## Facts

- Tethyan Copper Company Pty Limited (TCCA), an Australian mining company, held a 75% interest in the Reko Diq copper-gold project in Balochistan under the Chagai Hills Exploration Joint Venture Agreement (CHEJVA), acquired by novation.
- Through a Pakistani subsidiary, TCCA funded extensive exploration and feasibility work, identified major deposits, and submitted a feasibility study and a mining lease application in 2011.
- Provincial authorities in Balochistan rejected the mining lease application and an administrative appeal.
- In domestic proceedings, the Supreme Court of Pakistan later declared CHEJVA void and contrary to public policy.
- TCCA commenced ICSID arbitration under the Australia–Pakistan BIT (1998), alleging that Pakistan’s conduct—by the province and the Supreme Court—breached treaty protections.
- Pakistan challenged jurisdiction and admissibility, arguing illegality of the investment (given CHEJVA’s invalidation) and alleging corruption in the investment’s procurement or performance.

## Issues

1. Whether the tribunal had jurisdiction under the BIT and ICSID Convention despite Pakistan’s claim that CHEJVA was void under domestic law and the investment therefore not protected.
2. Whether alleged corruption or other illegality barred jurisdiction, rendered the claims inadmissible, or precluded relief.
3. Whether Pakistan breached the BIT through (a) denial of the mining lease and related conduct, and (b) the Supreme Court decision, including under FET/minimum standard of treatment, denial of justice, expropriation, and non-impairment standards.
4. Whether acts of Balochistan authorities and the Supreme Court were attributable to Pakistan for purposes of international responsibility.
5. How to value the project and quantify damages, including the proper valuation method, assumptions, date of valuation, interest, and costs.

## Decision

- The tribunal affirmed jurisdiction and held that TCCA’s interests and expenditures qualified as a protected investment under the BIT.
- It rejected Pakistan’s “legality of investment” defense insofar as Pakistan sought to rely on a subsequent domestic-law invalidation to remove treaty protection after the investment had been accepted and allowed to proceed.
- It rejected corruption-based objections for insufficient proof to bar jurisdiction or defeat the claims.
- On the merits, the tribunal held Pakistan liable for multiple BIT breaches, including FET/minimum standard of treatment (including denial of justice), indirect expropriation, and non-impairment through unreasonable or arbitrary measures.
- It attributed the conduct of Balochistan authorities and the Supreme Court to Pakistan.
- It awarded approximately USD 4.087 billion in damages, plus pre-award interest and costs, producing a total monetary consequence reported to exceed USD 5.9 billion.

## Legal Principles

- A treaty “legality” requirement generally turns on acceptance in accordance with host-state law at the time the investment is made; a later domestic-law ruling declaring an agreement void does not automatically erase treaty protection for an accepted, implemented investment.
- Corruption allegations can bar treaty protection, but the state bears the burden to substantiate them to a level adequate to defeat jurisdiction, admissibility, or recovery.
- Arbitrary administrative treatment that defeats an investor’s reasonable expectations created by the host state’s framework and conduct may breach FET/minimum standard of treatment.
- Judicial conduct can breach FET and constitute denial of justice where the process or outcome is manifestly arbitrary or otherwise incompatible with the minimum standard of treatment.
- Indirect expropriation may be found where state measures substantially deprive an investor of the economic value of its investment without compensation, even if formal title is not transferred.
- Under international law on state responsibility, acts of subnational entities and the judiciary are attributable to the state for treaty purposes.
- Project valuation in resource cases may be based on discounted cash flow where the record supports reserves, costs, and price forecasts, and causation is established on a but-for basis.

## Conclusion

The tribunal held Pakistan internationally responsible for provincial and judicial actions that deprived TCCA of the Reko Diq project, finding breaches of FET (including denial of justice), indirect expropriation, and non-impairment, and awarding multibillion-dollar compensation based largely on a DCF valuation with interest and costs.


Tethyan Copper Co. Pty Ltd. v. Islamic Republic of Pak., ICSID Case No. ARB/12/1, Award (July 12, 2019)