News

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Supreme Court of Pakistan throws out presidential reference against Justice Qazi Faez Isa, terms it 'invalid'.

The Supreme Court of Pakistan in its latest judgment has observed that the reference against Justice Faiz Esa is declared to be of no legal effect whatsoever and stands quashed.
The top court ended pending proceedings against the judge in the Supreme Judicial Council (SJC) and it observed that show cause notice issued to Justice Isa by the council has no legal effect.
The court also ordered that the Inland Revenue Department and the Federal Board of Revenue (FBR) may seek explanations from the judge's wife and children on the nature and source of funding for three properties in their names in the United Kingdom and submit a report to the Court’s registrar.

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Pakistan Court Sentences Former Military Dictator to Death

A Special court in Pakistan sentenced former military dictator General Pervez Musharraf to death on December 17, 2019.

A three-member bench of a special court, headed by judge Waqar Ahmad Seth who happens to be the Chief Justice of Peshawar High Court along with two other judges namely, Justice Nazar Akbar of Sindh High Court and Justice Shahid Karim of Lahore High Court found General Musharraf guilty of high treason under Article 6 of Pakistan’s Constitution and meted out the death penalty. Article 6 defines high treason as an act committed by a person who, “abrogates or subverts or suspends or holds in abeyance, or attempts or conspires to abrogate or subvert or suspend or hold in abeyance, the Constitution by use of force or show of force or by any other unconstitutional means.” The punishment for high treason is death or imprisonment for life, according to Section 2 of the Pakistan’s High Treason Act of 1973.

General Musharraf, being an Army officer usurped power through a coup d’état in October 1999, served as Pakistan’s military administrator and, subsequently, President until 2008. He was found guilty on charges filed in December 2013 stemming from his imposition of a state of emergency in 2007, when he was facing growing opposition to his rule. Under the emergency, all civil liberties, human rights, and democratic processes were suspended from November 2007 to February 2008.

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Spain Supreme Court finds Workers Entitled to Christmas Hamper

The Supreme Court of Spain found Monday that workers are entitled to a Christmas hamper as a condition of their employment. The case arose from a labor dispute against Fujitsu Technology Spain. The company had eliminated gifting the Christmas hamper from the budget back in 2013. A Christmas hamper is a packaged assortment of wine, cheese, oils, and meats. It is often gifted to employees in Spain. The court reasoned that employees gained the right to the Christmas hamper from longstanding tradition. Because Fujitsu Technology Spain had provided the Christmas hamper to employees for many decades, it became an expectation within the employment contract. In essence, the court stated that employees acquired the right to the item.

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AN IMPORTANT DECISION OF THE SUPREME COURT OF PAKISTAN

The tenure of Pakistan’s Chief of Army Staff (COAS) was scheduled to end on November 28, 2019, however, his tenure was extended for another three year by the Government of Pakistan. This action of the government was challenged as being unconstitutional by an entity through a constitutional petition before the Supreme Court of Pakistan. The court took cognizance of the case and notices were issued to the Federal government as well as to the COAS. The matter was heard on 28-11-2019 and after hearing the parties at length the court passed the following orders:
1) “The extension/reappointment of General Qamar Javed Bajwa, Chief of the Army Staff (“COAS”) has been challenged before us. In the proceedings before us during the last three days the Federal Government has moved from one position to another referring to it as reappointment, limiting of retirement or extension of tenure and has also interchangeably placed reliance on Article 243(4)(b) of the Constitution of the Islamic Republic of Pakistan, 1973 (“Constitution”) and Regulation 255 of the Army Regulations (Rules), 1998. However, finally today the Federal Government through the learned Attorney General for Pakistan has presented this Court with a recent summary approved by the President on the advice of the Prime Minister along with Notification dated 28.11.2019 which shows that General Qamar Javed Bajwa has been appointed as COAS under Article 243(4)(b) of the Constitution with effect from 28.11.2019.
2) We have examined Article 243(4)(b) of the Constitution, Pakistan Army Act, 1952, Pakistan Army Act Rules, 1954 and Army Regulations (Rules), 1998 and inspite of the assistance rendered by the learned Attorney-General, we could not find any provision relating to the tenure of COAS or of a General and whether the COAS can be reappointed or his term can be extended or his retirement can be limited or suspended under the Constitution or the law. The learned Attorney-General has taken pains to explain that the answers to these questions are based on practice being followed in the Pakistan Army but the said practice has not been codified under the law.
3) Article 243 of the Constitution clearly mandates that the Federal Government shall have control and command of the Armed Forces and the supreme command of the Armed Forces Constitution Petition No. 39 of 2019 3 shall vest in the President. It further provides that the President shall, subject to law, have power to raise and maintain the military, etc. and it is the President who on the advice of the Prime Minister shall appoint, inter alia, COAS. Article 243 of the Constitution, therefore, clearly shows that the President shall, subject to law, raise and maintain the military, however, the laws referred to above do not specify the tenure, retirement, reappointment and extension of the COAS or of a General of the Pakistan Army.
4) The learned Attorney-General has categorically assured the Court that this practice being followed is to be codified under the law and undertakes that the Federal Government shall initiate the process to carry out the necessary legislation in this regard and seeks a period of six months for getting the needful done. Considering that the COAS is responsible for the command, discipline, training, administration, organization and preparedness for war of the Army and is the Chief Executive in General Headquarters, we, while exercising judicial restraint, find it appropriate to leave the matter to the Parliament and the Federal Government to clearly specify the terms and conditions of service of the COAS through an Act of Parliament and to clarify the scope of Article 243 of the Constitution in this regard. Therefore, the current appointment of General Qamar Javed Bajwa as COAS shall be subject to the said legislation and shall continue for a period of six months from today, where after the new legislation shall determine his tenure and other terms and conditions of service. “ [C.P No. 39 of 2019 decided on 28 Nov 2019].

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ANNOUNCEMENT

It is to inform to all that Mr. Hamid Khawer working with M/s Azimuddin Law Associate as administrator has left the organization at his own with effect from Oct 07, 2019. We wish him success in life.

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GOVERNMENT AFFAIRS

Today’s business clients can be subject to extensive requirements of many government agencies. There are highly detailed regulations, particularly in the areas of Energy, Petroleum, Pharmaceuticals, building and development, banking, health care, insurance, tax and the environment, all of which impact on business. On their behalf, ADLA’s Government Affairs attorneys interact with these administrative agencies. Previous government service and legal and business experience provide the expertise to anticipate agency responses to many situations and to achieve results favorable to the client. If our clients’ needs evolve from the delivery of traditional legal advice, the Government Affairs Department of ADLA can do any or all of the following.
01) Strategic planningToo often a potentially bad situation becomes worse by neglect or mismanagement. The same holds true in government affairs. The preferable course of action would be to engage us to develop a good strategic plan in advance and allow you to work the plan as your time and resources permit incrementally building toward your business or organization’s goal. Good relationships with the regulators should be established in advance of the crisis.
02) Government advocacy With the government’s “one size fits all” legislative response to a perceived problem a proposed law or regulation may threaten to crush a businesses or organization. We can provide effective representation before the legislature or executive branch and can act to raise awareness about the unintended consequence to you and work with all parties to achieve a successful outcome. Members of our government affairs team have valuable experience in this regard.
03) Regulatory assistanceWe assist our clients with complex permitting, economic development and redevelopment incentive, government contracts and administrative litigation, and regulatory enforcement and compliance issues at all levels of government.

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JADHAV CASE: INTERNATIONAL COURT OF JUSTICE [India v. Pakistan]

Jadhav case was decided by the international Court of Justice (ICJ) on July 17, 2019. The court observed:
a) The court has the jurisdiction to decide the cause presented;
b) The application of the Republic of India is maintainable;
c) Denying the rights under paragraph 1(b) of Article 36 of Vienna Convention was a breach of the Convention.
d) The matter requires review and till the decision of the review the awarded sentence will remain in abeyance.

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REKO DIQ PROJECT – ARBITRATION AWARD AGAINST PAKISTAN

Antofagasta plc (the “Company”) announces that an international arbitration tribunal of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) has today awarded $5.84 billion in damages to Tethyan Copper Company Pty Limited (“TCC”), a joint venture held equally by the Company and Barrick Gold Corporation, in relation to the arbitration claims filed against the Islamic Republic of Pakistan (“Pakistan”) following the unlawful denial of a mining lease for the Reko Diq project in Pakistan in 2011.
Damages include compensation of $4.087 billion by reference to the fair market value of the Reko Diq project at the time of the mining lease denial, and interest until the date of the award of $1.753 billion. The Tribunal also awarded TCC just under $62 million in costs incurred in enforcing its rights.
The award is binding on the parties. There are limited grounds for challenging the award under the ICSID Convention. It is not expected that proceeds of the award will be recognized in Antofagasta’s financial statements until received.
Prior to denial of the mining lease application, TCC had completed a feasibility study showing that Reko Diq was one of the world’s largest undeveloped copper and gold deposits, and had a potential mine life of over 50 years and an estimated initial capital investment of over $3 billion.
[PRESS RELEASE BY ANTOFAGASTA PLC]

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State aid: European Commission opens in-depth investigation into tax treatment of Nike in the Netherlands

European Commission opens in-depth investigation into tax treatment of Nike in the Netherland. The investigation will examine whether tax rulings granted by the Netherlands to Nike may have given the company an unfair advantage over its competitors, in breach of EU State aid rules.
Nike European Operations Netherlands BV and Converse Netherlands BV have more than 1,000 employees and are involved in the development, management and exploitation of the intellectual property. For example, Nike European Operations Netherlands BV actively advertises and promotes Nike products in the EMEA region, and bears its own costs for the associated marketing and sales activities.
In contrast, the recipients of the royalty are Nike group entities that have no employees and do not carry out any economic activity.
The Commission investigation will focus on whether the Netherlands' tax rulings endorsing these royalty payments may have unduly reduced the taxable base in the Netherlands of Nike European Operations Netherlands BV and Converse Netherlands BV since 2006. As a result, the Netherlands may have granted a selective advantage to the Nike group by allowing it to pay less tax than others or group companies whose transactions are priced in accordance with market terms. If confirmed, this would amount to illegal State aid.
Based on the Press Release of European Commission.

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Pakistan files dispute against EU over imports of polyethylene terephthalate

Pakistan has notified the WTO Secretariat of a request for consultations with the European Union regarding the imposition of countervailing measures by the EU on imports of certain polyethylene terephthalate (PET) from Pakistan and regarding certain aspects of the investigation underlying those measures.
The EU appears to have acted inconsistently with several articles of the Subsidies and Countervailing Measures Agreement in determining that Pakistan's tax law and other schemes and programmes in certain cases constitute a subsidy that is contingent upon export performance.
PET is used in synthetic fibres and in beverage, food and other liquid containers.
The request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations failed to resolve the dispute, the complainant will request adjudication by a panel.

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ICC endorses UNCITRAL Convention on the Assignment of Receivables in International Trade

The International Chamber of Commerce has announced its endorsement of the United Nations Convention on the Assignment of Receivables in International Trade. The ICC Executive Board endorsed the Convention at its 146th World Council Session held in New York on 19-20 November 2014, upon recommendation by the ICC Banking Commission’s Executive Committee and the Legal Committee.
ICC supports the Convention's purpose to establish principles and rules to create clarity and transparency in the legal regime applicable to the assignment of international receivables. ICC also aligns itself with the Convention's objective to promote the modernization of the law relating to assignments of receivables, while protecting existing assignment practices and facilitating the development of new practices.
ICC bank and firm members have reported situations where financings had to be reviewed or abandoned as a result of laws considering the assignment of future receivables or bulk assignments of receivables as ineffective. ICC welcomes the Convention's validation of assignments of future receivables and bulk assignments, invalidating contractual limitations to the assignment of receivables, and offering clear rules as to priority between competing claims. As such, ICC expects the Convention to remove legal obstacles to receivables financing transactions.
ICC shares a common goal with the United Nations Commission on International Trade Law (UNCITRAL) in striving to remove obstacles for international trade and considers the Convention to be a major step towards the globalization of asset-based lending.
ICC has a long history of providing needed international leadership in the field of international banking operations, particularly as a forum for developing rules of practice. Since 1933, the Uniform Customs and Practice for Documentary Credits (UCP), in its various revisions, has become a universally recognized standard, stating and establishing custom and practice for letters of credit.
Through endorsement of the subsequent UCP versions, UNCITRAL provided an important bridge to those countries that were, at the time, unable to participate directly in the work of ICC. Other ICC rules, such as Incoterms© Rules, have also been endorsed by UNCITRAL, contributing to their international acceptance. (22 December 2014)

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Foreign Decision: ECT on VAT

In the Case of Skandia America Corp. (USA), filial Sverige v. Skatteverket (the Swedish tax authorities) Case C-7/13, ECJ decided an important case on VAT:

This decision of the European Court of Justice (“ECJ”) could have significant consequences for international groups who provide services to each other cross-border. The decision will have particular consequences for all VAT exempt or partly exempt businesses; such as those operating in the financial services sector. The ECJ has held that, for VAT purposes, where a company provides services to a foreign branch:

a) for consideration; and
b) where that branch belongs to a VAT group;
then the services should be regarded as having been provided to the VAT group and not the branch.

The consequence of this is that previously ignored transactions may now be treated as a supply of services upon which VAT is now due. The case arose from the Swedish tax authorities’ decision to charge VAT on the supply of software and software related services by Skandia America Corp., established in the USA, to its branch Skandia Sverige in Sweden – the branch having been registered as a member of a VAT group in Sweden since July 2007. In hearing the case, the Swedish Court decided to stay the proceedings and to refer two questions to the ECJ for preliminary ruling. The questions were as follows:-

1) Do supplies from externally purchased services from a company’s main establishment in a third country (here, the United States) to that company’s branch in an EU Member State, together with an allocation of costs for the purchase by the branch, constitute taxable transactions if the branch belongs to a VAT group in the Member State? and
2) If the answer to the first question is in the affirmative, is the main establishment in the third country to be viewed for VAT purposes as a taxable person which is not established in the EU Member State of the branch, with the result that the branch purchaser of the services is to be taxed for the transactions?