State vs foreign investors: Govt approves TSG for legal, arbitration expenses

Islamabad has approved a Technical Supplementary Grant (TSG) of Rs4.327 billion to cover legal and arbitration costs in disputes between the Government of Pakistan (GoP) and international investors, as reported by Business Recorder. Key ongoing litigations involve M/s Karim-ud-Din (Halmore Power), M/s Star Hydropower Limited (SHPL), and K-Electric shareholders, Abdul Aziz Hamad Aljomaih (Saudi Arabia) and Combined National Industries Fielding (Kuwait).

The Power Division outlined the need for legal counsel under Standard Operating Procedures (SOPs) to ensure timely payments to arbitration forums like the London Court of International Arbitration (LCIA) and Permanent Court of Arbitration (PCA). Notably, in the Halmore Power case, investor-state arbitration under the UK-Pakistan BIT has claimed approximately USD 80 million due to discriminatory and coercive renegotiation.

The ECC approved the proposal, but some entities, including the Power Division and Finance Division, disagreed with the allocation, arguing that the arbitrations should be borne by project participants (PPIB and CPPA-G) or that costs could be shared jointly. The ECC's decision prioritized safeguarding Pakistan’s interests, ensuring the timely payment of outstanding legal obligations to prevent additional costs from delayed representation.