Category Archives: news story

We acted for a majority shareholder of a well-known textile manufacturing company in defending a petition brought in the Sindh High Court by a minority shareholder under section 286 of the Companies Act, 2017 (the Act), alleging oppression and mismanagement.

We raised a preliminary issue of standing before the High Court, contending that the petitioners did not cumulatively hold the minimum 10% shareholding in the company required to maintain the petition. The petitioners argued that they held the necessary shareholding by virtue of the general principle of Islamic inheritance law, under which a person’s estate devolves upon the legal heirs in proportion to their respective shares immediately upon death.

As the Act is relatively new legislation, most of the available reported judgments on minimum shareholding are related to the period when the corresponding provision, section 290 of the Companies Ordinance, 1984, was in force. These judgments held that the shareholding threshold had to be strictly enforced and could not be treated as a mere technicality. We also argued that the general principle of Islamic inheritance law was overridden by section 78 of the Act, under which shares of a deceased member can be transferred to legal heirs only upon an application to the company duly supported by a succession certificate or lawful award.

The High Court ultimately dismissed the petition, holding that the minimum shareholding requirement had to be applied strictly and that the petitioners did not have the minimum shareholding required to maintain the petition. The High Court agreed with our argument that section 78 of the Act was a special law and, therefore, over rode the general principle of Islamic inheritance law that the estate devolves on legal heirs immediately on death.

The decision underlines how important it is for legal heirs of shareholders to complete the procedure for transfer of shares prescribed in section 78 of the Act so that they can invoke their statutory rights as company members.

Our team for this matter comprised Pakistan Partner Omer Soomro and Associate Zahid Ali Sahito.

We represent a major global commodity trading group in a multi-million dollar dispute with a Pakistani purchaser. Both parties had entered a long-term supply contract that required each of them to provide the other security for their respective obligations in the form of an on-demand banking instrument for tens of millions of dollars. The contract required disputes to be resolved by international arbitration in London. A dispute arose under the contract, leading to the purchaser seeking to encash the security instrument provided by our client.

To avoid breaching the arbitration agreement, we filed an application under section 3 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, before the High Court seeking an order referring the parties to arbitration in accordance with the contract. By way of interim measures, we sought an order restraining the encashment of the security pending arbitration. As it happened, the purchaser filed civil proceedings the same day before the High Court to seek an interim injunction restraining the anticipated encashment of the security provided to our client. Both cases came up for hearing before the same learned Judge who, recognizing the urgency, heard and decided both applications for interim relief on the same day. A common order dismissed both applications passed later that day.

Our client sought to challenge such an order in an intra-court appeal we filed the following day. When our client’s application for interim injunction was heard, the foreign issuing bank had paid its correspondent bank in Pakistan, which was yet to make further payment to the purchaser. We obtained relief for the client requiring the correspondent bank to withhold the money from the purchaser until the dispute could be finally decided in arbitration.

Our team on this matter is led by Pakistan Partner Mayhar Mustafa Kazi and comprises Associate Partner Shahbakht Pirzada.

For years, the London Interbank Offered Rate (LIBOR), the reference rate for unsecured short-term borrowing in the interbank market, has served as a global benchmark for the pricing of floating-rate corporate loans, among other financial contracts. The Financial Conduct Authority of the United Kingdom has begun the LIBOR transition to phase out LIBOR, and the publication of the five remaining US Dollar rates will cease after 30 June 2023.

For US dollar-denominated debt, there is an ongoing transition towards an alternative reference rate – the Secured Overnight Financing Rate (SOFR). This is particularly significant for Pakistani Independent Power Producers (IPPs) that have executed LIBOR-based foreign currency loan agreements extending beyond June 2023 with international lenders.

RIAA Barker Gillette – Pakistan, with the support of Fieldfisher Capital LLC, is advising on the implications of the phase-out, alternatives to the LIBOR benchmark and on the legal, regulatory and other measures required to be undertaken by the IPPs, relevant Government of Pakistan entities and foreign lenders.

The transition is also significant for many other Pakistani businesses that have LIBOR-based US dollar-denominated debt with a tenor extending beyond June 2023.

Our team advising the IPPs on this matter is led by Hasnain Naqvee (Senior Partner-Pakistan).

For further details on the LIBOR transition, please visit https://www.brecorder.com/news/40145382.

In July 2022, we were engaged by a leading cargo service provider to advise on an aircraft purchase to update its fleet and enable the expansion of its operations.

We advised on the Pakistan law applicable to the transaction and conducted negotiations with sellers shortlisted by our client to identify those offering terms of sale compatible with our client’s legal and commercial requirements. We then negotiated, prepared and finalized the aircraft purchase agreement, which also dealt with certain pre-delivery modifications to align the aircraft with our client’s specifications, and advised on other documents relating to the transfer of the aircraft to our client.

Our team in this matter was led by Mazhar Bangash (Partner – Pakistan) and Momin Taufiq (Associate).

PIBT was established on a build, operate and transfer basis (BOT) at Port Qasim, as Pakistan’s first terminal for handling coal, clinker and cement. Development of the project was financed by the World Bank’s International Finance Corporation (IFC), the OPEC Fund for International Development (OFID) and a consortium of local lenders led by Faysal Bank.

We acted as counsel to several local financiers, led by Allied Bank, on the refinancing of the local portion of the senior debt availed by PIBT, amounting to PKR 6,000,000,000. The transaction will ease PIBT’s cash flows for the purposes of the expansion project it intends to undertake.

Our team for this matter comprised Shafaq Rehman (Partner – Pakistan) and Rafia Rauf (Senior Associate).

Details on the refinancing and expansion plans can be found at: https://mettisglobal.news/pibtl-approves-repayment-of-outstanding-loans-worth-rs5-904bn-from-banks/ and https://newsnreleases.com/2021/09/10/pibt-plans-to-expand-coal-handling-capacity-to-16mn-tons/

Major cement producers Attock Cement Company Limited and DG Khan Cement Company Limited own and operate manufacturing plants in Balochistan. They are entitled under leases granted by the Government of Balochistan (GOB) to extract limestone, shale and sand to use in the manufacturing process in consideration for payment of royalty in accordance with the Balochistan Mineral Rules, 2002 (BMR).

The GOB had earlier sought to levy excise duty on the cement companies through a notification issued under the BMR. We successfully represented the companies in constitutional proceedings before the Balochistan High Court (BHC), challenging such a levy as contrary to the Mines Act, 1923.

Thereafter, through the Balochistan Finance Act of 2020, the Balochistan Assembly amended the Mines Act of 1923 to drastically increase the excise duty rate to 25% of the royalty rate, as specified in the Third Schedule to the BMR. The Chief Inspector of Mines, GOB, issued notices to the companies demanding payment of excise duty under the amended provisions of the Mines Act, 1923.

We represented the companies in separate constitutional proceedings before the BHC challenging such notices on the ground that the amended provisions of section 30-A(d) of the Mines Act, 1923 did not authorise the levy of excise duty in respect of any mineral other than coal and coke. Further, given that the minerals extracted by the companies do not require sub-surface mining, the GOB had no justification for demanding excise duty whose proceeds could only be applied towards safety, rescue stations and training in relation to such mining. By a reasoned judgment handed down recently, the BHC allowed the petitions and set aside the notices, resulting in significant savings for our clients.

Pakistan Partner Omer Soomro led our team for this matter.

The incentives offered by the Pakistan Automotive Policy in 2016 attracted major automotive vehicle manufacturers to Pakistan. Many major players set up assembly plants, introducing new vehicles to the Pakistani market, which led to record demand for cold rolled coils/sheets used in the manufacturing of automotive parts, much of which is imported.

In this context, local manufacturers of cold rolled coils/sheets applied to the National Tariff Commission (NTC) for initiation of an investigation against imports of cold rolled coils/sheets and imposition of anti-dumping duties.

We successfully represented the Pakistan Association of Automotive Parts & Accessories Manufacturers (“PAAPAM”) and South Korean giant, POSCO, in these proceedings, which culminated in an order that did not levy anti-dumping duties on a wide variety of such products. The NTC’s decision recognised that domestic industry did not manufacture the product of the quality and specifications required by many auto manufacturers. This outcome was significant as the imposition of definitive duties, as sought by the applicants, would have significantly reduced the competitiveness of the local automotive industry.

Our team in this matter was led by Mazhar Bangash (Partner – Pakistan) and also comprised Ehsan Ejaz (Senior Associate) and Momin Taufiq (Associate).

For further details on this matter, please see https://www.ntc.gov.pk/wp-content/uploads/2022/02/ADC-60-CRC-FD-Notice.pdf

RIAA Barker Gillette (Pakistan) acted for Star Hydro Power Limited (Star Hydro) in its dispute with the National Transmission and Despatch Company Limited (NTDC) regarding NTDC’s delay in completion of the interconnection works necessary for connecting Star Hydro’s hydropower project to Pakistan’s national grid.

Star Hydro owns and operates the 147MW run-of-the-river Patrind hydropower project in Azad Jammu and Kashmir. The electric power generated by the project is sold to NTDC, Pakistan’s national grid company, pursuant to a power purchase agreement (PPA). South Korean giants K-water and Daewoo Engineering and Construction Co. Ltd sponsor the Patrind project.

We successfully represented Star Hydro in expert determination proceedings under the PPA. The expert decided the dispute in favour of Star Hydro and found NTDC responsible for the delays in testing and commissioning the project. This is the first expert determination in which NTDC has been held accountable for such a delay.

After the expert determination, the parties initiated arbitration proceedings at the London Court of International Arbitration. Star Hydro is seeking recovery of further amounts due to the delay, whereas NTDC has challenged the expert decision. We continue to act as Pakistan law counsel in the arbitration proceedings, while Herbert Smith Freehills acts as arbitration counsel.

Pakistan Partner Nadir Altaf leads the team advising Star Hydro.