Category Archives: news story

We recently achieved a significant win for our client, South Asia Pakistan Terminals Limited (SAPT), Pakistan’s largest container terminal operator, by obtaining a restraining injunction against Karachi Port Trust (KPT) in an ongoing dispute.

SAPT is the country’s first deep-water container terminal, designed to accommodate super post panamax ships. The US$1.4 billion terminal operates as a partnership between Hutchison Ports Pakistan, a member of the Hutchison Ports network, and Karachi Port Trust.

SAPT and KPT had entered into an agreement for SAPT to construct and operate Pakistan’s first deep-water container terminal at Kemari, Karachi. Under the agreement, both parties took on obligations tied to an implementation schedule. As security for meeting its obligations, SAPT provided a $2 million performance guarantee to KPT.

The parties’ obligations were interdependent under the agreement – delays by one party inevitably delayed the other. However, despite this interdependency, KPT claimed SAPT failed to meet agreed completion dates. Due to the alleged delays, KPT threatened to draw down on SAPT’s $2 million guarantee funds.

As counsel for SAPT, we filed suit in the Sindh High Court seeking an injunction to prevent KPT from taking the guarantee funds. The Court granted an ad-interim order restraining KPT from calling on SAPT’s guarantee.

This was an important result for SAPT, as courts rarely restrict parties from drawing on guarantees and set a high bar for granting such relief. Our Dispute Resolution Partner, Omer Soomro, called the order “a significant victory protecting our client’s rights while it continues to work to resolve a complex, high-value dispute with a state entity.”

The team acting for SAPT was led by Pakistan partner Omer Soomro.

Contact Omer Soomro today if you require our assistance on a complex commercial dispute or to seek a restraining injunction.

The Sindh High Court recently dismissed a constitutional petition filed by local residents challenging the establishment of a reservoir to store groundwater extracted from sub-surface aquifers to enable open-pit coal mining in Tharparkar. This judgment protects a key component of the China-Pakistan Economic Corridor (CPEC) priority Thar lignite mining and power generation project.

We acted for Sindh Engro Coal Mining Company (SECMC), a joint venture between the Government of Sindh, Engro Corporation, and other leading Pakistani companies. The USD 2 billion project, the first of its kind in Pakistan to achieve financial close, involves mining one of the world’s largest lignite deposits and establishing coal power stations.

The petitioners argued that the establishment of the reservoir would damage the environment and wildlife and contravene land acquisition laws. As SECMC’s counsel, we successfully resisted an interim injunction that could have delayed the project.

During the case, the High Court constituted a committee that confirmed that the reservoir would not have an adverse environmental impact on the ambient area and groundwater. SECMC also demonstrated rigorous site selection and that alternate reservoir sites would violate Pakistan’s Ramsar Convention obligations on wetland conservation.

The Court recognised SECMC’s extensive development work for displaced locals, including healthcare, education, and employment initiatives. it was satisfied by studies showing that water quality in the reservoir was similar to nearby drinking wells.

After examining all reports, the Court upheld the legality of the land acquisition and dismissed unproven claims of environmental damage.  “This judgment upholds the legality and environmental sustainability of a project vital for Pakistan’s energy security,” said Mayhar Kazi, Partner at RIAA Barker Gillette.

Pakistan partner Mayhar Kazi led the team that secured this significant victory.

This judgment enables SECMC to continue its essential work powering Pakistan’s growth. We are proud to support the project’s success. Should you require our assistance with a complex commercial dispute, please contact Mayhar Kazi.

For more information on how we can help you, speak to partner Mayhar Kazi today.

In 2013, one of the country’s leading container terminal operators – Karachi International Container Terminal Limited (KICT), modified its fleet of cranes to enable them to be powered by a combination of diesel and electricity. The purpose of the modification was to conserve energy and reduce emissions.

KICT imported the required machinery and equipment from the Peoples’ Republic of China in several partial shipments and claimed concessions and exemptions from duties and taxes under the China-Pakistan Free Trade Agreement (FTA). Each shipment was accompanied by a certificate of origin from China.

Further, regarding some goods imported, KICT also claimed concessions under SRO 575(I) of 2006 (SRO 575), which applied inter alia to capital goods not manufactured in Pakistan for infrastructure sector projects. One of the conditions for eligibility of the concessions under SRO 575 was a certification from the Board of Investment (BOI), Government of Pakistan that the imported goods are bona fide required by the importer for a particular project. KICT applied for such certification well before the first shipment landed in Pakistan. However, the BOI issued the certification after some shipments had already arrived. KICT’s application was accompanied by a confirmation from the Engineering Development Board, Government of Pakistan, that the machinery and equipment for which the certification was sought from BOI were not manufactured locally.

After clearance of the imported goods, Pakistan Customs initiated post-clearance audit proceedings. They alleged that KICT was not entitled to the concessions and exemptions under the FTA because the certificate of origin did not cover all the goods in the shipment. Customs also took issue with the customs classifications of the imported goods declared at the time of clearance. Such classification was material for the goods’ eligibility for the benefits of the FTA. Further, though Customs did not raise any such allegation in the show cause notice, they found that shipments that arrived before the issuance of the BOI certificate were not eligible for concessions under SRO 575. Customs raised a substantial demand against KICT for duties and taxes on these bases.
 
We represented KICT in the Customs Appellate Tribunal in Karachi. During the proceedings, we demonstrated that even though the certificates of origin mentioned only one HS Code, and a generic collective description of the goods, on a contextual reading, they covered all the goods comprised in each shipment. We also argued that Customs could not have made an adverse finding based on a certificate of origin without first undertaking the procedure prescribed in the FTA for verifying the certificate of origin with the issuing authority in China. As to classification, though many of the goods of the nature imported had not previously been imported into Pakistan, we were able to satisfy the Tribunal on the appropriateness of the tariff headings proposed by KICT by referring to the Explanatory Notes to the Harmonized System published by the World Customs Organization. As to Customs deciding not to allow the benefit of concessions under SRO 575 to goods that arrived before the issuance of the BOI certification, in the first instance, we contended that Customs’ order could not properly have been premised on a finding which was not put forth to KICT in the show cause notice. Further, we argued that the BOI certification applied to all the goods imported in identical partial shipments rather than under any specific shipment. Therefore, the benefit of concessions under SRO 575 should not be withheld from earlier shipments due to BOI’s delay in issuing the certification.

The Tribunal allowed KICT’s appeals and overturned the orders made by Pakistan Customs and their demand for duties and taxes. Disputes relating to certificates of origin are often grounds for Customs to deny the benefits available under FTAs. The Tribunal’s authoritative judgments in KICT’s cases have developed the law on the principles applicable to interpreting certificates of origin issued under FTAs. Further, the judgments are also relevant to disputes relating to duty and tax concessions that continue to be given by the Government of Pakistan to goods not manufactured in Pakistan.
 
Dispute resolution partner Mayhar Mustafa Kazi led the team representing KICT in the Customs Appellate Tribunal.

For more information, call Mayhar Mustafa Kazi today.