Reko Diq’s USD11.6bn case cited as example of state liability in court

ISLAMABAD: A three-member bench of the Federal Constitutional Court, headed by Chief Justice Amin ud Din, adjourned hearings on the high-profile “Super Tax” cases until Friday, following extensive arguments from counsels representing various corporate entities.

Senior lawyer Makhdoom Ali Khan, continuing his arguments for a second day, launched a broad critique of fiscal policy and legal drafting. He argued that while successive governments have passed tax-related bills for years, they have consistently failed to use “clear legal language,” creating ambiguity and instability for investors.

“When a local person invests in Pakistan, their mind is filled with many questions at that moment,” Khan stated, highlighting the climate of uncertainty. He asserted that instead of reducing tax exemptions to broaden the base, the tendency has been to increase them.

Addressing the court, Khan used the contentious Reko Diq mining project as a case study of poor contract management and fiscal liability. He reminded the bench that the Supreme Court had previously declared the Reko Diq mining licenses illegal. “When the Reko Diq case went to the international level, the government of Pakistan had to pay $11.6 billion,” Khan said, adding, “The government of Pakistan did not have the money.” He further alleged that the government later approached the Supreme Court in an intra-court appeal, effectively stating, “If you say so, we will not abide by your order.”

In his arguments, Hassan Ehsan Rizvi, counsel for a fertiliser company, pointed to a provision in the Tax Ordinance that specifies incentives are for “local companies of Pakistan.” Makhdoom Ali Khan countered this, stating bluntly, “At this time, a fertilizer plant in Pakistan cannot operate without tax [exemptions].”

The adjourned proceedings will resume tomorrow, with Makhdoom Ali Khan expected to continue his arguments before the bench. The court’s eventual ruling on the constitutionality of the Super Tax is highly anticipated by the business community and could have significant implications for government revenue and investment policy.

Web Desk