The Supreme Court on Monday declared illegal, null and void the Chaghai Hills Exploration Joint Venture Agreement (CHEJVA), ruling that it ran counter to the country’s mineral development act and mining concession rules.

Handing down its judgement in the Reko Diq mining lease case, a three-judge bench, headed by Chief Justice of Pakistan Iftikhar Muhammad Chaudhry, held that execution of the joint venture was contrary to provisions of the various laws of the land. In its 16-page short order, the court held that all the amendments made to the agreement after its signing were unlawful and in contradiction with it (agreement). 

The area of Reko Diq, located in Balochistan’s Chaghai district, sits over the popular Tethyan copper belt and is known to have the fifth largest reserves of gold and copper in the world. The operative part of the court order said, “The CHEJVA dated 23 July, 1993 is held to have been executed contrary to the provisions of the Mineral Development Act, 1948, the Mining Concession Rules, 1970, framed thereunder, the Contract Act, 1872, the Transfer of Property Act, 1882, etc, and is even otherwise not valid, therefore, the same is declared to be illegal, void and non est.” 

The apex court, on December 21 last year, reserved its judgement in the case after the counsels for the petitioners and respondents had completed their arguments. In its verdict, the three-judge bench observed that “the ‘Novation Agreement’ for the mining lease was purportedly made for the purpose of substituting the CHEJVA. The Balochistan government had also been made a party to the venture”. The order stated that it was not permissible under the Balochistan Mining Rules, 2002, as well as the Rules of Business of the government of Balochistan, particularly rule 7 and the others.

 Declaring all the amendments in the CHEJVA illegal, the order held that the addendum number 1 dated March 04, 2000, Option Agreement dated April 28, 2000, Alliance Agreement dated April 03, 2002 and Novation Agreement dated April 01, 2006, which are based upon, and emanate from, the CHEJVA were also held to be illegal and void.It also noted that all the agreements in result of the addendum in the instant matter did not confer any right on the BHP, MINCOR, TCC, TCCP, Antofagasta or Vancouver-based giant Barrick Gold. 

The order further said, “EL-5 is tantamount to exploration contrary to the rules and regulations as the claim of the TCCP is based on the CHEJVA, which the document itself had been held to be non est. Therefore, before exploration it was incumbent upon it to have sought rectification of its legal status.”The court however, in its ruling, admitted for hearing the petitions that had been filed pertaining to the agreement. 

During the last hearing, Tethyan Company’s counsel Khalid Anwar defended the lease deal reached between the company and the Balochistan government. The TCC also invoked the jurisdiction of the International Chambers for Commerce and International Centre for Settlement of Investment Disputes In December last year against the Pakistan government for not renewing the prospective Reko Diq minerals licence in accordance with Balochistan Mining Rules 2002.

The ICSID, however, rejected TCC’s demand for ‘provisional measures’ for ‘protecting’ two of its deposit areas.It may be mentioned here that cases pertaining to the Reko Diq mining lease dispute was being heard for the past five years. Barrick, the world’s largest gold producer, and Antofagasta Minerals, each own a 37.5 percent share, as the Tethyan Copper Company, in the largest Foreign Direct Investment mining project.

Their plan was to build and operate a copper and gold open-pit mine in Reko Diq. Barrick and Antofagasta say the proposed plant could produce 600,000 tons of copper and 250,000 ounces of gold a year, but in 2011 work came to a standstill after the local government refused to renew the consortium’s mining lease. The Balochistan government was also a partner in the project with a 25 per cent stake.