Pakistan Has Just A 1% Chance of Overturning Roosevelt Hotel Case

Islamabad is weighing an out-of-court settlement for an arbitration award concerning the Roosevelt Hotel, after legal counsel determined the likelihood of overturning the decision to be only 1 percent. The counsel suggested three courses of action: accepting the award ($11 million plus a 15 percent penalty), challenging it in District Court despite slim chances, or negotiating a severance deal with the hotel workers' union.

The disagreement began when the Roosevelt Hotel resumed operations under a three-year agreement with New York City, approved in May 2023. The agreement stipulated an 18-month period with a four-month notice period, but New York City rescinded the arrangement on June 30, 2025. Consequently, the Hotel Trade Council filed a grievance against Roosevelt Hotel Corporation, a PIA Investments subsidiary, alleging the hotel had not reopened as per the agreement.

An arbitrator subsequently issued an adverse award on November 19, 2025, ordering the hotel to reinstate laid-off employees and re-hire them starting January 1, 2026. The Pakistani government faced the prospect of an additional financial strain if it complied with the decision. In response, Pakistan's Investment Authority proposed a dual strategy: appealing the decision in the District Court while concurrently attempting to resolve the matter with the workers' union.

This approach would allow the legal dispute to be dropped if a settlement was reached. The government is also evaluating the formation of a negotiating committee consisting of officials from the relevant ministries, PIA Holding Company, and the Privatization Commission, potentially including a US-based legal advisor. The Ministry of Law and Justice has backed this proposal, urging the government to consult the Attorney General and consider hiring foreign legal counsel at a reasonable cost.

The Attorney General’s Office concurred, urging negotiations to prevent high-cost, drawn-out litigation, and requested PIA Investments and Roosevelt Hotel Corporation to submit detailed proposals addressing settlement terms, severance packages, outstanding liabilities, and subsequent steps.