"2. The uncontroverted facts that emerge from the concise statements, documents and submissions of the parties are that for the purpose of conducting exploration and development of mineral deposits of gold and copper in the agreed Exploration Area, in District Chaghai of the Province of Balochistan, Pakistan, Balochistan Development Authority (BDA) on the approval of the Government of Balochistan (GOB), entered into CHAGHAI HILLS EXPLORATION JOINT VENTURE AGREEMENT dated 29th July, 1993 (CHEJVA) with BHP MINERALS INTERNATIONAL EXPLORATION INC (BHP); a foreign company. BDA was to provide administrative support, necessary consents, approvals, NOCs, security clearances etc., etc., and relaxation of certain Rules of the Balochistan Mining Concession Rules, 1970. BHP was to undertake the work and entire cost of the exploration and infrastructure etc. thereof. The respective Percentage Interests were 25% for BDA and 75% for BHP. The Joint Venture was granted ten Prospecting Licenses (PLs) in 1996 for an area of 1000 Sq. Km. BHP carried out reconnaissance and detailed work up to 1999 in these areas and reported large deposits of Copper, Gold etc. at Reko-Diq. The Joint Venture thereafter surrendered 8-PL's and retained Two PLs of Reko-Diq. After the new National Mineral Policy and the enactment of Balochistan Mineral Rules, 2002, a consolidated Exploration License No.EL-5 was granted to the Joint Venture for a defined area of Reko-Diq in 2002 for three years. On two renewals thereof, EL-5 was to remain valid up to 18th February, 2011.
3. During the extended period of EL-5, ADDENDUM No.1 to the CHEJVA was signed between BDA/GOB and BHP, whereby inter alia, Government of Balochistan became a Joint Venture partner in CHEJVA with BDA as its Agent. ADDENDUM also permitted transfer or assignment of a party's interests in CHEJVA wholly or partly. Whereon through intermediary corporate instrumentalities, share interest of BHP in CHEJVA was routed and re-routed via Mincor Resources N.L/Tethyan Copper Company Ltd., of Australia (TCC) per the OPTION AGREEMENT/ALLIANCE AGREEMENT. And finally under the NOVATION AGREEMENT OF 2006 JVA was novated to substitute TCC for BHP as a full party with Deed of Waiver and Consent of GOB for such transfer. BHP was thus replaced by TCC in the Joint Venture which became TCC-BDA/GOB' CHAGAI HILLS JOINT VENTURE. The respective Percentage Interests were restated for GOB (25%) and TCC (75%). Antofagasta of Chile and Barrick Gold Corporation of Canada; stated to be amongst the largest companies prospecting for gold and copper in the world, then stepped in and jointly purchased TCC's entire 75% Percentage Interest in the Joint Venture. Antofagasta and Barrick Gold; on thus acquiring TCC, carried out the drilling and exploration programme at EL-5 area of Reko-Diq at a claimed expense of millions of US $, with no financial cost burden on GOB/BDA.
4. In 2006, C.P. No. 892 of 2006 was filed by Maulana Abdul Haq etc., in the Balochistan High Court challenging legality of CHEJVA, relaxation of 1970 Mining Rules by GOB and BHP's lukewarm exploration activity. The Government of Balochistan denied illegality of CHEJVA and its alleged contrariness to public interest. This Constitutional Petition was dismissed by the High Court of Balochistan through the impugned judgment dated 26-6-2007. The relaxation of 1970 Rules, acts of GOB/BDA and CHEJVA were held to be legal. Hence C.P.L.A. No. 796 of 2007 in this Court against the above judgment.
5. During the pendency of the leave petition, a major development took place. Exploration work including drilling was completed by TCC within the stipulated period. Substantial discoveries of gold and copper etc. were made. The license period expired on 18th of February, 2011. TCC submitted to GOB Feasibility Study Report; a study to ascertain the commercial feasibility of the mining of the resource, treatment of ore obtained in mining operation, expected optimum return, life of the mine, mineable reserves and grade and the results of geological and geophysical investigations etc. The Feasibility Study is admittedly under examination of GOB.
6. The above mentioned feasibility report was offered by the former Advocate General i.e. Mr. Salahuddin Mengal to be exclusively shared with this Court though claiming the same to be sensitive, confidential, highly technical and ordinarily beyond the Court's domain.
7. … …
8. During the hearing of the matter, TCC formally applied to the Government of Balochistan within the visualized period for the grant of the mining lease under 2002 Rules which statedly recognized the licensee's entitlement to apply for a mining lease on success of the licensee in the exploration."
The concluding paragraphs therefrom are also reproduced hereinbelow: -
"13. We are in agreement with the learned counsel for the parties and are of the opinion that at this stage it will not be proper for us to inquire into the Feasibility Study Report or to rule upon the entitlement of TCC to the mining lease. The reason is that under the governing law and 2002 Rules, this matter falls exclusively within the domain of the Government of Balochistan and the Government is also seized of the Feasibility Report as well as the application of TCC. All the parties have expressly admitted that the Government of Balochistan being the competent authority in this matter, should in due discharge of its obligation, make a decision on TCC's application impartially, objectively and in accordance with law and thus accept its legal responsibility thereof. In this view of the matter, it will not be proper for us to pre-empt the decision of the Government of Balochistan by entering into the merits of the case at this juncture.
14. As such accepting the consensus of all the learned counsel and for the reasons above recorded, the restraining order dated 3-2-2011 is recalled. The competent authority in the Government of Balochistan shall proceed to expeditiously decide TCC's application for the grant of mining lease transparently and fairly in accordance with the law and the rules. In so doing the Government of Balochistan shall not be influenced in any manner whatsoever by the pendency of these proceedings or by the orders therein passed by this Court. Upon decision of the matter by the Government of Balochistan, the learned Advocate General of the Province shall inform the Registrar of this Court forthwith. The petitions shall remain pending on the file of this Court until the decision of the application by the competent authority."
15.4.1 Any dispute in respect of which:
(i) amicable settlement has not been reached within one hundred and twenty (120) days of written notice of the dispute;
(ii) neither Party requests resolution of the dispute by the Expert within the thirty (30) day period set forth in Clause 15.2 or a decision by the Expert pursuant to Clause 15.2 has not become final and binding pursuant to sub-clause 15.2.5; or
(iii) pursuant to sub-clause 15.2.2 the Parties fail to agree upon the appointment of an Expert,
shall be submitted to the International Centre for the Settlement of Industrial Disputes (the "Centre") established by the Convention for Settlement of Other States in effect since October 14, 1966 (the "ICSID Convention").
15.4.2 To the extent required by the ISCID Convention each of the Parties agrees to submit to arbitration under the ISCID Convention, but should sub-clause 15.4.8 operate, then the Parties agree to submit to an arbitration conducted pursuant to the ICC Rules.
15.4.3 In all cases of arbitration pursuant to this Clause 15.4:
(a) arbitration shall take place in London, United Kingdom, unless the Parties decide otherwise;
(b) the language of the arbitration shall be English and all hearing materials, statements of claims or defence, and awards and the reasons supporting them shall be in English; and
(c) the costs of the arbitration shall be borne by the losing Party.
15.4.4 In rendering their decision, the arbitrators shall consider the intention of the Parties at the time of entering into this Agreement insofar as it may be ascertained from the Agreement, Pakistan law, and as provided by Article 16, generally accepted standards and principles of international law applicable to the mining industry.
15.4.5 Any arbitrator(s) appointed pursuant to this Clause 15.4 shall have the full power to review and revise any decision, recommendation or opinion of the Expert related to the dispute. No Party shall be limited in the arbitral proceedings to evidence or arguments submitted to the Expert pursuant to Clause 15.2, and nothing shall prevent the Expert from being called as a witness to give evidence before the arbitrators.
15.4.6 The award of the arbitral tribunal shall be final and binding upon the Parties, and any Party may seek to enforce or execute the award in any court of competent jurisdiction. The Parties hereby waive any defence or sovereign immunity they may have or claim to have in relation to any action brought to enforce or execute any arbitral award.
15.4.7 For the purposes of arbitration pursuant to the ICSID Convention, the Parties agree that the transactions to which this Agreement relates constitute an investment within the meaning of Article 25(1) of the ICSID Convention.
15.4.8 In case, for whatever reason, the Centre should not accept jurisdiction or should reject the arbitration request, the dispute shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce (the "ICC Rules") and the provisions of sub-clauses 15.4.3, 15.4.4, 15.4.5 and 15.4.6 shall apply. Arbitration shall be conducted by one sole arbitrator appointed by mutual agreement of the Parties. This arbitrator shall have extended experience in the mining field. In case the Parties cannot agree on the choice of the arbitrator, arbitration shall be of a nationality other than that of the Parties and shall have extended experience in the mining field. In case the Parties cannot agree on the choice of the arbitrator, arbitration shall be conducted by three arbitrators named in accordance with the ICC Rules.
1. Grant of Exploration Areas
2. Area available for prospecting Licences
3. Application for prospecting Licence
4. Satisfaction of conditions attaching to prospecting Licences
5. Exclusive right
6. Other Minerals
7. Government rights pre-emption acquisition merger, and taking control in National emergency
9. Application for Mining Licence
11. Penalties compensation and cancellation
12. Employment and training
13. Mining Lease
A. The GOB, through the Chairman of the BDA, and BHPM intended to enter into a Joint venture Agreement for mineral exploration in the Chagai hills in the Province of Balochistan, which was executed on 29.07.1993 (… …) and it is desirable to clarify the roles of each of GOB and the BDA under the JVA;
B. Pursuant to GOB's intention to appoint the BDA as its agent in connection with the JVA, the BDA has exercised its rights and discharged its obligations under the JVA as if it were a Joint Venturer rather than the agent of the GOB. The GOB and BHPM now wish (i) to clarify the role of the BDA under the JVA as agent of the GOB and the scope of its authority to act on behalf of the GOB in connection with the JVA, and (ii) to have the GOB confirm and ratify all past actions, matters and things done by the BDA in connection with the JVA;
C. Pursuant to the issue of the JVA, BHPM, on behalf of the Joint Venture, has completed Stage One Activities (as defined in sub-clause 1.1 of the JVA) and has identified certain anomalous mineralized areas in respect of which the BDA and BHPM have jointly obtained ten (10) Prospecting Licences in order to enable BHPM to conduct Stage Two Activities on behalf of the Joint Venture; and
D. The GOB and BHPM have agreed to amend certain terms of the JVA as set out hereunder."
Thus, by means of the Addendum, in the name of ratification in terms of section 196 of the Contract Act, 1872, instead of supplementing CHEJVA, its entire complexion was changed.
|Company||Place ofIncorpor ation||Nature ofInterest||Interest received through||Owned by|
|BHP Minerals||Delaware, USA||Original party with 75% share||CHEJVA 29.07.1993||BHP Minerals Australia|
|Mincor NL||Western Australia||Assignable Mincor Option||Option Agreement 28.04.2000 for $100||Shareholders from Iscor Ltd. of South Africa|
|TCC||Western Australia||Nominee of Mincor for Option Agreement||Alliance Agreement 03.04.2002 for future investment of $2 to 3 million||Atacama|
|Atacama||UK||Purchased shareholding in TCC||Share Purchase for AUD220 million||Antofagasta and Barrick Gold|
|Barrick Gold||Canada||Shareholder of Atacama (50%)||Share Purchase Agreement||Itself Parent Company|
|Antofagasta||UK (FTSE-100)||Shareholder of Atacama (50%)||Original Holding Company of Atacama||Itself Parent Company|
|TCCP||Pakistan||Holder of EL-5||Amalgamated with TCC Branch Office||TCC|
The Novation Agreement was purportedly made for the purpose of substituting CHEJVA, and the GOB was also made a party to the Joint Venture, which was not permissible under BMR 2002 as well as the Rules of Business of the Government of Balochistan, particularly Rule 7 and other rules. The GOB, in purported exercise of the powers vested in it under the BMR 2002, granted relaxations in violation of rule 98 ibid as no reason was assigned for the relaxation of the relevant Rules.
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