In the Contract of 29 September 1994, the Government of Pakistan entrusted SGS with the right to exercise its activity of control in the Customs field.
Identically to the right of a State to levy taxes, the right to levy Customs duties is a right belonging to the State sovereignty by essence.
Only the State of Pakistan—excluding any individual—has the power to levy Customs duties.
If Pakistan entrusted SGS with certain powers in that field normally reserved to the State, it did so in the exercise of its public
power…
This link to the State sovereignty of Pakistan seems tighter if one recalls that the activity of SGS was meant to increase the Customs revenue of the State. By doing this, SGS did not perform a simple commercial activity for the account of the State of Pakistan; it had to raise the financial revenue of the State (which indeed SGS alleges to have done)…
It appears from what has been said that the legal nature of the Contract of 29 September 1994 appears clearly to be a concession of public law by which the State of Pakistan granted to SGS the right (subject to acceptation) to be active—to the exclusion of any other public entity—in a field which is normally left to the public power of the State.
By concluding the Contract of 29 September 1994, the State of Pakistan acted jure imperii.