ISLAMABAD: Pakistan’s cabinet on Monday withdrew a notice to terminate a 45-year-old investment protection treaty with Sweden, reversing an earlier move to end an agreement providing legal safeguards to investors from both countries.
Signed in Stockholm in March 1981 and in force since June that year, the bilateral investment treaty provides protections for investments made by Pakistani and Swedish nationals and companies in each other’s countries.
The agreement includes safeguards against arbitrary or discriminatory treatment and expropriation and allows investors to take certain disputes with a host government to arbitration at the World Bank’s International Center for Settlement of Investment Disputes.
Pakistan decided in 2021 to terminate 23 older bilateral investment treaties as part of a wider reassessment of agreements that officials believed exposed the state to costly international arbitration claims.
“The cabinet approved the withdrawal of the notice to terminate the bilateral investment agreement concluded between Pakistan and Sweden in 1981,” the prime minister’s office said in a statement following a cabinet meeting chaired by Prime Minister Shehbaz Sharif.
The government statement did not say when Pakistan issued the termination notice, why it initially sought to end the treaty or what prompted Monday’s decision to withdraw it.
Under the treaty, either country can terminate the agreement by giving one year’s notice.
It also contains a so-called survival clause under which protections for investments made before termination continue for another 20 years.
Pakistan’s reassessment of its investment treaties followed a series of international arbitration disputes, including the Reko Diq case involving a major copper and gold deposit in the southwestern province of Balochistan.
In 2019, an arbitration tribunal awarded Tethyan Copper Company around $5.8 billion in a case brought against Pakistan under its bilateral investment treaty with Australia after the company was denied a mining lease for the Reko Diq project.
The dispute was later settled as part of an agreement to revive the mine, now being developed by Barrick Gold with Pakistani federal and provincial entities.
The Pakistan-Sweden treaty remains listed as in force by the United Nations Conference on Trade and Development.
Pakistan and Sweden established diplomatic relations in 1949, and around 40 Swedish companies are represented in the Pakistani market, according to Pakistan’s embassy in Stockholm.
Bilateral goods trade stood at $278.8 million in the 2023-24 fiscal year, with Pakistan exporting $149.4 million to Sweden and importing $129.4 million, according to embassy data.
