Just days befre hearing, the Kuwait-based Agility Private Limited Company has withdrawn a case it filed in the International Centre for Settlement of Investment Disputes (ICSID) against Pakistan seeking $650 million in compensation – a decision that may have implications on an inquiry by National Accountability Bureau (NAB).
The company had taken the government to the international court after the Federal Board of Revenue (FBR) had terminated its contract for developing software for automated clearance of import and exports cargo at Karachi ports in 2010.
The FBR’s vigorous pursuance of the litigation has led to the withdrawal of the case by Agility days before the London Tribunal of the ICSID was about to hold the final hearing in the matter, according to an announcement by Ministry of Finance.
The government has decided to claim the cost of fighting the case from Agility and its legal team has already started preparations, said an official of the FBR.
Agility Private Ltd was engaged in 2005 by FBR for developing software for automated clearance of import and exports cargo at Karachi port. However, the government terminated the contract with Agility in September 2010.
The PPP government had decided to terminate the contract after a committee constituted by then Finance Minister Dr Abdul Hafeez Shaikh found a number of irregularities and illegalities committed in the award and implementation of the pilot project.
The company thereafter filed a claim worth $650 million against Pakistan before the ICSID, according to the Finance Ministry.
Finance Minister Ishaq Dar has lauded the efforts of FBR and its legal team for putting up a strong and successful defence, according to the official handout.
A person involved with the case said that Agility had taken the government to court on weak legal grounds and Pakistan initially spoiled its case by appointing a weak lawyer. He said Agility had claimed protection under Pak-Kuwait Bilateral Investment Treaty (BIT). Pakistan’s federal cabinet had not rectified the BIT when the Agility took the country to the ICSID.
The Ministry of Finance said that initially the case was heard on the point of jurisdiction at ICSID’s Singapore seat during 2012-13. “As the then government did not properly pursue the matter, Pakistan lost the case on the point of jurisdiction,” said the Finance Ministry.
It added the present government took up the case afresh at the London seat of ICSID in August 2013 and a vigorous defence was then put up throughout the proceedings.
The NAB has also launched an inquiry against three former chairmen of the FBR for allegedly illegally paying $11 million fee to the Agility.
An official of the FBR said that the Agility’s decision to withdraw the case will strengthen the NAB inquiry. He said the withdrawal tantamount to admission that Pakistan did not do any wrong by cancelling the Agility contract, which was awarded by compromising transparency.
