If we want any returns on this stock in a reasonable time-frame, we've got to hustle for a deal with the Chinese and get the hell out of the DRC, it's a total snake-pit!
While the ICSID might eventually produce a result, it could easily stretch over a decade before any settlement materializes. For example, take the case of 'Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan' – it took a 11 years from lodging to settlement. The timeline of this case is detailed below:
In 2011, Tethyan Copper Company (TCC) initiated a dispute with ICSID over Pakistan's denial of the mining lease. TCC sought $11.43 billion in compensation, they'd investment $220 million in the project before Pakistan refused the mining permit.
In 2013, the Pakistan Supreme Court declared the agreement void, asserting that TCC had no legal rights to explore or mine.
In 2017, the ICSID ruled that TCC indeed held a legitimate expectation of obtaining the mining lease.
In 2019, the ICSID granted $5.976 billion in damages to TCC. The tribunal determined that Pakistan had unlawfully refused to grant TCC the mining lease.
In 2020, to enforce the $6 billion award, TCC petitioned the High Court of Justice in the British Virgin Islands, seeking the attachment of Pakistani assets, including those held by Pakistan International Airlines.
Pakistan lodged appeals to have the judgment annulled and separate appeals to have the judgment revised. A stay on the enforcement of the judgment was granted until all reviews could be heard by the ICSID.
In 2022, Pakistan reached an out of court settlement with TCC for reviving and developing the mine. As part of the settlement $11 Billion worth of penalties by ICSID and London court of Arbitration were set aside.
There are several lessons we can learn from this case. Firstly, it highlights the extensive duration of legal proceedings. 11 years is a long time to wait.
Secondly, in the event of a favourable judgment and non-payment by the DRC, avenues exist to pursue the seizure of state-owned assets. However, it's crucial to note that the DRC may utilize appeals processes to contest or delay enforcement, prolonging the resolution.
Thirdly, while the initial judgment amounted to $6 billion, the settlement set aside $11 billion, indicating additional fines and penalties totalling $5 billion incurred by Pakistan over the 11-year period. The fact that this $5 billion was set aside obviously indicates the fines were never paid, so relying on court-imposed fines to support our cash flow over this journey might not be realistic.
We're going to need a lot more than US$20M in funding to endure a similar journey. I'm not trying to throw shade here, just keeping it real. The ICSID path will be a marathon before we see any returns, assuming there even is one. Another thing worth noting from this case is that it's very rare for the ICSID to make judgements of this size. So we can't us this judgment as an indication of what AVZ may receive, should we go down the ICSID road and win.
Without a negotiated outcome now, this could end up being one of those investments you stash away for the grandkids under the bed.
AVZ Price at posting:
78.0¢ Sentiment: None Disclosure: Held
