Islamabad is considering an out-of-court settlement over an arbitration award involving the Roosevelt Hotel after the hotel’s legal counsel assessed the chances of successfully challenging the award at only 1 percent.
The counsel presented three options to the government. Pakistan could accept the arbitration award, which would cost about $11 million and carry an additional 15 percent penalty, challenge the award in the District Court despite the low chances of success, or negotiate a severance package with the hotel workers’ union, reported Express Tribune.
The dispute arose after the Roosevelt Hotel reopened following the Covid-19 pandemic under a three-year arrangement with New York City approved by the Economic Coordination Committee in May 2023. The agreement included a guaranteed period of 18 months, including a four-month notice period.
New York City terminated the arrangement effective June 30, 2025, after which the Hotel Trade Council, representing the workers, filed a grievance against Roosevelt Hotel Corporation, a subsidiary of PIA Investments. The union argued that the hotel had failed to reopen after the agreement was terminated.
An arbitrator later issued an adverse award on Nov. 19, 2025, directing the hotel to restore laid-off employees and return them to the payroll from Jan. 1, 2026. The government was informed that complying with the decision would create an additional financial burden.
PIA Holding Company proposed a two-track approach involving an appeal in the District Court while simultaneously negotiating a settlement with the workers’ union. Under the proposal, the legal case could be withdrawn if an agreement was reached.
The government is also considering forming a negotiating committee comprising officials from the relevant ministry, Finance Ministry, PIA Holding Company and the Privatisation Commission, with the possibility of including a US-based legal counsel.
The Ministry of Law and Justice endorsed the proposal and advised the government to obtain the Attorney General’s views and hire foreign legal counsel at a reasonable cost. The Attorney General’s Office also recommended negotiations to avoid costly and prolonged litigation, while asking PIA Investments and Roosevelt Hotel Corporation to prepare detailed proposals covering the settlement position, severance packages, outstanding liabilities and the way forward.
