Advocate Usman Gondal
Advocate Nawaz Virk
The superior courts of Pakistan have always intended to encourage the dispute resolution by way of arbitration. The legal system of Pakistan has also considered the arbitration proceedings with welcoming gesture, under the mechanism provide for resolution of disputes.
A area of dispute usually arise with respect to the outstanding payments under a contract of commercial nature, to which negotiations have been failed, leaving the issues unsettled. In such circumstances, this process has provided a private, independent and neutral forum for settlement of a question at issue in favour of two or more persons.
Currently, two primary legislations dealing with Arbitration in Pakistan are
(1) the Arbitration Act, 1940, and
(2) the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 respectively.
Though, the Arbitration Act 1940 since its incorporation being a highly ambiguous document has attained quite remarkable clarity with the help of judicial precedents. One of the big hurdles in way of development of international commercial arbitration in Pakistan was that though Pakistan being one of the early signatory states of New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“Convention”) ratified the same with a delay of almost half century after which the same was enforced through an Act of Parliament in 2011.
Presently, some of the challenges that Pakistan face and could effect the rapid progress of international commercial arbitration are modernizing Lex Arbitri, establishment of arbitration institutions, enforcement of foreign awards and training facilities for students and lawyers.
On the other hand, Pakistan has worked upon certain areas to bring its legislations in conformity with the legal systems of arbitration friendly jurisdictions through the help of judicial precedents being a common law jurisdiction in order to win the investor confidence. Moreover, the arbitration law pertaining to national arbitration in Pakistan is now quite clear with the help constant dicta from the superior courts. In addition to this, with respect to international commercial arbitration, the courts have consistently enforced the awards except for matters involving questions of criminality (including allegations of violations of mandatory laws, corruption and fraud) or public policy. Hence, the recognition and enforcement of foreign arbitral awards in Pakistan, could not be refused except in accordance with the Convention.
As the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (“Foreign Awards Act”) has been enforced in Pakistan in its true spirits, it would be wrong to say that future of international commercial arbitration is not bright.
