Non-payment of dues: PMO seeks update on Al-Jomaih Group’s legal notice

ISLAMABAD: Prime Minister Office (PMO) has sought update on M/s Al-Jomaih Group legal notice issued to the Government of Pakistan for non-payment of dues and other outstanding issues, well informed sources told Business Recorder.

On January 24, 2023, Pakistan received legal notice from M/s Al-Jomaih Group of Saudi Arabia and the National Industrial Group of Kuwait reportedly on non-payment of outstanding amounts of Karachi Electric (KE) by using OIC platform with indication to go for arbitration.

Both groups sent legal notice to the office of Attorney General of Pakistan (AGP), which suggested to the concerned authorities to avoid litigation.

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The notice had been served for alleged breaches of the Agreement on Promotion, Protection and Guarantee of Investment Agreements Amongst the Members States of the Organization of Islamic Conference (the “OIC Investment Agreement”). The notice suggests initiation of formal legal proceedings against the Federation unless disputes concerning outstanding payments are resolved.

The AGP Office examined the notice and offered following observations: (i) Pakistan is a signatory to the OIC Investment Agreement. The countries of origin of the claimants are also signatories to the OIC Investment Agreement.

Accordingly, the Federation can be litigated against under the OIC Investment Agreement; (ii) the claimants satisfy all legal requirements for issuance of proceedings against Pakistan under the OIC Investment Agreement.

Specifically, there are two requirements that must be satisfied before proceedings can be initiated under the said Treaty - first, the claimant must be an investor within the definition of an investor in the Treaty and second the claimant must have made an investment within the definition of an investment in the Treaty; (iii) The claimants are the ultimate and beneficial owners of Al-Jomaih Power Limited and Denham Investments Limited that collectively own 46% of KES Power that, in turn, owns 66% shareholding of KE.

Accordingly, the claimants fall within the definition of the Investor in the OIC Investment Agreement; (iv) the claimants have deployed finances and resources in KE and thus satisfy the definition of investment. The OIC Agreement does not provide a minimum equity threshold for initiation of arbitral proceedings.

According to sources, the issue of legal notice has already been discussed at a meeting of a Committee headed by former Prime Minister, Shahid Khaqan Abbasi, wherein Power Division proposed that the issues related to KE will be sorted out soon, requesting M/s Al-Jomaih Group to withdraw its legal notice. The new investors of KE, Asiapak Investment Limited, raised many questions on previous decisions of power utility company and presented a new plan for investment and improvement in its system.

Copyright Business Recorder, 2023