for the same area. However, [the Government of Balochistan] did not exercise its prerogative and instead granted exploration licence (EL-5) for the Reko Diq area, which was renewed for a further period of 6 years.
Under CHEJVA, BHP/TCC enjoyed rights for exploration in the Reko Diq area between 1994 and 1996; held a prospecting licence for the same area for 5 years and an exploration licence for the same area for 9 years, meaning thereby that the exploration/prospecting facility was extended to BHP/TCC for a total period of 17 years, which is an extraordinary and undue favour in itself granted under CHEJVA." (paragraph [35])
The Finance Department
"Nothing has been brought on the record to show that the Finance Department, which is required under [the Government of Balochistan] Rules of Business, 1976 to scrutinize such a venture by [the Government of Balochistan] had approved this project. In absence of non-approval [sic] of the JVA by the Finance Department, CHEJVA was executed between BDA and BHP." (paragraph [45])
The BDA
" BDA possesses its own legal personality, distinct and separate from [the Government of Balochistan]. BDA is not even listed as an attached department under any of the Departments of [the Government of Balochistan] in the [Government of Balochistan] Rules of Business, 1976. However, BDA in entering into the Addendum remained in a state of confusion as to whether CHEJVA was, or any subsequent agreement on the subject had, to be entered into by it independently of any other department of [the Government of Balochistan]. All that BDA through its Board of Directors was required to do was to seek approval of [the Government of Balochistan] for the project of mineral exploration in terms of section 4 of BDA Act, 1974 and enter into a Joint Venture Agreement in terms of section 17 read with section 16 of the Act. All subsequent agreements/instruments in connection with CHEJVA would have followed the same position. This confusion on the part of BDA as well as [the Government of Balochistan] hierarchy unfortunately led to a fundamental uncertainty and ambiguity in CHEJVA which rendered the contract void ab initio on this score as well ...." (paragraph [75])
"[The Government of Balochistan] could not have validly appointed BDA or its Chairman to act as [the Government of Balochistan's] agent either at the time of execution of CHEJVA or at any time thereafter. It was, therefore, not permissible to rely on the so called affirmation or ratification made in Addendum as was sought to be done by the learned counsel for BHP. Having examined this aspect of the matter in some detail, we find that [the Government of Balochistan] was not a party to CHEJVA, therefore, [the Government of Balochistan] could not be said to have entered into an agreement with any company or a prospective licensee of the nature referred to in CHEJVA or the Addendum. Accordingly it is held that CHEJVA suffered from uncertainty as to parties to the agreement and was void ab initio " (paragraph [88])
The Chairman of the BDA
"Learned counsel for [the Government of Balochistan] stated that the documents relating to CHEJVA, Addendum, Novation agreements, relaxations, etc., showed a clear pattern of irregularities.
He pointed out that Mr Ata Muhammed Jaffer, Chairman BDA, who also happened to be Additional Chief Secretary, was convicted by a Court functioning under National Accountability Ordinance, 1999 after being charged for an offence of having assets and living beyond his means.
In response learned counsel for TCC argued that the petitioners had made a bald assertion that elements of corruption and corrupt practises were involved in the award of contracts, and failed to produce any substantial evidence in support of such an assertion. Further, no nexus was established or shown to exist between the corrupt practices allegedly committed by Mr Ata Muhammed Jaffer with CHEJVA.
A perusal of the record shows that the executant of CHEJVA Mr Ata Muhammad Jaffer held dual position of Chairman BDA and Additional Chief Secretary at the relevant time.
The two positions are very distinct in the eyes of the law. The first is an office holder in a statutory incorporated body while the latter is an officer of [the Government of Balochistan] authorized to represent the Government. The same person holding both offices may have contributed to the impression created by BDA that the Governmental authorities were under an obligation to issue the relevant relaxations and licences.
In the former position he forwarded the case to the Provincial Government whereupon in the latter position he chaired the meeting wherein decisions regarding CHEJVA were taken. It was a clear conflict of interest. The record also shows he was hand carrying the file, which showed a visible haste on his part to execute the agreement.
In fact, there was a greater burden on the officer not only to be fair in his adherence to the law but also to have disassociated himself from the matter as far as his position as applicant was concerned. The record also shows that he disregarded caution sounded by several departments.
As per the Balochistan Civil Servants (Efficiency and Discipline) Rules 1983, living beyond one's means is an act of corruption. The factum of his conviction had not been rebutted by the learned counsel for TCC or anyone else." (paragraphs [49-50])
Mining Leases
" Part III of BMCR 1970 provides for the issuance of a mining lease and the statutory procedure for making applications for the same. In the absence of the application of BMCR 1970 CHEJVA attempted to exercise the statutory right of creating rules governing its operations, which is a right reserved for the competent authority under section 2 of the Act of 1948.
Article 11 of CHEJVA provides for its own framework for the transfer of interests under the contract for mining development far away from the statutory framework provided in BMCR 1970. It utterly disregards all the rules provided therein and attempts to create an ad hoc system of awarding the parties mining leases automatically. It declares that Prospecting Licences issued by the Provincial Government shall be 'converted into' Mining Licences.
This goes much beyond the scope of an exemption and is tantamount to usurpation of executive and legislative prerogatives. No exemption or relaxation of rules can grant a foreign company the power to create ad-hoc rules to apply to a specific contract with regard to licences issued by a statutory body.
Article 11.8.2 provides that where the Joint Venture, or pursuant to subclause 11.3.2, a Participating Party elects to develop a mine, then, subject only to compliance with routine Government requirements, it shall be entitled to convert the relevant Prospecting Licence(s) into Mining Licences so as to give a secure title over the required Mining Area. Article 11 not only renders the rules redundant, but also creates the possibility of continuing 'Mining Development' without Government approval and even to the exclusion of BDA under sub-clauses 11.3.3 and 11.4.1-2.
This also disregards the terms and conditions of the Prospecting Licences issued to BHP by the Directorate of Mineral Development, Balochistan, which, inter alia, provided that the licence would not confer upon BHP any rights of renewal of the prospecting licence or grant of a mining lease over the area or any part thereof unless the prospecting or work obligations as required under the licence have been carried out to the satisfaction of the Directorate of the Mineral Development.
Besides CHEJVA provides for the inclusion of other parties in the future as a mining consortium without recourse to government licencing or authorization. Such permission to extend rights to parties not conceivable at the time of granting exemptions to the exclusion of both the present parties of the contract amounts to an attempt to disregard all relevant law for an undefined period of time.
The same disregard for the laws of the host country and its law making institutions is expressed under Article 17, inasmuch as it provides that in the case of change in legislation which is applicable to the Joint Venture, then if the change or the new provision is more favourable to the Joint Venture or one of the parties than the relevant laws, acts, rules or regulations in effect on the date this Agreement was signed, the Joint Venture and the party concerned shall promptly apply to receive the benefits of such change or new provision. However, if, on account of the change or new provision, the economic benefits to any Party or the Joint Venture existing, or to arise under CHEJVA, are materially and adversely affected, directly or indirectly, then CHEJVA shall continue to be implemented in accordance with its original terms. Clearly, this clause of CHEJVA too, gives an overriding effect to CHEJVA over the legislative process and thereby attempts to make subservient the laws of a sovereign country, which cannot be approved." (paragraph [62])
The record relating to CHEJVA
" On 8th February, 2011 this Court directed the production of entire record relating to CHEJVA. The said record was retrieved and filed through several applications. It made shocking disclosures of extensive irregularities and corruption. The Government examined the same and decided not to defend the said acts and accordingly it decided to render full assistance to this Court from the record that was filed. Further, this Court has always encouraged that the Government officials must perform their functions in accordance with law and give no weight/consideration to any unlawful order let alone protect the irregularities of their predecessors". (paragraph [63]; see also paragraph [116] quoted below)
Mistake
"The legal position is that the BDA Act, 1974 does not authorize BDA to act as an agent of [the Government of Balochistan], rather the Act requires BDA to seek approval of the [Government of Balochistan] in certain matters while performing its functions enumerated in the Act." (paragraph [73]) An undated letter from the Governor purporting to authorize the Chairman of the BDA to sign the Addendum on behalf of the Governor was held to be "improper and untenable in the eyes of the law" (paragraph [71])
Forum
"The law of Pakistan being the law applicable to the agreement, the Courts of Pakistan are the appropriate forum to decide the legality of CHEJVA.
Learned counsel for [the Government of Balochistan] stated that in this regard [the Government of Balochistan] and the Government of Pakistan have respectively put both the ICC and ICSID on notice vide respondent's Answer to the Claimant's Request for Arbitration and Counterclaim dated 16.11.2012 that matter of CHEJVA is pending before the Supreme Court of Pakistan in the following words:
"2. Matters relating to the enforceability, validity and vires of CHEJVA the addendum of 2000 and the novation of 2006 ("the joint venture contract") are pending before the Supreme Court of Pakistan .... The Claimant, its Pakistani subsidiary and its parent companies are before the Supreme Court of Pakistan and before were present before the Balochistan High Court. In excess of 50 applications have been filed and are pending before the Supreme Court. It is plain that only the Supreme Court of Pakistan has the jurisdiction to decide on the validity of the joint venture contract and no tribunal has the authority or power to usurp such jurisdiction. Therefore, this Tribunal should suspend any further proceedings in this arbitration until such time the Supreme Court of Pakistan determines the validity, legality and vires of CHEJVA.
3. During the Course of the Supreme Court proceedings allegations of corruption have been raised. It is the Supreme Court of Pakistan which is the appropriate forum for determining whether corruption is a factor in this matter before it and then take appropriate decisions. In this regard, Article 34 of the UN Convention on Corruption allows the Supreme Court, in part being the sub-set of the State to continue with pending legal proceedings."
Even otherwise in addition to section 4 of the New York Convention Act referred to above, article 2(3) of the New York Convention, which is incorporated in Pakistan's domestic law as an act of Parliament in 2011, states that the court of a contracting state when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.
Moreover, Article 34 of the UN Convention Against Corruption 2003 provides that with due regard to the right of third parties, acquired in good faith, each state party shall take measures, in accordance with the fundamental principles of its domestic law, to address consequences of corruption. And, in this context, states parties may consider corruption relevant factor in legal proceedings to annul or rescind a contract, withdraw a concession or other similar instrument or take any other remedial action. This indeed furnishes additional basis under international law to this Court to decide upon CHEJVA and related documents." (paragraphs [3], [106])
115. Mr Khalid Anwar, Sr ASC [shown in the Judgment of the Supreme Court as Counsel for TCCP and Muslim Lahkani; see later in this judgment] argued that if [the relevant authority] had refused to grant [the Mining Lease] there would be no complaint against them to be agitated before this court unless this court had given the findings that the international arbitration clause of CHEJVA was illegal and unconstitutional; ICSID and ICC Arbitration should not have taken place; and the verdict, if any, given by the Arbitrators would be null and void. He requested the Court not to give such a finding and suggested that proper course for the Court would be to stay its hands off and wait for the outcome of those proceedings being carried out under the laws of Pakistan namely the Arbitration (International Investment Disputes) Act, 2011, the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, and the Fourth Schedule to the Constitution of Pakistan under which the international arbitration treaties are binding upon the Government of Pakistan.
116. We have given anxious consideration to the arguments of the learned counsel. The Constitution Petitions were filed by the petitioners in the instant case and entertained by this Court by way of public interest litigation considering the peculiar facts and circumstances of the instant case where despite the fact that grave illegalities and irregularities were committed in the execution of CHEJVA and other instruments, but [the Government of Balochistan] failed to defend the petition filed before the Balochistan High Court under Article 199 of the Constitution and protect the interests of the people of Balochistan. The petitioners genuinely apprehended that the CPLA filed against the judgment of the Balochistan High Court before this Court might also not [sic] meet the same fate. The petitions under Article 184(3) of the Constitution have raised questions of public importance with reference to enforcement of Fundamental Rights. Learned counsel for [the Government of Balochistan] rightly argued that there is no question of retraction of pleadings on the part of [the Government of Balochistan] inasmuch as the law permits parties to modify position if there are developments subsequent to the filing of the case or new facts come to light. The developments in this regard included the approval of Dr. Samar Mubarakmand's project [heading a team working on the nearby H-4 area] in December 2010 and accordingly CMA 252/2011 was filed apprizing the Court of this development and requesting a decision on merits. The objection raised by the learned counsel for TCC is, therefore, not tenable. On 08.02.2011, this Court directed the production of entire record relating to CHEJVA. The said record was retrieved and filed through several applications. It made shocking disclosures of extensive irregularities and corruption. The Government examined the same and decided not to defend the said acts and accordingly it decided to render full assistance to this Court from the record that was filed. Further, this Court has always emphasized that the government functionaries must perform their functions in accordance with law. In this regard, reference may be made to the cases reported as Ghulam Bib v. Sarsa Khan (PLD 1985 SC 345), Zahid Akhtar v. Government of Punjab (PLD 1995 SC 530), Iqbal Hussain v. Province of Sindh (2008 SCMR 105), Human Rights Cases Nos. 4668 of 2006, 1111 of 2007 and 15283-G of 2010 (PLD 2010 SC 759), Mst. Mumtaz Begum v. Province of Sindh (2004 CLC 697) and Dilshad Ali v. Ahmed Khan (2007 CLC 441). It may be mentioned that this Court has wide powers in terms of Article 184(3) of the Constitution to oversee the acts/actions of the other organs of the State, namely, Executive and Legislature. It is also well settled that under the principle of trichotomy of powers, the Judiciary plays a crucial role of interpreting and applying the law and adjudicating upon disputes arising among governments or between State and citizens or citizens inter se. The Judiciary is entrusted with the responsibility for enforcement of Fundamental Rights, which calls for an independent and vigilant system of judicial administration so that all acts and actions leading to infringement of Fundamental Rights are nullified and the rule of law upheld in the society. The discharge of constitutional duty by the State functionaries in deviation to the spirit of the Constitution can be anvil to the Constitution and challengeable on diverse grounds including mala fide and colourable exercise of the power in bad faith for ulterior motive. It is difficult to confer validity and immunity to the mala fide act or action from judicial scrutiny in exercise of power of judicial review which is inherent in the superior courts. Reference in this behalf can be made to the cases of Miss Benazir Bhutto v. Federation of Pakistan (PLD 1988 SC 416), Muhammad Nawaz Sharif v. President of Pakistan (PLD 1993 SC 473), Wasey Zafar v. Government of Pakistan (PLD 1994 SC 621), Sabir Shah v. Federation of Pakistan (PLD 1994 SC 738), Al-Jehad Trust v. Federation of Pakistan (PLD 1996 SC 324), Asad Ali v. Federation of Pakistan (PLD 1998 SC 161), Benazir Bhutto v. President of Pakistan (PLD 1998 SC 388), Wukala Mahaz Barai Tahafaz Dastoor v. Federation of Pakistan (PLD 1998 SC 1263), Farooq Ahmad Khan Leghari v. Federation of Pakistan (PLD 1999 SC 57), Liaqat Hussain v. Federation of Pakistan (PLD 1999 SC 504), Khan Asfandyar Wali v. Federation of Pakistan (PLD 2001 SC 607), In the matter of Reference No.2 of 2005 By the President of Pakistan (PLD 2005 SC 873), Javed Jabbar v. Federation of Pakistan (PLD 2003 SC 955), Iqbal Haider Capital Development Authority (PLD 2006 SC 394), Muhammad Mubeen-us-Salam v. Federation of Pakistan (PLD 2006 SC 602), Wattan Party v. Federation of Pakistan (PLD 2006 SC 697), Pakistan Muslim League (N) v. Federation of Pakistan (PLD 2007 SC 642), Sindh High Court Bar Association v. Federation of Pakistan (PLD 2009 SC 879), Chief Justice of Pakistan Iftikhar Muhammad Chaudhry v. President of Pakistan (PLD 2010 SC 61), Mobashir Hassan v. Federation of Pakistan (PLD 2010 SC 265), Bank of Punjab v. Haris Steel Industries (Pvt) Ltd. (PLD 2010 SC 1109), Shahid Orakzai v. Pakistan (PLD 2011 SC 365), Munir Hussain Bhatti v. Federation of Pakistan (PLD 2011 SC 407), Federation of Pakistan v. Munir Hussain Bhatti (PLD 2011 SC 752), Wattan Party v. Federation of Pakistan (PLD 2011 SC 997).
117. As regards the power and jurisdiction of the municipal courts to nullify any action of the Government where it is established that the decision-making authority has exceeded its powers; committed an error of law or breach of the rules of natural justice; reached a decision which no reasonable forum would have reached; or abused its powers, reference may usefully be made to the case of Bhanu Constructions Company v. A.P. State Electricity Board [1997 (6) ALT 328] ...
Thus it is clear that this Court has the jurisdiction to adjudge the validity of CHEJVA on the above grounds, including non-transparency, violation of law/ rules, curtailment of the fundamental rights of the general public, etc.
118. In this regard, it is pertinent to mention that a number of tribunals have held that, where an investment is made in violation of the general principles of law, which include violations of certain host country laws, such as where an investment results from the commission of crimes, e.g. fraud or bribery, the tribunal possesses both the ability and the obligation to prevent the investor from benefiting from the right under the relevant bilateral investment treaty. The ICSID Tribunal in World Duty Free v Kenya [ICSID Case No ARB/00/7), Award, 25 September 2006] rejected the claimant's attempts to characterize the payment made to the then president of Kenya as something other than a bribe to secure a contract, and also laid out the legal consequences of that bribe - that the tribunal could not uphold claims based on contracts of corruption because to do so would be a violation of international public policy. In that case, the claimant did not dispute Kenya's assertion that a payment had been made to the then president nor did claimant dispute the manner in which Kenya described the payment as having been made. The tribunal rejected the claimant's argument that the payments made on behalf of the claimant to the then president of Kenya were "a personal donation for public purposes" that were "sanctioned by customary practises and regarded as a matter of protocol by the Kenyan people". The tribunal held that the payments were a bribe because they "were made not only in order to obtain an audience with President Moi (as submitted by the claimant) but above all to obtain during that audience the agreement of the president on the contemplated investment." In the course of its reasoning, the tribunal explained that where a payment is received corruptly by a state official - i.e. where it is a covert bribe - receipt of the payment is not legally imputable to the state itself and that "if it were otherwise, the payment would not be a bribe." After satisfying itself as to the objective existence of a transnational public policy rule against bribery conducted by identifying the rule "through international conventions, comparative law and arbitral awards," the tribunal looked away from norms of international law to the law applicable to the dispute - English and Kenyan - and found nothing that would justify bribe taking but instead plenty to proscribe it. The tribunal also asserted that, even in contexts where "corruption is widespread either within the purchasing country or in the particular sector of activity all arbitral tribunals [have] concluded that such facts do not alter in anyway the legal consequences dictated by the prohibition of corruption [regardless of the fact that] in some countries or sectors of activities, corruption is a common practise without which the award of a contract is difficult even impossible" and that the tribunal "agree[d] with such a conclusion." Interestingly, and of particular relevance for our case, is the fact that the claimant was the successor in title to the contract and was not even in existence as a juridical person when the payment was made and "ha[d] no knowledge, actual or constructive, of any payment which could be characterized as improper and unlawful." Nevertheless, as noted above, the tribunal refused to uphold the claims based on the corrupt contract.
119. In Tokios Tokeles v Ukraine [(ICSID Case No ARB/02/18), Decision on Jurisdiction and Dissent, 29 April 2004] it was observed that the requirement "that investments be made in compliance with the laws and regulations of the host state is a common requirement in modern [bilateral investment treaties]," while noting that "the purpose of such provisions is 'to prevent the bilateral treaty from protecting investments that should not be protected, particularly because they would be illegal'.
120. In Inceysa v El Salvador [(ICSID Case No ARB/03/26), Award, 2 August 2006] it was held that a contract made in violation of host country law does not benefit from the protections of the relevant bilateral investment treaties or the rights granted by them, including the right to arbitration. In that case, the illegal act was fraud committed by the investor in obtaining a contract with the host state. The tribunal found that such an outcome was mandated by the principle of good faith, as well as by the fact that granting treaty rights or protections in such cases would violate both the principle of nemo auditur propiam turpitudinem allegans and international public policy. The tribunal also found that the claimant's failure to act in good faith - by making fraudulent misrepresentations in obtaining its contract with El Salvador - meant that " it did not make it in accordance with Salvadoran law" and that this rendered the tribunal " incompetence [sic] to hear [the Investor's] complaint, since its investment cannot benefit from the protection of the [treaty]." With respect to nemo auditur propiam turpitudinem allegans, the Inceysa tribunal held that: " a foreign investor cannot seek to benefit from an investment effectuated by means of one of several illegal acts and, consequently, enjoy the protection granted by the host State, such as access to international arbitration to resolve disputes, because it is evident that its act had a fraudulent origin and, as provided by the legal maxim, "nobody can benefit from his own fraud". It was found further that investments made in violation of host state law were contrary to international public policy, which it defined as " consist[ing] of a series of fundamental principles that constitute the very essence of the State, and its essential function is to preserve the values of the international legal system against actions contrary to it. That bilateral investment treaties commonly contained a provision requiring investments to be made "in accordance with law" was a "clear manifestation" of the signatories' commitment to this international public policy and of their intent to exclude from the treaty's protection investments made in violation of the internal laws of each of signatory. The tribunal further found that the language "in accordance with law" in bilateral investment treaties " follow[ed] international public policies designed to sanction illegal acts and their resulting effects" and that "it is uncontroversial that respect for the law is a matter of public policy in any civilised country and that a meta-positive provision [exists] prohibit[ing] attributing effects to an act done illegally," a provision that prevented the tribunal from hearing the dispute. The tribunal concluded its discussion of international public policy by holding that "it is not possible to recognize the existence of rights arising from illegal acts, because it would violate the respect for the law which is a principle of international public policy.
121. While dismissing the case on other jurisdictional grounds the tribunal in TSA Spectrum de Argentina SA v Argentina [(ICSID Case No ARB/05/5), Award, 19 December 2008] noted that, had these other grounds not been available, it would have reserved the issue of corruption in the granting to the claimant of a concession (contract for the privatization of the management and control of the Argentine radio spectrum) for the merits of the case and would not have decided them at the jurisdictional stage. Such reservation followed from the fact that investigations into bribery and misuse of public office in connecion with the granting of the concession were, at the time of the decision, ongoing in Argentina, with the alleged bribery still being investigated and two indictments, but no judgments, having issued from the misuse of public office investigations."
The concluding paragraph of the Judgment of the Supreme Court of Pakistan (paragraph [122], page 148-149))
" which was even otherwise not valid,"
Given this phrase, and given that the Judgment does not confine its conclusions to the concluding paragraph, it is important to look back again at the treatment of corruption in the body of the Judgment to see whether the CHEJVA and related agreements were held void (or "not valid") due to the existence of corruption.
Section 23 of the Contract Act
The treatment of corruption in the body of the Judgment of the Supreme Court of Pakistan
82. There had been a reference at the end of paragraph [35] to "extraordinary and undue favour granted under CHEJVA", but in my judgment it is not that characterisation of events that, either in terms or when seen in context, is used by the Supreme Court to found the conclusion that the CHEJVA and related agreements were void.
The interim hearing before Foxton J
" a decision in TCC's favour would involve this court rejecting arguments that had in some shape or form prevailed by the [Pakistan] Supreme Court allegations of corruption and illegality [were] substantially upheld by the [Pakistan] Supreme Court".
Issue (1): the Corruption Allegation: section 73(1)
Section 73(1) of the 1996 Act
"73. Loss of right to object
(1) If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection
(a) that the tribunal lacks substantive jurisdiction,
(b) that the proceedings have been improperly conducted,
(c) that there has been a failure to comply with the arbitration agreement or with any provision of this Part, or
(d) that there has been any other irregularity affecting the tribunal or the proceedings,
he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection".
Principles and approach: the position of the parties
Principles and approach: authority
"The effect of this section is that a party to an arbitration must act promptly if he considers that there are grounds on which he could challenge the effectiveness of the proceedings. If he fails to do so and continues to take part in the proceedings, he will be precluded from making a challenge at a later date. Moreover, it is clear from the language of sub- s. (1) itself that it is unnecessary for an applicant to have had actual knowledge of the grounds of objection in order for him to lose his right to challenge the award. If the respondent can show that the applicant took part or continued to take part in the proceedings without objection after the grounds of objection had arisen, the burden passes to the applicant to show that he did not know, and could not with reasonable diligence have discovered, those grounds at the time. It may often be necessary, therefore, to consider the applicant's conduct of the proceedings against the background of his developing state of knowledge.
The expression 'continues to take part in the proceedings' is broadly worded and the sub-section as a whole is designed to ensure that a party who believes he has grounds for objecting to the constitution of the tribunal or the conduct of the proceedings raises that objection, if he wishes to do so, as soon as he is, or ought reasonably to be, aware of it. He is not entitled to allow the proceedings to continue without alerting the tribunal or the other party to a flaw which in his view renders the whole arbitral process invalid. That could often result in a considerable waste of time and expense which is no doubt something which the legislation seeks to avoid. There is, however, a more fundamental objection of principle to a party's continuing to take part in proceedings while at the same time keeping up his sleeve the right to challenge the award if he is dissatisfied with the outcome. The unfairness inherent in doing so is, of course, magnified if the defect is one which could have been remedied if a proper objection had been made at the time.
" The principle of openness and fair dealing between the parties to an arbitration demands not merely that if jurisdiction is to be challenged under s.67 the issue as to jurisdiction must normally have been raised at least on some grounds before the arbitrator but that each ground of challenge to his jurisdiction must previously have been raised before the arbitrator if it is to be raised under a s.67 application challenging the award".
"The effect of section 73 is that an objection to a serious irregularity may not be raised by a party after participating in the proceedings without taking the objection, unless that party can show that at the time of participation the grounds for the objection were not known to him and he could not with reasonable diligence have discovered them. The approach to this section appears from the decision of Moore-Bick J in Rustal v Gill & Duffus [2000] 1 LLR 14 at page 20-21. If the respondent can show that the applicant took part in or continued to take part in the arbitration proceedings without objection, after the grounds of objection arose, the burden passes to the applicant to show that he did not know and could not with reasonable diligence have discovered those grounds at the time. Moreover, the expression 'continues to take part in the proceedings' in section 73 is broadly worded and is designed to ensure that a party who believes he has grounds for objecting on the basis of serious irregularity should raise that objection as soon as he is, or reasonably ought to be, aware of it. He is not permitted to allow the proceedings to continue without alerting the Tribunal and the other party to a serious irregularity, which, in his view, renders the whole arbitral process invalid. As Moore-Bick J points out, this is not only to avoid a waste of time and expense but is based upon a more fundamental point of fairness and justice. It cannot be right for a party to participate in proceedings, which he believes to be fundamentally irregular, with the intention of taking advantage of any decision in his favour, whilst keeping up his sleeve an objection to an irregularity, which he will only produce in the event of an unfavourable decision."
"59. It is clear that the intention behind section 73 is to ensure that a party objecting to jurisdiction, who has decided to take part in the arbitral proceedings, should bring forward his objections in those proceedings before the arbitrators. He should not hold them in reserve for a challenge to jurisdiction in the court. I agree with Colman J that this intention reflects a principle of 'openness and fair dealing' between parties who may, or may not, be bound by an arbitration clause. I also agree with Colman J, therefore, that to fulfil this intention and to accord with that principle, the words 'any objection' and 'that objection' in section 73 must mean 'any ground of objection' and 'that ground of objection'.
60. But what does that phrase cover? I think that it is wrong to be prescriptive or try to lay down precise limits in the abstract. It is usually easy to recognise in particular cases whether a party is attempting to raise a new ground of objection to jurisdiction on an appeal. It was obvious in the National Basketball Association case and the Zestafoni case. Take this case: in my view Primetrade raised two "grounds of objection" to the arbitrators' jurisdiction. They are: that Primetrade was not a holder of the bills of lading at any relevant time; and that it did not make a claim against the Owners; therefore it is not bound by the arbitration clause.
61. Primetrade raises the same two grounds of objection on this appeal. I accept that it raises different and broader arguments on the first ground. But in my view all those arguments are within the same 'ground of objection' to the jurisdiction of the arbitrators. The argument that no right of suit is transferred to Primetrade even if it became a 'holder' of the bills under section 5(2)(c) is, in my view, within that first ground.
112. For convenience I summarise my conclusions:
(1) On the proper interpretation of section 73(1) of the Arbitration Act 1996, an appellant under section 67 of the Act is entitled to argue any point coming
within the existing 'grounds of objection' to the jurisdiction that were raised
before the arbitrators. The 'grounds of objection' should not be examined
closely as if a pleading, but broadly. In this case all the arguments which the
appellants wish to advance on the appeal are within the two grounds of
objection to jurisdiction advanced before the arbitrators.
"
36. In Primetrade AG v Ytham Ltd at [60] [61] Aikens J emphasised the distinction between different grounds of objection and different or broader arguments relating to existing grounds.
37. In the present case I do not consider that ASES is seeking to raise new grounds of objection. Whilst the evidence and argument relied upon has expanded, ASES's underlying ground of objection has throughout been the same, namely that it is the arbitration agreement in the LML which is the governing agreement. In any event I would not therefore regard s.73 as precluding any of the arguments relied upon by ASES on this application."
In Habas Sinai, Hamblen J said at [86]-[87]:
"86. In order to decide whether a new ground of objection is being raised "the 'grounds of objection' should not be examined closely as if a pleading, but broadly" per Aikens J in Primetrade at [112]. The fact that it raises different and broader arguments or new evidence does not mean that it is a new ground ibid at [61]-[62].
87. Adopting a broad approach I agree with Habas that in the circumstances of this case its arguments on actual and ostensible authority based on Turkish law falls within the ground of objection based on lack of authority made at the arbitration. However, as Habas itself stressed in oral argument, its objection based on failure to comply with the formal requirements for an arbitration agreement under Turkish law has nothing to do with authority. It derives from the Turkish International Arbitration Act and Code of Obligations. In my judgment this is a new ground of objection and as such is not open to Habas on its application by reason of section 73 of the 1996 Act."
" . The parties are entitled to know the specific grounds which are to be advanced in a challenge to an arbitration award not only because they must know the case to be met but also because they should know the extent to which what would otherwise be a valid award is challenged. One of the objectives of arbitral proceedings is to achieve the speedy determination of disputes. It is accordingly very important that time requirements prescribed by the Act are strictly complied with and only allowed to be departed from in exceptional cases. No reasonable excuse has been proffered to the court for the failure to plead the grounds now sought to be introduced at the time the Arbitration Claim Form was issued. "
"I remind myself at the outset of the broad policy in play, as identified in Primetrade AG v Ythan Ltd ("the Ythan") [2006] 1 All ER 367. As Moore-Bick J said in Rustal Trading v Gill & Duffus SA [2000] 1 Lloyd's Rep 14 (at paragraph 19), s.73(1) is designed to ensure that if a person believes he has grounds for objecting to the constitution of the tribunal or the conduct of the proceedings, he raises those objections as soon as he is aware of them or ought to be aware of them. It would be unfair if he took part in arbitration yet kept an objection up his sleeve and only attempted to deploy it later."
"61. It was argued that the objection now raised was not a new ground of objection but merely an argument in support of the existing ground of objection. I was referred to the decision of Aikens J in Primetrade AG v Ythan Ltd [2006] 1 All ER 367, paras 54-60. At para 59, he stated that the intention behind section 73 was to ensure that a party which objected to jurisdiction but who had decided to take part in the arbitration proceedings, should bring forward his objections in those proceedings before the arbitrators and not hold them in reserve for a challenge to jurisdiction in the court. At para 60 he said that it was wrong to be prescriptive or to try to lay down precise limits in the abstract as to what was meant by an objection which meant a "ground of objection". "It is usually easy to recognise in particular cases whether a party is attempting to raise a new ground of objection to jurisdiction on an appeal." At para 112, he said that the "grounds of objection" should not be examined closely as if a pleading, but broadly. Hamblen J in Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Co Ltd [2014] 1 Lloyd's Law Rep 479, para 86, adopted the same line.
62. In my judgment it is clear that what is now being advanced is a new ground of objection. It is not merely another argument in relation to the ground of objection which was taken before the arbitrators. The only basis upon which E challenged the substitution of F as claimant in the arbitration was that such substitution was precluded by the decision of the Court of Appeal in the Baytur case [1992] QB 610. In its skeleton and oral arguments, E contended that, if the Tribunal were to exercise a discretion to allow such substitution, it should be allowed only on terms that E put up security for costs. In making that submission it is clear that E was accepting that the Tribunal had the power to order the substitution of F as claimant and expressly referred to the Tribunal as having that power as a condition of substitution of F as claimant. It took the position that section 38 of the Act, relating to security for costs was "not excluded by the [1998 Rules]". It is clear from the materials put in front of me that not only was E not making any argument that the ICC Rules did not allow for substitution but it was positively putting forward an alternative case that, if it was wrong on the Baytur point, the Tribunal should exercise its discretionary power to allow substitution only on terms.
63. In these circumstances E is precluded from raising the objection that it now takes by reason of section 73 of the Act. E participated in the arbitration without taking that objection and knew, through its advisers certainly, and could with reasonable diligence have discovered, the grounds for the objection in any event."
" whilst the court has resisted the temptation to lay down precise limits in the abstract, the court will investigate whether the party is attempting to raise a new "objection". The concept of objections does however appear to be construed relatively broadly; objections do not have to be put in exactly the same way as they were put before the arbitrators."
(1) The fundamental principle, or policy, is fairness, and justice, in the sense of openness and fair dealing between the parties: see Moore-Bick J in Rustal at 19-20, Colman J in Zestafoni at [64], Cooke J in Thyssen at [18], Aikens J in Primetrade at [59]-[61] and Carr J in C v D1 at [150].
(2) There is also a concern to seek to avoid waste of time and expense: see Moore-Bick J in Rustal at 19-20 and Cooke J in Thyssen at [18].
(3) The issue as to jurisdiction must normally have been raised at least on some grounds before the arbitrator: see Colman J in Zestafoni at [64].
(4) In addition, each ground of challenge to jurisdiction or of objection to jurisdiction must have been raised if it is to be raised; by this is meant the irregularity that the party considers renders the whole arbitral process invalid: see Colman J in Zestafoni at [64], Cooke J in Thyssen at [18] and Aikens J in Primetrade at [59]-[61].
(5) It is wrong to be prescriptive or try to lay down precise limits in the abstract for the meaning of the phrase "ground of objection", but it is usually easy to recognise (or obvious) in particular cases whether a party is attempting to raise a new ground of objection to jurisdiction on an appeal: see Aikens J in Primetrade at [59]-[61].
(6) The 'grounds of objection' should not be examined closely as if a pleading, but broadly, or adopting a broad approach. The fact that different and broader arguments are raised or new evidence is put forward does not mean that there is a new ground: see Aikens J in Primetrade at [59]-[61] and [112] and Hamblen J in Ases at [36]-[37] and Habas Sinai at [86]-[87].
(7) This is not to suggest a relaxed approach, especially bearing in mind (1) above. The other party (and the arbitral tribunal) must know the specific grounds which are to be advanced in challenge to an arbitration award not only because they must know the case to be met but also because they should know the extent to which what would otherwise be a valid award is challenged: see Field J in Konkola at [18].
(8) It would be unfair if a party took part in arbitration yet kept an objection up his sleeve and only attempted to deploy it later: see Moore-Bick J in Rustal at 10-20 and Carr J in C v D1 at [150].
(9) Different and broader arguments may be raised, and evidence and argument relied upon may be expanded, provided these are within the same existing "ground of objection" to the jurisdiction of the arbitrator: the fact that it raises different and broader arguments or new evidence does not mean that it is a new ground: see Aikens J in Primetrade at [61]-[62] and [112] and Hamblen J in Habas.
(10) It is not enough that the party mention an issue; the issue must be properly put to the arbitral tribunal as denying jurisdiction.
Applying the principles and approach: the contentions of the parties
"(i) that the arbitration agreement in the CHEJVA was void as a result of [the Judgment of the Supreme Court of Pakistan] (which created an issue estoppel and/or had binding effect as a matter of Pakistani law); (ii) that TCCA did not have standing to bring the claim because it had divested its rights under the CHEJVA in favour of its Pakistani subsidiary, TCCP; (iii) that [the Province of Balochistan] was not a party to the CHEJVA and could not therefore be a party to the arbitration agreement; and (iv) that the ICC Tribunal lacked jurisdiction to deal with TCCA's extra-contractual claims."
The development of the ICC arbitration
Stage 1: The early period of the ICC arbitration to the Judgment of the Supreme Court of Pakistan January 2012 to May 2013
"1. We write to request the ICC Court of Arbitration to exercise its power under Article 6.2 of the 1998 ICC Arbitration Rules to stop this arbitration from proceeding as any tribunal that may be constituted to hear this matter cannot have any jurisdiction.
2. The Request for Arbitration invokes Clause 15.4 of the Chagai Hills
Exploration Joint Venture Agreement ("CHEJVA") dated 29 July 1993, as
amended by Addendum No. 1 dated 04 March 2000 ("the Addendum") and a Novation Agreement dated 01 April 2006 ("the Novation Agreement")
(together "the Joint Venture Agreements"). The entire premise of [TCCA's] Request for Arbitration rests on challenging the denial of a mining
lease application made to the Directorate General of Mines and Minerals ("the Licensing Authority") under the Balochistan Mining Rules 2002 ("the BMR
Rules 2002"). Clause 16 of the CHEJVA provides that the applicable law is
the "law of Pakistan which the Parties acknowledge and agree includes the
principles of international law."
3. [TCCA] alleges that it has a right to be issued a mining lease by the
Licensing Authority under the Joint Venture Agreements entered into with the Governor of Balochistan. The Governor of Balochistan cannot bind the Licensing Authority to give a particular decision. The Licensing Authority,
which is the sole authority that can grant mining leases in the province of
Balochistan, is not a party to the Joint Venture Agreements. No government
entity, including the Governor of Balochistan, except the Licensing Authority has the power to grant mining leases under the BMR Rules 2002. This power is vested with the Technical Head of the Directorate General of Mines and
Minerals under Rule 2(z) of the BMR Rules 2002.
4. An ICC arbitration panel constituted pursuant to the Joint Venture Agreements certainly does not have the jurisdiction to hear a claim challenging the decision of the Licensing Authority made under the BMR Rules 2002. [TCCA's] claim does not rest in contract and cannot be the subject of these ICC arbitration proceedings. If [TCCA] wishes to consider claims against the Licensing Authority's decision, a procedure is set out in the BMR Rules 2002, which we believe it is exercising. It is understood that [TCCA] made an application in the nature of an appeal under Rule 70 of the BMR 2002 on the 28th of November, 2011 which is still pending with the Secretary Mines and Minerals Development Department, Government of Balochistan. Ultimately, this is a case of judicial review for the courts of Pakistan to decide, and one that cannot be arbitrated at the ICC.
10. It is also widely believed that the Joint Venture Agreements are tainted by corruption. The issues of procedural impropriety and corruption relating to the procurement and operation of the Joint Venture Agreements are the subject of ongoing proceedings in the Supreme Court of Pakistan in which both the Claimant and the Respondent are parties. In this regard, CPLA No. 796 of 2007, Constitution Petition No. 68 and No. 69 of 2010 and No.1 and No. 4 of 2011, Crim. Org. Petition No. 1 of 2011 and Human Rights Case No. 53771-P/2010 are pending before the Honourable Supreme Court.
11.The fact that the Joint Venture Agreements were made in flagrant violation of Pakistani law is also indicative of the corruption at work. The official who was intimately involved with the conclusion of the agreement has been later convicted for 7 years imprisonment on corruption charges for collecting assets beyond means. Some learned judges, including the Chief Justice of Pakistan, made pointed comments in open court about the allegations of corruption surrounding the Joint Venture Agreements in the Supreme Court proceedings.
17. It is a well-established principle that contracts procured by corrupt practices and trading in influence are unenforceable as a matter of international public policy. This is also the case under Pakistani law, the governing law of the Joint Venture Agreements. The recent law evolved in Pakistan by the Supreme Court of Pakistan demonstrates that procedural irregularities in themselves can be sufficient basis to infer corruption even if there is no overt act of corruption detectable on the surface. There is ample authority to indicate that contracts that have been the result of illegality and/or corruption have led to the international arbitral tribunals declining jurisdiction.
18. For any and all of the above reasons, there is no contractual or statutory basis for an ICC arbitral tribunal to hear this hopeless claim as it falls well beyond the validity and scope of any arbitration agreement. The Supreme Court of Pakistan is seized of the matter and it is for that Court to make the relevant ruling on the legality of the Joint Venture Agreements. It is also the relevant forum to review the Licensing Authority's decision to refuse the mining lease application of [TCCA].
19. The ICC Court of Arbitration must decline this Request for Arbitration as it is self-evident that there is no jurisdiction. The entire premise of [TCCA's] request is flawed as it alleges that it was promised the grant of a mining lease by the Governor of Balochistan. Such a promise, even if it did exist, is unenforceable and void ab initio under the governing law.
20. If the ICC Court of Arbitration is unable to make a decision on the basis of this letter, [the Province of Balochistan] can provide further information or documentation. If the ICC Court of Arbitration still finds that its powers do not allow it to decline jurisdiction at this stage, it should instruct the arbitral tribunal to decide the objections in this letter as soon as possible as a threshold matter.
21. [The Province] reserves its rights to raise additional objections, including those relating to the locus standi of [TCCA], jurisdiction and/or admissibility of the claim. These include objections on the ground that [TCCA's] Request for Arbitration was filed at the ICC in violation of the procedures set out in the Joint Venture Agreements."
"Arbitral institutions should proceed with care and prudence in allowing arbitrations under their auspices in circumstances where the highest court of a major Sovereign State is clearly seized of the matter, particularly where the issues raised are of vital public interest.
What [TCCA] really wants is a review of the Licensing Authority's decision to reject the application for a Mining Lease to a subsidiary company which is not a party to any agreement with the Government of Balochistan.
Neither is the Licensing Authority a party to this arbitration."
"3. [TCCA] seeks provisional measures from both the ICSID and ICC tribunals to restrain the Government from developing the RekoDiq Mining Area either by itself or with third parties. It does so, even though it has never held any title in its own right to the RekoDiq Mining Area. The exploration licence EL-5, which included the RekoDiq Mining Area, was held by the "TCCP-BDA Chagai Hills Exploration Joint Venture" and not [TCCA]. Under Article 1.1 of the joint venture contract, this licence was the property of the joint venture and not the individual contracting parties. EL-5 expired on 19th February 2012 and no further renewal was possible under the Balochistan Mineral Rules. In effect, [TCCA] is applying to preserve non-existent rights to territory that belongs to the Government of Balochistan.
4. The joint venture contract [TCCA] relies upon to claim a right to mine the RekoDiq Mining Area is seriously tainted by a strong suspicion of corruption. The joint venture contract is the 1993 Chagai Hills Exploration Joint Venture Agreement (the "CHEJVA"), amended in 2000, and novated in favour of the [TCCA] in 2006. The person who signed the 1993 CHEJVA on behalf of the BDA was subsequently convicted of corruption. Serious questions of irregularities and illegality have been raised by public interest petitions in various applications to the Supreme Court of Pakistan since 2007. As has subsequently emerged, the order passed by the High Court of Balochistan upon which [TCCA] relies as giving it a clean bill of health did not take into account all of the above facts.
VIII. OBJECTIONS TO JURISDICTION
60. Finally, these submissions are made without prejudice to the [Province of Balochistan's] position on a series of important jurisdictional issues. First, the matters in dispute are before the Supreme Court of Pakistan and are sub judice. Thus, for example, the Supreme Court of Pakistan will decide on the validity or invalidity of the relevant joint venture contracts and will look at such public interest issues as it considers appropriate. Secondly, the Supreme Court will state the law of Pakistan definitively with respect to the interpretation of those contracts and the application of the relevant legislation.
61. Thirdly, there are other jurisdictional issues which will fall to be decided in due course, but are sufficiently obvious as to lead to the conclusion that this Tribunal should not order provisional measures in circumstances where it may well make a finding that it has no jurisdiction. This would be so, for example, if the contract was void ab initio for corruption or was ultra vires under Pakistan law.
62. Finally, both [TCCA] and the Government are parties to the public interest litigation in the Supreme Court of Pakistan and have complied with the orders and directions of that Court. In fact, the Supreme Court of Pakistan oversaw the Claimant's mining lease application. It has never been suggested, nor could it be, that the conduct of the Supreme Court is in any way an abuse of process or a denial of justice.
63. The Government maintains its objections to the jurisdiction of this Tribunal. These were set out in the Government's letter to the ICC of 06 February 2012 [sic]. The parties have exchanged correspondence on these objections. These objections were made before [TCCA's] request for interim measures and ought to be decided before the Tribunal decides [TCCA's] application. The Government requests that the Tribunal, after hearing the parties on 4th December 2012, rules upon the matter of its own jurisdiction before it decides [TCCA's] application for interim measures."
1. "[The Province] submits its Answer and Counterclaim in accordance with Article 7 of [the ICC Rules]. It does so while maintaining its position that this Tribunal has no jurisdiction over this dispute. [The Province] requests this Tribunal to adjudicate upon its objections to jurisdiction which were submitted on 27 January 2012 before any further steps are taken in this arbitration. Should the Tribunal find it has jurisdiction, [the Province] requests that [TCCA's] claims be dismissed in their entirety for the reasons set out in this submission and the relief requested in its counterclaim be granted.
II. OBJECTIONS TO JURISDICTION
This dispute is outside the Tribunal's jurisdiction
2. Matters relating to the enforceability, validity and vires of the CHEJVA, the addendum of 2000 and the novation of 2006 ("the joint venture contract") are pending before the Supreme Court of Pakistan . [TCCA], its Pakistani subsidiary and its parent companies are before the Supreme Court and before were present before the Balochistan High Court. In excess of 50 applications have been filed and are pending before the Supreme Court. It is plain that only the Supreme Court of Pakistan has the jurisdiction to decide on the validity of the joint venture contract and no tribunal has the authority or power to usurp such jurisdiction. Therefore, this Tribunal should suspend any further proceedings in the arbitration until such time the Supreme Court of Pakistan determines the validity, legality and vires of the CHEJVA.
3. During the course of the Supreme Court proceedings allegations of corruption have been raised. It is the Supreme Court of Pakistan which is the appropriate forum for determining whether corruption is factor in the matter before it and then take appropriate decisions. In this regard, Article 34 of the UN Convention on Corruption allows the Supreme Court, in part being the sub-set of the State to continue with the present legal proceedings.
II. Objections to Jurisdiction; The joint venture contract is a product of illegality and corruption.
10. [The Province] also maintains its objections to the jurisdiction of this Tribunal, set out in its letter to the ICC of 06 February 2012 [sic].
11. The signatory to the CHEJVA, Mr Jafar, the then Chairman of the BDA, was convicted of corruption. The execution of the CHEJVA is riddled with irregularities which strongly infer corruption. One such example is that when the CHEJVA was signed in 1993 it was an express instruction of the caretaker Chief Minister of Balochistan that the agreement be termed as provisional. It was further contended that no-one really knew what the CHEJVA was and what sort of deal with BDA was getting into. However the concerns and instructions were brushed aside by BHP and the former Chairman of the BDA who was convicted of corruption.
12. The validity and legality of the CHEJVA, the Addendum and the novation agreement (together the "joint venture agreement") are before the Supreme Court of Pakistan. [TCCA], TCCP together with their parent companies, Barrick Gold Company and Antofagasta plc, have participated in that litigation.
15. The Honourable Judges of the Supreme Court during the various stages of the proceedings have expressed serious concerns about the merits and the circumstances in which the CHEJVA was executed and the unfair and unbalanced arrangement that it involved.
18. The joint venture contract is void and unenforceable because it is a product of illegality and corruption. Applications seeking declarations of illegality and invalidity of the 1993 Agreement and the Addendum and Novation Agreements of 2006 are pending in the Supreme Court of Pakistan. This Tribunal must wait for the Supreme Court's decision which is expected shortly before proceeding further.
19. If the Supreme Court of Pakistan finds illegality, then the entire contract including the arbitration provision will be void. This Tribunal will have no jurisdiction."
130. The Province says that at paragraphs 10 to 34 it submitted that the ICC tribunal did not have jurisdiction because "the joint venture contract [ ] is a product of illegality and corruption" (paragraph 18). As such, argues the Province, it was addressing corruption, encompassing both pre- and post- contract fraud, which it contends are separate concepts as a matter of Pakistani law. It emphasises that, under the heading "Objections to Jurisdiction", it had the section called "The joint venture contract is a product of illegality and corruption". It argues it could not have made it clearer that this was one of the Province of Balochistan's jurisdictional objections.
"The person who signed the CHEJVA was later sentenced for corruption for beyond means offence in Pakistan he has just completed his sentence"
and no allegations were advanced linking this to the CHEJVA. The Province of Balochistan made no jurisdictional objection based on corruption allegations. For TCCA, Mr Donovan stated to the ICC tribunal:
"I do want to suggest, though, that to the extent that there is any suggestions that appeared in the papers here that there is any corruption involved in this case -- and there are obviously extremely distinguished members of the Pakistani and English bar in front of the tribunal on the other side, but they have been very careful to frame their suggestions as there may be questions, there is no an iota of suggestion, nothing."
"15. On January 27, 2012, the Government requested the ICC not to proceed with the arbitration pursuant to Article 6(2) of the ICC Rules.
16. The reasons included these: (a) the Governor of Balochistan cannot bind the Directorate General of Mines as the Licensing Authority to grant a Mining Lease; (b) the Tribunal would not have jurisdiction to hear a claim challenging the refusal of a lease; (c) if the Governor of Balochistan guaranteed or promised the grant of a lease, the agreement would be unenforceable and void, and ultra vires; (d) the CHEJVA was tainted by corruption; (e) there were proceedings relating to the validity of the CHEJVA pending before the Supreme Court of Pakistan, which was the final authority on all questions of Pakistani law.
60. The Government's objections to jurisdiction included grounds in addition to those indicated in its letter of 27 January 2012.
61. In the course of this application, the Government has made these points on the merits of the claim (inter alia): (1) TCCA's application for a Mining Lease in February 2011 was in breach of the CHEJVA, and failed to meet the requirements for the grant of a Mining Lease pursuant to the BMR; (2) Article 5.9 provides for "the right to apply for a Mining Lease" and does not contain a right to be granted a Mining Lease, and the Government was not obliged to procure a Mining Lease under the CHEJVA; (3) even if Article 11.8.2 entitled TCCA to a Mining Lease, this would be in relation to a "mine" or a single mineral deposit in accordance with the provisions of and procedure set out in the CHEJVA, and not to at least 14 mineral deposits of substantial value contained in the Reko Diq Mining Area; (4) TCCA's Feasibility Study related to only two mineral deposits at H14 and H15 (which cover an area of 6 sq km); (5) TCCA did not commission feasibility studies for the other deposits, nor did it offer the Government any opportunity to develop those deposits; (6) TCCA unilaterally submitted an application for the entire 99.473 sq km in breach of the CHEJVA; (7) TCCA attempts in breach of law to bind the Licensing Authority's broad statutory discretion to refuse a Mining Lease application if it believes that this would not be in the interests of the development of the mineral resources of Balochistan; (8) Licence EL-5 was held by the Joint Venture and not by TCCA; (9) Licence EL-5 expired on February 19, 2011 and no further renewal was possible under the BMR; (10) in effect, TCCA is applying to preserve non-existent rights to territory that belongs to the Government; (11) the CHEJVA is seriously tainted by a strong suspicion of corruption: the person who signed the 1993 CHEJVA on behalf of the BDA was subsequently convicted of corruption, and serious questions of irregularities and illegality have been raised by public interest petitions in various applications to the Supreme Court of Pakistan since 2007; and (12) the Supreme Court of Pakistan has been seised of the fundamental questions concerning the validity and legality of the CHEJVA, and it is for the Supreme Court of Pakistan also to consider the meaning and effect of the BMR and whether to follow the principle that the Government's discretion in granting a mining title cannot be curtailed by contract: Cudgen Rutile (No.2) Pty Ltd v Chalk [1975] AC 520.
87. It would appear that the Government's position now is that the CHEJVA is governed by the law of Pakistan and that the effect of the order of the Supreme Court of Pakistan is that the arbitration agreement in the CHEJVA is null and void and that the Tribunal is therefore deprived of jurisdiction.
88. It is well established that an arbitration agreement is severable from the contract of which it forms a part, and may be governed by a different law. It is not necessary to express a view on the question at this stage prior to any formal challenge to the Tribunal's jurisdiction by the Government, but it is arguable that the arbitration agreement is governed by English law on the basis that it has the closest connection with English law as the seat of the arbitration envisaged by the arbitration agreement in clause 15.4.3(a). Secondly, even if the arbitration agreement is governed by the same law as the CHEJVA, it is arguable that the reference to international law in clause 15.4.4 and clause 16 has the result that the CHEJVA is governed by international law and that the validity of the arbitration agreement is therefore unaffected by the ruling of the Supreme Court [of Pakistan] that the CHEJVA is null and void under the law of Pakistan. Accordingly the Tribunal is of the view that it retains prima facie jurisdiction pending the resolution of the Government's challenge to its jurisdiction.
Ruling
138. For the reasons given above the Tribunal considers that TCCA has not made out the conditions for the grant of interim relief."
(1) The jurisdiction point raised by the Province with the ICC Court was that an ICC arbitral tribunal would not have the jurisdiction to hear a claim challenging the decision of the Licensing Authority made under the BMR Rules 2002.
(2) The Province also referred to the possibility of corruption, and of corruption that went to jurisdiction.
(3) The possibility at (2) was identified by reference to the presence of suspicions, indications, comments, and the potential to infer corruption.
(4) The Province had made clear that its position was that these matters were before the Supreme Court and were for decision by the Supreme Court.
(5) The ICC tribunal had recorded that there was not yet "any formal challenge to the Tribunal's jurisdiction by the Government".
Stage 2: The Judgment of the Supreme Court of Pakistan May 2013
Stage 3: From the Judgment of the Supreme Court of Pakistan to the eve of the ICC tribunal's "Rulings on Preliminary Issues", including jurisdiction May 2013 to October 2014
"1. The Government of Balochistan ("the Government" or "the Respondent") requests that the preliminary jurisdictional and admissibility objections set out below are heard before this arbitration proceeds to the merits. The Tribunal's power to hear these objections on a preliminary basis is set out in paragraph 52 of the Terms of Reference.
2. Firstly, this Tribunal must consider the impact of the [Supreme Court's] judgment on its jurisdiction and the admissibility of the claims before it. The [Supreme Court] has declared that the contract pursuant to which this arbitration arises is "illegal void and non est" in its entirety. Pakistani law governs the CHEJVA, including the arbitration agreement contained therein. The Supreme Court's ruling, therefore, binds this Tribunal. The source of the Tribunal's jurisdiction is not an autonomous source, but derives from a contractual nexus between the parties. Once that nexus is declared finally and conclusively null and void, then all rights and obligations under it, including the jurisdiction of this Tribunal, fall away. The Tribunal has no inherent jurisdiction of its own independent of the contract.
26. The [Supreme Court] found that the CHEJVA was illegal void and non est on a number of grounds including the fact that officials involved in its conclusion violated their public duties under Pakistani law and were induced into giving undue advantages and benefits to [TCCA's] predecessor related to the CHEJVA. These findings are firmly in line with current international law and policy on anti-corruption.
27. Tellingly, the Supreme Court also held that the CHEJVA is "illegal void and non est" in its entirety:
"As all the key provisions of the CHEJVA were made subject to a reliance on relaxations that were illegal and void ab initio, the illegality of the agreement seeps to its root. "
28. [T]he arbitration agreement is governed by Pakistani law. The Pakistan Supreme Court has determined that no part of the CHEJVA can be saved as the agreement is void ab initio, non existent and the illegality "seeps to the root[s]" of the CHEJVA. This determination of Pakistani Law by the Pakistan Supreme Court is not open to scrutiny by this Tribunal, nor can this Tribunal substitute its own finding for that of the Supreme Court.
31. [I]t is important to note that this jurisdictional objection is not based on a claim or allegation of voidness/illegality of the agreement, but rather a finding of voidness / illegality by a court of competent jurisdiction.
32. For the record, the Government submits that this Tribunal could not "uphold the validity of the arbitration agreement" even if it were governed by English law. Since (a) the underlying contract terms are governed by Pakistani law, and (b) the Pakistani Supreme Court has held that the underlying contract, including the arbitration agreement, is void ab initio for illegality. First, the illegality in this case is "palpable"; it is not contested. Second, the illegality directly impeaches the arbitration agreement [at footnote 20, the Province of Balochistan distinguished Fiona Trust "on the grounds that the "bribery" in that case did not entail the invalidity of the arbitration agreement, whereas the Province of Balochistan submission was that it did in its case"]. Third, the nature of the illegality is such that due to public policy reasons it would be unenforceable under English law and international public policy. Any award rendered by a Tribunal assuming jurisdiction under an unenforceable arbitration agreement (i.e. an arbitration agreement tainted by illegality) would be denied recognition and enforcement.
49. The findings of the Pakistani Supreme Court and the Tribunal's obvious lack of jurisdiction over the parties to, and subject matter of, this dispute warrant urgent upfront consideration.
51. In the exercise of its undoubted right to determine its own jurisdiction, the Government submits that the Tribunal will be compelled to find that it has no jurisdiction to hear this case. If the Tribunal accepts that the governing law of the arbitration agreement is Pakistani law, then the Supreme Court's finding that the arbitration agreement like the rest of the CHEJVA is void and tainted with illegality is dispositive of the matter. If the Tribunal takes the view that English law governs the arbitration agreement, the arbitration agreement is in any event unenforceable due to the illegality of the underlying terms of the CHEJVA. In this case, the illegality directly impeaches the arbitration agreement itself."
"Balochistan argues that this Tribunal lacks jurisdiction, either because it is bound to accept the Pakistan Supreme Court's judgment purporting to invalidate all provisions in the CHEJVA, including the arbitration clause, or because the Supreme Court's conclusion that the entire contract is illegal necessarily renders the arbitration clause unenforceable.
Balochistan's theory confirms that the Tribunal would have to weigh the same evidence and consider the same legal arguments when assessing the validity of both the arbitration clause and the other CHEJVA provisions underlying TCCA's claims on the merits, including:
(i) alleged "irregularities and corruption" surrounding the conclusion of the CHEJVA,
(ii) the authority, under Pakistani law and in the factual circumstances, of the persons signing the CHEJVA and related agreements on behalf of Balochistan, and
(iii) the effect of the alleged invalidity of the CHEJVA on later agreements that expressly reaffirmed its provisions, including the arbitration clause."
The Province of Balochistan contends that TCCA recognised here that the Province was taking a jurisdictional objection based on corruption. TCCA disagrees.
"30. "The claimant's position: the respondent's objection that there is no valid arbitration agreement rests entirely on its position that the CHEJVA as a whole is invalid, and it has asserted no separate basis for its contentions that the claimant's claims are inadmissible .the Tribunal would have to weigh the same evidence and consider the same legal arguments when assessing the validity of both the arbitration clause and the other CHEJVA provisions underlying the claimant's claims on the merits, including: (i) alleged irregularities and corruption surrounding the conclusion of the CHEJVA; (ii) the authority, under Pakistani law and in the factual circumstances, of the persons signing the CHEJVA and related agreements on behalf of the respondent; and (iii) the effect of the alleged invalidity of the CHEJVA on later agreements which expressly reaffirmed its provisions, including the arbitration clause.
41. The first main basis of [the Province's] claim that the Tribunal has no jurisdiction is that the CHEJVA and the associate[d] [sic] contracts are invalid by reason of, and for the reasons given by, the Supreme Court of Pakistan.
43. So also is the second main submission of the respondent closely entwined with the merits. [The Province's] position is that the BDA was not authorized to enter into the CHEJVA on behalf of [the Province] and that neither the respondent nor the Licensing Authority is party to the CHEJVA ."
14. the Supreme Court of Pakistan has definitively held in a well-reasoned decision that the CHEJVA Agreements (including the 2006 Novation Agreement) are illegal, void and non-existent in their entirety under the applicable law (i.e. Pakistani law). This undisputed and indisputable finding (not merely allegation) of illegality infects the arbitration clause in the CHEJVA upon which the Claimant seeks to establish the Tribunal's jurisdiction in this arbitration.
119. On 8 February 2011, the Supreme Court of Pakistan directed the Government of Balochistan to produce and submit the entire record pertaining to the CHEJVA and the related contracts. Earlier the Supreme Court had been displeased with the failure on the part of the Government of Balochistan to produce the entire record of documents as the Supreme Court wanted to satisfy itself about the reasoned basis of the different position taken by Government in its pleadings before the Balochistan High Court and initially before the Supreme Court. In compliance with the said orders, the said record was retrieved from the archives of the BDA and other departments of the Government of Balochistan. The said record was then filed through several applications. It made shocking disclosures of extensive irregularities from which corrupt practices could be inferred.
120. The then government officials, including the Advocate General, examined the record and decided not to defend the irregularities and instead rendered full assistance to the court in relation to the record. Indeed, the Government of Pakistan and the Respondent have a duty to assist the Supreme Court under the Constitution of Pakistan, and the counsel representing the Governments is an officer of the Court. Neither can the Governments or its counsel hide documents from the Supreme Court, nor can they misrepresent such documents or the law pertaining thereto. Pakistani law permits a modification of a party's position if there are developments subsequent to the filing of the case. The decision to adopt a neutral position was taken by the Government of Balochistan as the Supreme Court has repeatedly encouraged and instructed officials to perform their duties while disregarding any unlawful order or irregularities on the part of their predecessors.
121. Once the full review of the case file had been completed, the Respondent, in good faith, withdrew its support for the CHEJVA and adopted a neutral position, submitting that the Supreme Court should decide the matter on the merits. Contrary to the Claimant's allegation, the Governments of Balochistan and Pakistan did not "attack" the CHEJVA. The Government of Balochistan's counsel performed its duty towards the Supreme Court by handing over additional documents, explained the position of Pakistani law to the best of their ability and left it to the Supreme Court to decide the matter on the merits.
II. THE FINDINGS OF THE SUPREME COURT
122. After lengthy hearings, the Supreme Court issued an order in relation to the various petitions brought before it in relation to the CHEJVA and TCCA's activities on 7 January 2013.That order, though providing a summary of the basis of its dispositive part, expressly stated that "detailed reasons [would] be recorded later".
123. Those reasons were rendered on 10 May 2013. They in essence rely on a finding that the conclusion of the CHEJVA by the BDA in 1993 (and even when considered in light of the 2000 Addendum) was ultra vires and thus void. In particular, the Supreme Court held that the conclusion of the CHEJVA fell outside the powers granted to State authorities under, inter alia, the 1948 Act and the 1970 BM Rules which were promulgated pursuant to that statute. Similarly, it held that the "relaxations" of the 1970 BM Rules were not done in accordance with Pakistani law. In summary, Pakistani law requires that such "relaxations" be granted only once "hardship" is established which it had not been in the present circumstances. As the conclusion of the CHEJVA was ultra vires, the Supreme Court declared that it was void and non est. As a matter of Pakistani law, it did not exist and did not confer any rights on BHP, Mincor, the Claimant in this arbitration, TCCP, Antofagasta or Barrick. This being so, each element of the contractual regime premised on the CHEJVA including the 2000 Addendum, the 2000 Option Agreement, the 2002 Alliance Agreement and the 2006 Novation Agreement was also void.
124. In greater detail, the Supreme Court held:
(a) once the Supreme Court had inspected [the CHEJVA record] it found that the record "made shocking disclosures of extensive irregularities and corruption"
312. The Supreme Court's finding of the illegality of the CHEJVA was utterly clear:
"The said record [the entire record relating to CHEJVA] was retrieved and filed through several applications. It made shocking disclosures of extensive irregularities and corruption.
313. The Supreme Court found that the CHEJVA was illegal, void and non est on a number of grounds including the fact that the officials involved in its conclusion violated their public duties under Pakistani law and were induced into giving undue advantages and benefits to the Claimant's predecessor relating to the CHEJVA. Furthermore, as discussed above, the Supreme Court found that the CHEJVA's object was unlawful as it was an attempt to contravene the provisions of Pakistani law, including the Constitution of Pakistan, the Mines Act 1948 and the 1970 BM Rules. Pursuant to Section 23 of the Pakistani Contract Act 1872 contracts with such unlawful objectives are void.
314. The preclusive effect of the Supreme Court's judgment is complete. The Court held that the CHEJVA is "illegal, void and non est" in its entirety
315. The scope of this finding by the Supreme Court means that the arbitration agreement in the CHEJVA, which is governed by Pakistani law, cannot be saved. It, individually, is illegal and of no effect under its governing law. This determination of Pakistani Law by the Pakistan Supreme Court is not open to scrutiny by this Tribunal, nor can this Tribunal substitute its own finding for that of the Supreme Court.
316. It is important to emphasise that this jurisdictional objection is not based on a claim or allegation that the CHEJVA is void and illegal. Rather it is based on an express finding that the CHEJVA is void illegal [sic] by the most senior court of competent jurisdiction.
319. The Tribunal would be bound to accept that it could not "uphold the validity of the arbitration agreement" even if the arbitration agreement were governed by English law. This is so for three reasons. First, the illegality in this case is "palpable"; it is not contested. Second, the illegality directly impeaches the arbitration agreement. Third, the nature of the illegality is such that due to public policy reasons it would be unenforceable under English law and international public policy. Any award rendered by a Tribunal assuming jurisdiction under an unenforceable arbitration agreement (i.e. an arbitration agreement tainted by illegality) would be denied recognition and enforcement.
320. However, there are additional reasons, under Pakistani law, why the CHEJVA Agreements are illegal and void. First, the Respondent could not have entered into a joint venture agreement because the Pakistan Mines Act 1948, the legislative instrument under which the 1970 BM Rules were promulgated, did not allow provide for the execution of agreements, but only for the promulgation of rules. Therefore, the Rules already occupied the subject of regulating the mines and minerals in Balochistan. This concept of an occupied field is well known in Pakistani law, and its effect is to render illegal and void any entry by the Respondent into a contract such as the CHEJVA.
321. Second, the fact is that the Respondent is not a party to CHEJVA. The Respondent never appointed the BDA or any of its officials to act as its agents for executing the CHEJVA. The Claimant's assumption that the Respondent was party to the CHEJVA is a critical mistake of fact. As a result, the CHEJVA is also void on account of Section 20 of the Contract Act 1872, which says: "Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void."
322. Third, the CHEJVA Agreements are also void because they are an effort to interfere with and curtail the discretion of a licensing authority. A licensing authority by its nature enjoys independence as it needs to consider the licencee's application. The 2002 BM Rules codify this independence. Only the appellate body has the mandate to set aside the decision of the Licencing Authority. Any attempt by the CHEJVA Agreements, as construed by the Claimant, to curtail this discretion of the Licensing Authority is void.
323. This principle has been applied in Pakistani courts, including in the Balochistan High Court when it declared that the Chief Minister had no executive power to interfere with matters regulated by the Balochistan mining code. It is plain that, if the CHEJVA is considered by this Tribunal to grant a mining lease, which is denied by the Respondent, such contract would be illegal under Pakistani law.
324. Fourth, the CHEJVA Agreements suffer from uncertainty about the area which is the subject of any future mining rights. Although a general map covering 13 thousand square miles is annexed to the CHEJVA, clause 5.3.1 CHEJVA states that the aggregate prospecting area shall not be more than 50 square kilometres. The scope of the prospecting activities anticipated by the CHEJVA, along with the scope of any future mining activities, are inherently uncertain. Thus, on account of this uncertainty in respect of the area that is to be taken as subject matter of CHEJVA, Section 29 of the Contract Act renders it void.
325. For the foregoing reasons, the CHEJVA, the 2006 Novation Agreement and the arbitration agreements contained in each of those contracts are governed by Pakistani law, and are invalid as a result of the determinative finding to that effect by the Supreme Court of Pakistan (and would in any event be void by virtue of other aspects Pakistani contract law). The result is that the present Tribunal does not have jurisdiction under the CHEJVA Agreements to hear and decide the present dispute. The Tribunal must therefore decline jurisdiction."
" the issue of irregularities and corruption in relation to the CHEJVA Agreements is at the heart of the Supreme Court decision that the CHEJVA Agreements are illegal, void, ab-initio and non est under Pakistani law. The documents requested are relevant and material to establishing [whether bribes were paid]. Indeed, such document would in and of themselves strip this Tribunal of any jurisdiction to hear and decide the Claimant's claims."
"Some of the documents will be produced in the ICSID arbitration. The Supreme Court referred to corruption but did not invalidate the contracts on that basis, and [the Province] has not sought to make out an independent case on that basis. In any event the request is overly broad."
"252. The CHEJVA is not invalid due to corruption .Balochistan refers throughout its objections to alleged corruption or impropriety in the conclusion of the CHEJVA and subsequent Agreements, and contends that the Supreme Court invalidated the CHEJVA on that ground ..The Supreme Court did no such thing. As this Tribunal has already ruled the Court "referred to corruption" but "it did not invalidate the contracts on that basis".
253. There was no corruption involved in the CHEJVA the Tribunal should not indulge further unsubstantiated allegations of this kind".
"17. After comprehensively considering the matter, the Supreme Court provided a 149-page reasoned judgment addressing the many issues placed before it. That judgment determined that, as a matter of Pakistani law, inter alia:
- [BMCR 1970] required that, in order for any relaxations of the Rules to be legal, both "hardship" and "special circumstances" had to be shown, and the reasons for any relaxations had to be recorded in writing. Since these tests were not met, the relaxations of the BM Rules of 1970 were ultra vires, void and ineffective.
- Balochistan did not have the legal power to enter into the CHEJVA or related agreements in the manner in which it purportedly did.
- All key provisions in the CHEJVA were subject to reliance on relaxations which were illegal and void ab initio, so the illegality of the agreement "seeps to its root", and the principle of severability cannot save any part thereof.
- Since the CHEJVA was void and illegal, so were the other related agreements."
By Footnote 11 the Province of Balochistan referred to its 30 September 2013 Objections to Jurisdiction (see above) for the reasons why the Supreme Court of Pakistan held that the CHEJVA was void, and those Objections, note the Province, expressly included corruption.
"E. ALTERNATIVELY, THE JUDGMENT OF THE PAKISTANI SUPREME COURT AMOUNTS TO A BINDING STATEMENT OF PAKISTANI LAW AS A MATTER OF PRECEDENT
(2) The Pakistani Supreme Court did not err on the facts underlying its findings of invalidity .
(d) Whether the CHEJVA was obtained by corruption
137. For the avoidance of doubt, Balochistan does not presently allege that the CHEJVA was obtained by corruption. Of course, corruption, given its nature, is difficult to prove. But Balochistan does not need to demonstrate corruption.
138. In some countries, at some times, corruption has been rare. Lawyers and courts operating in those circumstances can adopt regulations and conduct themselves on the basis that it is inherently unlikely that any particular public act is the result of corruption. In those circumstances, it is not surprising that strict proof is required of such an allegation (despite the difficulties inherent in obtaining such proof).
139. Regrettably, however, not all countries have been so fortunate at all times. Where there is a greater likelihood of corruption affecting public acts, the legal system can take a different view of the inherent probability of the involvement of corruption. Its public law may develop differently, in the light of this greater risk.
140. In Pakistan, the law provides that, if a public servant is found to have greater assets than can be the result of his salary or legally-acquired funds, and he is unable to prove the contrary, corruption is inferred, without the need to prove a particular bribe. It was under that provision that Mr Jaffar was convicted (the former chairman of the BDA who procured the conclusion of the CHEJVA).
141. In any event, this is the law of Pakistan, and the law on which the Supreme Court reached its decision. In such circumstances, the Supreme Court cannot be criticised for making the statements it did. There was certainly evidence available from which one might infer that corruption was involved (chiefly, of course, that we now know that Mr Jaffar was a corrupt individual, but also his conduct in relation to the conclusion of the CHEJVA).
142. However, whether or not the Supreme Court was right to refer to corruption is neither here nor there. As the Claimant has rightly accepted, and as the Tribunal has already found in this arbitration, the Supreme Court did not conclude that Balochistan did not have power to make the relaxations or enter into the illegal CHEJVA and related contracts as a result of corruption. Whether or not there was actually corruption is irrelevant to the binding force of the Supreme Court's conclusions.
311. As a matter of Pakistani law, the arbitration agreement is invalid. This is because: (a) The Supreme Court adjudged it to be invalid, and that constitutes a res judicata; and (b) The Supreme Court's judgment is binding as a matter of Pakistani law.
312. The Supreme Court expressly held that the entirety of the CHEJVA was rendered null and void by the illegality. No provision, including the arbitration agreement, was capable of being saved by the principle of separability:
"As all the key provisions of CHEJVA were made subject to a reliance on relaxations that were illegal and void ab initio, the illegality of the agreement seeps to its root. As such, no operative part of the agreement survives to be independently enforceable and the principle of severability cannot be applied to save any part thereof. The agreement is, therefore, void and unenforceable in its entirety under the law."
" It is common ground that s.7 of the English Arbitration Act 1996 applies, so the invalidity of the CHEJVA (and related agreements) does not automatically lead to the invalidity of the arbitration agreement therein."
(1) The Province of Balochistan relied on the decision of the Supreme Court of Pakistan and its finding that the CHEJVA was void and illegal.
(2) The ICC tribunal was being asked by the Province to give effect to the consequences of the decision of the Supreme Court of Pakistan, and in particular its consequences for the alleged arbitration agreement and the ICC tribunal's jurisdiction.
(3) The ICC tribunal was not being asked by the Province to decide whether, independently of the decision of the Supreme Court of Pakistan, there was corruption rendering the CHEJVA and related agreements void.
(4) The ICC tribunal made clear that the Province had not sought to make out an independent case of corruption leading to the invalidity of the arbitration agreement.
(5) The ICC tribunal also made clear its view that whilst the Supreme Court of Pakistan referred to corruption it did not invalidate the CHEJVA and related agreements on that basis.
(6) The Province of Balochistan itself made clear it did "not presently allege that the CHEJVA was obtained by corruption", and did not need to.
(7) The Province further emphasised that "[t]he Supreme Court did not conclude that Balochistan did not have power to make the relaxations or enter into the illegal CHEJVA and related contracts as a result of corruption" and that "whether or not there was actually corruption is irrelevant to the binding force of the Supreme Court's conclusions."
Stage 4: The ICC tribunal's "Rulings on Preliminary Issues", including jurisdiction, on 21 October 2014
"the main factual elements in the Judgment of the Supreme Court [of Pakistan] which are immediately relevant are these: (6) There were "shocking disclosures of extensive irregularities and corruption".
"The Government's position is that the arbitration agreement is governed by Pakistani law, and that it is invalid under that law. The Supreme Court found (para 24) " no operative part of the agreement survives to be independently enforceable and the principle of severability cannot be applied to save any part thereof. The agreement is, therefore, void and unenforceable in its entirety under the law" and also said that no stay was available under the New York Convention (para 102 [sic]), which only made sense if it had decided that the arbitration agreement was null and void.
" under which it is valid, unless any of the vitiating factors alleged by the Government [of Balochistan] to exist under Pakistani law apply so as to invalidate the arbitration agreement".
"The officials involved in the conclusion of the CHEJVA violated their public duties under Pakistani law and were induced into giving undue advantages and benefits to TCCA's predecessor relating to the CHEJVA. Once the Supreme Court had inspected "the entire record relating to CHEJVA", it found that the record "made shocking disclosures of extensive irregularities and corruption."
"The CHEJVA is not invalid due to corruption. Contrary to the Government's assertions, the Supreme Court did not find corruption. It referred to corruption but did not invalidate the contracts on that basis. There was no corruption involved in the CHEJVA or the relaxations of the 1970 BM Rules.".
"The Supreme Court found that (1) the agreements were invalid by virtue of section 23 of the Contract Act because of unlawful relaxations of the BM Rules requirements; (2) the agreements were void by virtue of section 20 because of a mistake of fact, namely that the BDA was an agent for the Government and/or there had been unlawful relaxations; (3) the agreements were void for uncertainty under section 29 because the map annexed did not correlate with the CHEJVA."
"Although the Supreme Court said (at para 116) that the record showed "extensive irregularities and corruption" it made no finding, and did not invalidate the Agreements on this ground. No separate arguments or evidence have been put before this Tribunal, and therefore the Tribunal makes no ruling on this question."
The paragraph of the Supreme Court's judgment to which the ICC tribunal referred (paragraph [116)] is set out earlier in this judgment.
(1) The ICC tribunal was being asked by the Province to accept and apply the decision of the Supreme Court, which was said to include that the arbitration agreement was null and void.
(2) The ICC tribunal was not being asked by the Province to decide whether, independently of the decision of the Supreme Court of Pakistan, there was corruption rendering the CHEJVA and related agreements void.
(3) The ICC tribunal decided that the Supreme Court made no finding of corruption, and that the Supreme Court did not invalidate any agreement on this ground.
(4) The ICC tribunal made no ruling itself on the question of corruption because no separate arguments or evidence had been put before it.
(5) Corruption was not an issue before the ICC tribunal other than as identified above. What is identified above shows why the ICC tribunal referred to the parties' positions and then addressed corruption in the way that it did.
(6) Reference by the Province of Balochistan before the ICC tribunal to the effect that the Supreme Court of Pakistan had made findings of corruption and that these invalidated the arbitration agreement was confined to the compass of challenge identified above.
Stage 5: The October/November 2014 exchange, between the parties and the ICC tribunal
"The Tribunal stated that the rulings were not an interim or partial award and would be incorporated in a partial or final award on the merits of the proceedings.
The ICC has suggested that, to avoid any possible prejudice to either party from the adoption of that course, the parties should be given the option of the rulings being given as a partial award after the normal scrutiny by the ICC. The Tribunal has agreed to that suggestion and the parties are therefore informed that if either party indicates (or both parties indicate) by November 21, 2014, that it wishes (or they wish) that course to be adopted, the Tribunal will (subject to scrutiny by the ICC) make a partial award."
"The Parties have consulted following the President's email to them on 29 October 2014. Neither Party requests that the Tribunal issue the Rulings on Preliminary Issues dated 21 October 2014 as a Partial Award, with the understanding that [TCCA] will not assert that [the Province of Balochistan's] decision not to seek review of the Rulings prior to the Tribunal's incorporation of those Rulings into an Award shall compromise whatever right [the Province] may have in relation to challenging, the enforcement of, the recognition of, or any other form of review of the Award, upon its issuance."
(1) The parties agreed that the Rulings were not yet an award.
(2) The 28-day period under section 70(3) of the 1996 Act would therefore run not from the Rulings but from the point at which an award was made.
(3) In the meantime, a right to object to the substantive jurisdiction of the ICC tribunal would not be lost under section 73 where the objection had been made in the proceedings before the ICC tribunal that resulted in the Rulings.
(4) The parties' position in relation to an objection that was not made remained governed by section 73; the October/November exchange did not encompass or affect the position of any objection that was not made, whether it was not made because a party did not know and could not with reasonable diligence have discovered it, or for any other reason.
Stage 6: Following the October/November 2014 exchange
"The [Government of Balochistan] has recently uncovered cogent new evidence of extensive corruption by TCC in relation to the Reko Diq project, including bribery of a broad range of [Government] officials. The issue of corruption has long been suspected and the Tribunal will recall that during the preliminary phase the [Government of Balochistan] referred to the Supreme Court's identification of "extensive irregularities and corruption" in respect of Reko Diq. However, the Supreme Court made no finding on this and the Tribunal noted in its Decision on Preliminary Issues that "no separate arguments have been put before the Tribunal, and therefore the Tribunal makes no ruling on this question."
[T]his new evidence will have significant consequences including for the procedure going forward. It goes to important issues which have not been dealt with in the arbitration to date and will not require a re-opening of the proceedings as a whole. "
"10. Balochistan's position in these proceedings has been that it was not challenging the CHEJVA on grounds of corruption notwithstanding suspicions of corruption, in light of difficulties in evidencing corruption. While the Tribunal intended to address "all issues relating to the validity and binding nature of the CHEJVA" at the June 2014 hearing, the Tribunal made no ruling on the question of corruption in its Ruling on Preliminary Issues, there being "no separate arguments or evidence put before [the] Tribunal"."
"7. The tribunal has considered the submissions. The allegations, or similar allegations have been made from an early stage in the proceedings in the Pakistani courts, and the respondent did not adduce any positive material in this arbitration until the present application. The tribunal is not convinced that the evidence could not have been presented and/or obtained much earlier. But without in any way suggesting that the allegations have merit, the tribunal considers that it is important that allegations of this kind be dealt with, and, although they should have been detailed much earlier, the claimant will not be substantially prejudiced by having to deal with them at this stage.
8. As to procedure, the respondent is in effect asking for another preliminary issue to be determined in the form of an application to dismiss.
9. The tribunal is not satisfied at this stage that the hearing of such a further preliminary issue would be efficient or appropriate, and therefore orders that:
(1) The corruption allegations be set out in the Supplemental Counter- Memorial to be served pursuant to the tribunal's previous order in its email dated April 28, 2015;
(2) pending service of the Supplemental Counter-Memorial, the respondent should serve by January 11, 2016 in final form the section dealing with the corruption allegations supported by all witness statements and relevant documents in its possession;
(3) the parties should report to the tribunal by January 25, 2016 what progress has been made on agreeing a timetable for service of the Supplemental Counter-Memorial and for other procedural steps leading to the scheduled hearing, as requested in the tribunal's email of August 17, 2015."
"207. There is well known precedent, in the form of Judge Lagergren's 1963 award [ICC Case No. 1110 of 1963, 3 Arbitration International (1994, no.3) at pp. 282-294.], for an ICC tribunal to hold that the existence of bribery can lead to a finding that a tribunal does not have jurisdiction. Nevertheless, contemporary arbitral practice has moved away from finding that corruption has an impact on the jurisdiction of a tribunal and has instead given effect to the doctrine of separability. This doctrine is enshrined in the laws and rules applicable to these proceedings."
"RLA-232, English Arbitration Act, section 7; RLA-100, ICC Rules Article 6(4). See also the Tribunal's Rulings on Preliminary Issues dated 21 October 2014, paras. 218-219. The principle is also contained within Pakistani law (see Respondent's Reply on Preliminary Issues, para. 314(b))".
"208. An exception to this practice exists, as a matter of English law, where "bribery impeaches the arbitration clause in particular" [footnote 417: see below]. The [Government of Balochistan] does not seek to pursue the argument that the arbitration agreement in the CHEJVA is vitiated by TCC's corruption. Accordingly, the [Government of Balochistan] accepts that the Tribunal has jurisdiction to determine TCC's claims.
216.The principle of issue estoppel and the rule in Henderson v. Henderson have no application to the [Government of Balochistan]'s submissions on corruption. In respect of the former, it is clear from the chronology above that the issue of corruption was not put to the Tribunal for determination at the June 2014 hearing. As such, the Tribunal did not decide that issue. In respect of the latter, the [Government of Balochistan] could not and should not have put the issue to the Tribunal during the June 2014 hearing as, at that stage, it had insufficient evidence to substantiate the argument. While the Tribunal has suggested that the evidence could have been presented earlier, it is the [Government of Balochistan's] case that this was not possible. The obtaining of this evidence required a detailed investigation with the cooperation of third parties who had not to that date been involved. Had such an investigation been conducted earlier, there is no guarantee that the individuals that now provide evidence would have cooperated before the passage of time loosened TCC's corrupt influence in Pakistan. In any event, even if the [Government of Balochistan] could have obtained this evidence earlier, it is not an abuse of process for the Tribunal to address these matters now. The delay is primarily attributable to the fact that TCC has concealed and denied its wrongdoing.
313. At the outset, the [Government of Balochistan] notes that corruption was not invoked as a basis for rejecting TCC's Mining Lease Application. The reason for this is obvious evidence of that illegality has only recently come to light. The [Government of Balochistan] submits, however, that TCC's corruption is still highly relevant to a consideration of the merits of the Claimant's Mining Lease Application and its rejection.
317. TCC claims that the [Government of Balochistan] breached Clause 11.8.2 of the CHEJVA, BM Rule 48(1), Pakistani and international law when the MMDD denied the Claimant's Mining Lease Application. Specifically, TCC argues that: (i) the [Government of Balochistan] agreed to grant TCCA the right to mine Reko Diq upon satisfaction of routine requirements; (ii) TCCA met or exceeded all requirements for the grant of a mining lease; and (iii) the [Government of Balochistan] wrongfully denied the mining lease.
318. The [Government of Balochistan] presented numerous reasons why these arguments were wrong in its Counter-Memorial. It does not repeat those arguments here (although it will address these in due course in Section 2 of this Supplemental Counter-Memorial). Rather, this Subsection addresses the numerous reasons why TCC's corruption provides a further, separate basis for rejecting the Claimant's claims on the merits. In short, in addition to the grounds set out in the 21 September 2011 Notice rejecting the Mining Lease Application, the Licensing Authority had every right to reject that application in light of TCC's corruption.
"RLA-261, Fiona Trust and Holding Corporation and others v. Privalov and others [2007] EWCA Civ 20 at para. 29. In this respect, it is noteworthy that the Supreme Court Judgment found that "[a]s all the key provisions of CHEJVA were made subject to a reliance on relaxations that were illegal and void ab initio, the illegality of the agreement seeps to its root. As such, no operative part of the agreement survives to be independently enforceable and the principle of severability cannot be applied to save any part thereof. The agreement is, therefore, void and unenforceable in its entirety under the law" (at para. 24). The [Government of Balochistan] does not pursue this point in light of the Tribunal's decision in its Rulings on Preliminary Issues.
(a) at paragraph 216: "the issue of corruption was not put to the Tribunal for determination at the June 2014 hearing. As such, the Tribunal did not decide the issue.";
(b) at paragraph 313: "TCC's corruption is still highly relevant to a consideration of the merits of the Claimant's Mining Lease Application and its rejection";
(c) at paragraph 318: "Rather, this Subsection addresses the numerous reasons why TCC's corruption provides a further, separate basis for rejecting the Claimant's claims on the merits."
(1) The Province of Balochistan had what it considered to be "recently uncovered cogent new evidence of extensive corruption by TCC in relation to the Reko Diq project, including bribery of a broad range of [Government] officials".
(2) It was the Province's position that it was not too late to raise the issue of corruption, for reasons summarised below.
(3) Given its position, it was open to the Province to request the ICC tribunal to look at the issue of corruption as an issue going to jurisdiction, and not only as an issue going to the merits of the claims in the arbitration.
(4) The Province did not to do so, for reasons it explained and which are summarised below.
(5) Instead the Province confined its request of the ICC tribunal to look at the issue of corruption as an issue going to the merits of the claims in the arbitration ("a consideration of the merits of the Claimant's Mining Lease Application and its rejection" and particularly "in addition to the grounds set out in the 21 September 2011 Notice rejecting the Mining Lease Application, [that] the Licensing Authority had every right to reject that application in light of TCC's corruption.").
(6) The Province, advised and represented by a leading and expert international law firm, appreciated what it was doing.
(7) Both the Province and TCCA must be taken to have understood the October/November 2014 exchange to have had the meaning and effect held at Stage 5 above.
(a) "the issue of corruption was not put to the Tribunal for determination at the June 2014 hearing [and] [a]s such, the Tribunal did not decide that issue.";
(b) "the [Government of Balochistan] could not and should not have put the issue to the Tribunal during the June 2014 hearing as, at that stage, it had insufficient evidence to substantiate the argument.";
(c) it "was not possible" to have presented earlier the evidence it now had, because a detailed investigation had been required "with the cooperation of third parties who had not to that date been involved";
(d) "[i]n any event, even if the [Government of Balochistan] could have obtained this evidence earlier, it is not an abuse of process for the Tribunal to address these matters now";
(e) the delay was "primarily attributable to the fact that TCC has concealed and denied its wrongdoing".
Remaining analysis and conclusions
The Province's knowledge, and reasonable diligence
" shows that, at the time [it] took part or continued to take part in the proceedings, [it] did not know and could not with reasonable diligence have discovered the grounds for the objection".
"56. The issue of TCC's wrongdoing and irregularities associated with Reko Diq was [ ] kept under review by the Government of Balochistan in the course of the Arbitration (in respect of which there is some overlap in the chronology with the Supreme Court proceedings), but as is to be expected when faced with issues of fraud and corruption the evidential picture emerged over time. There is an important distinction to be drawn between suspecting fraud in the first instance and being able to plead a positive case in that regard (i.e. specifically setting out individual allegations of wrongdoing).".
57. The question of whether to revisit the CMIT's findings was assessed by the [Province of Balochistan] periodically over the course of 2013/14 and following the Supreme Court's finding of serious procedural and other irregularities in respect of the Reko Diq project".
" resulted in an effective stay of the NAB's investigation as it had a chilling effect on Pakistan's ability to provide relevant materials to the NAB until 12 July 2019 (upon the issuance of the ICSID Award) when those procedural orders ceased to have effect, as they were stated to remain in place 'until the final conclusion of this arbitration (whether by final award or otherwise)'".
"It is incumbent on a party seeking to bring a claim based on new materials to condescend to real particularity. As noted in Terna in seeking relief from the Court, it is normally incumbent upon the applicant to adduce evidence which explains his conduct, unless circumstances make it impossible. Thus if an applicant does not do this, the court is entitled to count any periods where no good excuse is established as being periods lacking in good reason. So too may it draw an inference when issues go un-dealt with."
"[The Province of Balochistan] did not have the evidence concerning corruption upon which it is now able to advance a case prior to 2015. it was the work of the LEG Group in 2015 that resulted in the discovery of the main evidence of corruption ".
Issue (2): the Corruption Allegation: waiver by election
"[ ] a person is entitled to alternative rights inconsistent with one another. If he has knowledge of the facts which give rise in law to these alternative rights and acts in a manner which is consistent only with his having chosen to rely on one of them, the law holds him to his choice even though he was unaware that this would be the legal consequence of what he did."
"The requirements for a waiver have not been met (and it is difficult to see how a waiver could arise in circumstances where it is well established that there can be a rehearing under section 67, a fact parties are taken to know), and in the context of no restriction being set out in section 67 itself restricting what arguments may be re-run, no question of any loss of a right to advance particular arguments on a rehearing under section 67 can arise."
"The [Government of Balochistan] does not seek to pursue the argument that the arbitration agreement in the CHEJVA is vitiated by TCC's corruption. Accordingly, the [Government of Balochistan] accepts that the Tribunal has jurisdiction to determine TCCA's claims."
Separability
"Unless otherwise agreed by the parties, an arbitration agreement which forms or was intended to form part of another agreement (whether or not in writing) shall not be regarded as invalid, non-existent or ineffective because that other agreement is invalid, or did not come into existence or has become ineffective, and it shall for that purpose be treated as a distinct agreement."
Issue (3): Issue estoppel against TCCA: separability of the arbitration agreement
" [a] decision necessarily involves a judicial determination of some issue of law or fact, because it could not have been legitimately or rationally pronounced without determining or assuming a particular answer, that determination, though not expressed, is an integral part of that decision".
Did the Supreme Court of Pakistan decide that the arbitration agreement was not separable from the CHEJVA, or otherwise saved by the concept or principle of separability?
"As all the key provisions of CHEJVA were made subject to a reliance on relaxations that were illegal and void ab initio, the illegality of the agreement seeps to its root. As such, no operative part of the agreement survives to be independently enforceable and the principle of severability [sic] cannot be applied to save any part thereof. The agreement is, therefore, void and unenforceable in its entirety under the law."
"invalidity, illegality or unenforceability for any reason of any provision of this Agreement shall not in any way prejudice or affect the validity, legality and enforceability of the remaining provisions".
Lord Goldsmith QC put it in this way in argument: the reference is to the contract principle, not the arbitration principle.
"58. judicial restraint is called for given the specific facts and circumstances of the matter
59. Learned counsel for BHP further submitted that without prejudice or otherwise affect [sic] the position adopted or advanced by any of the parties to the arbitration proceedings as BHP itself is not a party to the arbitration proceedings the ICC arbitration arises pursuant to the arbitration agreement contained in the CHEJVA, but under settled principles of law an arbitration agreement or even an arbitration clause as a part and parcel of a contractual agreement, is severable/separable/autonomous from the main agreement (CHEJVA) and would under these principles survive even if the CHEJVA is struck down. The underlying cause of action in the ICC arbitration appears primarily to be premised on an alleged breach of contractual obligations. In this regard, arbitration clause is treated as an independent agreement, freely entered into by the parties, and thus enforceable for determination of a dispute under the agreement. This will include even the validity of the main agreement.
60. Learned counsel further argued that Article 6(9) of the Rules of Arbitration of the International Chamber of Commerce (ICC Rules) provides that unless otherwise agreed, the arbitral tribunal shall not cease to have jurisdiction by reason of any allegation that the contract is non-existent or null and void, provided that the arbitral tribunal upholds the validity of the arbitration agreement. And, the arbitral tribunal shall continue to have jurisdiction to determine the parties' respective rights and to decide their claims and pleas even though the contract itself may be non-existent or null and void. "
"Mr. Khalid Anwar, Sr. ASC argued that if TCC were granted the mining lease, the instant petition would still be maintainable because this Court could then declare that everything including relaxation was illegal and strike it down, for which this Court had jurisdiction. However, if they had refused to grant it, there would be no complaint against them to be agitated before this Court unless this Court had given the findings that the international arbitration clause of CHEJVA was illegal and unconstitutional; ICSID and ICC Arbitration should not have taken place; and the verdict, if any, given by the Arbitrators would be null and void. He requested the Court not to give such a finding and suggested that proper course for the Court would be to stay its hands off and wait for the outcome of those proceedings being carried out under the laws of Pakistan, namely, the Arbitration (International Investment Disputes) Act, 2011, the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, and the Fourth Schedule to the Constitution of Pakistan under which the International Arbitration Treaties are binding upon the Government of Pakistan. According to the learned counsel, that would be the best, clearest, fairest and most transparent approach, which would restore the confidence of foreign investors in Pakistan as a safe environment for their investments and there would be no conceivable allegations that the agreement was struck down after the discovery had been made. He urged that Pakistan should stand up for its commitments under the bilateral treaty read with ICSID clause, which the State of Pakistan has accepted voluntarily and freely, and that this Court should not put its prestige on the line."
"On an application under sub-section (1), the court shall refer the parties to arbitration, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed".
Given that the Supreme Court of Pakistan did not grant "TCC" any stay, it must, argues the Province, therefore have decided that the arbitration agreement was "null and void, inoperative or incapable of being performed" under section 4(2) of the 2011 statute.
"1. Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.
2. The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.
3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed."
"With regard to the application of the arbitration clause, the same considerations apply. ... If I am right in the view I take in the events which have happened there is no binding contract, the arbitration clause is not binding, and there is no contract out of which or in reference to which any dispute can arise."
See further, very recently, the decision in Black Sea Commodities Ltd v Lemarc Agromond Pte Ltd [2021] EWHC 287 (Comm) reached by Sir Michael Burton GBE. May and Butcher, cited by the Province, of course pre-dates the 1996 Act. Section 7 of the 1996 Act extends in terms to the question whether an arbitration agreement is treated as "non-existent" where an agreement "did not come into existence".
"We find force in the submission of learned counsel for [the Government of Balochistan] that the respondent company has been changing its position and has not been forthcoming before the Court. For example, it was described as TCCA before the Balochistan High Court (as described in the impugned judgment at page 27 ). Thus, in the appeal, it is TCCA that would continue to be present before this Court. However, it was later stated that it is not TCCA, but TCCP that is before this Court without making any application for the change of parties. The Court accordingly issued notices to TCCA."
The Province accepts that no issue estoppel arises from this passage but argues that the Commercial Court in London would need strong reasons "to depart from the view of the [Supreme Court] in Islamabad as to who was a party before the [Supreme Court] in Islamabad".
(a) Paragraph 4 of the petition states that respondent number 4 is referred to in a specific 2006 news article. The article refers, says the Province, to TCCA not TCCP.
(b) Paragraph 5 of the petition refers to respondent number 4 having been involved in transactions "acquiring rights" to Reko Diq. The Province points out this cannot be TCCP as the Scheme of Arrangement involving TCCP did not occur until 2008.
(c) Paragraph 7(vi) of the petition states that respondent number 4 entered into the CHEJVA, which TCCA did by the Novation Agreement, and that it raised "$1.6 million seed capital", which is what TCCA says that it did.
(d) Paragraph 8 of the petition refers to respondent number 4's website being annexed at Annex C. Annex C contains TCCA's website.
(e) Paragraph 9(i) of the petition states that respondent number 4 floated "on the Australian stock exchange", which is what TCCA did.
"Second, it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase "privity of interest." Thus in relation to trust property I think there will normally be a sufficient privity between the trustees and their beneficiaries to make a decision that is binding on the trustees also binding on the beneficiaries, and vice versa."
"It is obvious that the defendant in the New York proceedings is not the same as the claimants in the English proceedings; the question therefore is whether SCBHK is a privy are privies in the sense used in the quotation from The Sennar. For this purpose it is sufficient to cite Resolution Chemicals v Lundbeck A/S [2014] RPC 5 in which Floyd LJ at para 32 said:-
" a court which has the task of assessing whether there is privity of interest between a new party and a party to previous proceedings needs to examine (a) the extent to which the new party had an interest in the subject matter of the previous action; (b) the extent to which the new party can be said to be, in reality, the party to the original proceedings by reason of his relationship with that party, and (c) against this background to ask whether it is just that the new party should be bound by the outcome of the previous litigation."
It may be that SCBHK and SCBMB had a general commercial interest in the outcome of the New York proceedings but that, on its own, is insufficient to make them privies to SCB. If one asks whether they were "in reality the party to the original proceedings", the only answer can be a negative one. Unlike SCB, SCBHK was not itself present in New York and were thus, in principle, not available to be sued in New York; but, whether or not, if sued, they could have been made subject to New York's jurisdiction, the fact is that they were not sued. That was a decision made by VIP for whatever reason; it hardly lies in VIP's mouth now to assert that they were in reality parties to the original proceedings."
See also Johnson v Gore-Wood [2002] AC 1 at 60D per Lord Millett.
Issue (4): Issue estoppel against TCCA: the governing law of the arbitration agreement
Issue (5): Separability: section 73 of the 1996 Act
Issue (6): Challenge on the merits
Issue (7): The Arbitration Claim Form
"4. On 7 January 2013, the Supreme Court of Pakistan issued an Order declaring that the CHEJVA and related agreements are "illegal, void and non est". Full reasons were reserved and were given on 10 May 2013 (together "the Supreme Court Judgment").
5. In summary (and without limitation) the Supreme Court Judgment declared that the CHEJVA was void due to (i) the existence of corruption; (ii) the fact that CHEJVA's object was unlawful; (iii) the fact that TCCA had made a mistake of fact when entering into CHEJVA; (iv) the fact that CHEJVA represented an effort to interfere with a public body in Pakistan; (v) fundamental uncertainty; (vi) the fact that certain relaxations of mining rules were granted in excess of authority and ultra vires and void; (vii) the fact that Clauses of CHEJVA violated mining rules or were inconsistent with them; (viii) the CHEJVA was contrary to public policy and/or illegal; (ix) the CHEJVA was entered into for inadequate consideration; (x) the fact that TCCA's licences stood transferred to another company; (xi) the fact that relaxations of mining rules were unjustifiably granted without any explanation; and (xxii) the CHEJVA contravened section 23 of the Pakistan Contract Act.
9. The Court should now set the Award aside and/or declare it has no effect. The ICC tribunal has no jurisdiction for the following reasons:
a. In the Supreme Court Judgment, the Supreme Court of Pakistan has determined (i) that the CHEJVA is void; and (ii) that the arbitration agreement is not separable from it, and an issue estoppel arises out of both of those determinations.
b. Further or alternatively, whether or not any issue estoppel arises out of the Supreme Court Judgment, as a matter of the law of Pakistan the CHEJVA is void for the reasons set out in the Supreme Court Judgment and the arbitration agreement is not separable from it.
c. Further or alternatively, if the arbitration agreement is separable from the CHEJVA then it is governed by the law of Pakistan (either because (i) the parties have made an express choice; or (ii) the parties have made an implied choice; or (iii) the arbitration agreement has its closest connection with Pakistan) and the arbitration agreement is void for the reasons set out in the Supreme Court Judgment.
d. Further or alternatively, if the arbitration agreement is separable from the CHEJVA and it is governed by the law of England and Wales, then it is void because the Government of Balochistan was not a party to the CHEJVA and the Balochistan Development Authority did not have capacity to enter into the CHEJVA.
e. Further or alternatively, if the arbitration agreement is separable from the CHEJVA and it is governed by the law of England and Wales, then TCCA is not a party to the CHEJVA or the arbitration agreement and is not entitled to exercise any rights under the CHEJVA or the arbitration agreement (whether because of the Supreme Court Judgment or a scheme of arrangement or otherwise).
f. Further or alternatively, if the arbitration agreement is separable from the CHEJVA and it is governed by the law of England and Wales, then it is void/unenforceable because it is contrary to the public policy of England and Wales, by virtue of the fact that it is contrary to the public policy of Pakistan, a friendly state."
Issue (8): Amending the Arbitration Claim Form
"5. In summary (and without limitation), the CHEJVA and related agreements are [delete "Supreme Court Judgment declared that the CHEJVA was"] void due to (i) the existence of corruption; (ii) the fact that CHEJVA's object was unlawful; (iii) the fact that TCCA had made a mistake of fact when entering into CHEJVA; (iv) the fact that CHEJVA represented an effort to interfere with a public body in Pakistan; (v) fundamental uncertainty; (vi) the fact that certain relaxations of mining rules were granted in excess of authority and ultra vires and void; (vii) the fact that Clauses of CHEJVA violated mining rules or were inconsistent with them; (viii) the CHEJVA was contrary to public policy and/or illegal; (ix) the CHEJVA was entered into for inadequate consideration; (x) the fact that TCCA's licences stood transferred to another company; (xi) the fact that relaxations of mining rules were unjustifiably granted without any explanation; and (xii) the CHEJVA contravened section 23 of the Pakistan Contract Act. In the Supreme Court Judgment, the Supreme Court declared that the CHEJVA and related agreements are void for all these reasons.
9. The Court should now set the Award aside and/or declare it has no effect. The ICC tribunal has no jurisdiction for the following reasons:
b. Further or alternatively, whether or not any issue estoppel arises out of the Supreme Court Judgment, as a matter of the law of Pakistan the CHEJVA is void for the reasons set out in the Supreme Court Judgment and/or paragraph 5 above and the arbitration agreement is not separable from it.
c. Further or alternatively, if the arbitration agreement is separable from the CHEJVA then it is governed by the law of Pakistan (either because (i) the parties have made an express choice; or (ii) the parties have made an implied choice; or (iii) the arbitration agreement has its closest connection with Pakistan), alternatively English law, and the arbitration agreement is void for the reasons set out in the Supreme Court Judgment and/or paragraph 5 above.
"
Case management
Conclusions
(1) The Corruption Allegation (as defined, that is the allegation by the Province of Balochistan to the effect that the ICC tribunal lacked jurisdiction because the CHEJVA and related agreements were void due to the existence of corruption) is precluded by section 73(1) of the 1996 Act (Preliminary Issues Order paragraph 2.1, first part).
(2) The Corruption Allegation is additionally precluded pursuant to the doctrine of waiver by election (Preliminary Issues Order paragraph 2.1, second part).
(3) TCCA is not precluded by an issue estoppel arising from the Judgment of the Supreme Court of Pakistan from alleging separability of the arbitration agreement (Preliminary Issues Order, paragraph 2.2(a)).
(4) TCCA is not precluded by an issue estoppel arising from the Judgment of the Supreme Court of Pakistan from denying that the arbitration agreement is governed by the law of Pakistan (Preliminary Issues Order, paragraph 2.2(b)).
(5) The Province of Balochistan is precluded by section 73 of the 1996 Act from denying separability of the arbitration agreement (Preliminary Issues Order, paragraph 2.2(c)).
(6) The Corruption Allegation seeks impermissibly to challenge the ICC tribunal's decision on the merits of the claim before it (Preliminary Issues Order, paragraph 2.3).
(7) The Province of Balochistan cannot pursue the Corruption Allegation because it was not included in the Arbitration Claim Form (Preliminary Issues Order, paragraph 2.4).
(8) The application by the Province of Balochistan to amend the Arbitration Claim Form should be refused.
