This country-specific Q&A provides an overview of International Arbitration laws and regulations applicable in Pakistan.
What legislation applies to arbitration in your country? Are there any mandatory laws?
There are two main pieces of legislation pertaining to arbitration in Pakistan: (1) The Arbitration Act, 1940 (“Arbitration Act”) and the (2) Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (“Foreign Awards Act”).
The Arbitration Act provides for arbitration with the intervention of the court and arbitration without the intervention of the court. Arbitration without the intervention of the court takes place where both parties are willing to submit disputes to arbitration without approaching the court primarily for appointing arbitrator(s). Arbitration with the intervention of the court however, occurs where one of the parties questions the existence of a dispute that falls within the ambit of the Arbitration Agreement. The Foreign Awards Act, on the other hand, is the enactment of the New York Convention, 1958 that governs the enforcement of foreign/international arbitration agreements and awards.
Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Yes. While Pakistan has not expressed any reservations or objections with regard to the Convention, it has issued a clarification by means of a Declaration which states that the “Islamic Republic of Pakistan will apply the Convention to the recognition and enforcement of awards made only in the territory of [a] Contracting State.”
What other arbitration-related treaties and conventions is your country a party to?
Pakistan is also a signatory to the ICSID Convention, and also enacted this Convention in 2011.
Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
The Arbitration Act which is Pakistan’s primary legislation pertaining to arbitration, departs substantially from the UNCITRAL Model Law.Most stark amongst these differences is the fact that the Arbitration Act primarily deals with domestic arbitration and does not envisage international commercial arbitration. Some of the key differences between the two are as follows:
the Arbitration Act provides that the arbitral tribunal shall consist of a sole arbitrator unless the parties have agreed to the contrary. The Model Law, however, provides for three arbitrators in case the parties have not consented to number of arbitrators;
the Arbitration Act allows a reference to two arbitrators and an umpire, whereas the Model Law does not expressly provide for this;
under the Arbitration Act, a third arbitrator appointed by the two party-appointed arbitrators is deemed to be an umpire, whereas the Model Law simply treats the appointed arbitrator as a third arbitrator;
where the parties have agreed to refer a dispute to two arbitrators, one to be appointed by each, the Arbitration Act stipulates that a failure to appoint an arbitrator in time may result in the arbitrator already appointed by the compliant party proceeding with the matter ex parte. In such circumstances, the arbitrator appointed by the compliant party acts as a sole arbitrator, and his or her award is considered binding on both parties as if the party failing to appoint an arbitrator had consented;
under the Arbitration Act, the arbitrator has power to state a special case for the opinion of the court on any question of law;
under the Arbitration Act, the court has power to remit the award to the arbitrators for reconsideration of matters in certain circumstances. The Model Law does not vest the Court with such power but enables it to give an opportunity to the arbitral tribunal to resume proceedings to eliminate any ground for which the award may be set aside;
the Arbitration Act unlike the Model Law does not expressly provide that the arbitral tribunal has competence to rule on its own jurisdiction (competence-competence);
the grounds for setting aside an award under the Arbitration Act are very broad compared to the Model Law. An award may be set aside under the Act if an arbitrator or umpire misconducts him or herself or the proceedings, or if the award was improperly procured or otherwise invalid. Courts have construed these grounds to include serious errors of law by the arbitral tribunal;
under the Arbitration Act, the court has discretion whether to grant a stay of proceedings pertaining to a matter that is the subject of an arbitration agreement and refer the parties to arbitration, whereas under the Model Law unless the arbitration agreement is null and void, inoperative or incapable of being performed, the court must stay its proceedings and refer the parties to arbitration; and
the Arbitration Act provides for appeals against court orders:
superseding an arbitration;
on an award stated in the form of a special case;
modifying or correcting an award;
filing or refusing to file an arbitration agreement;
staying or refusing to stay legal proceedings where there is an arbitration agreement; and
setting aside or refusing to set aside an award.
Are there any impending plans to reform the arbitration laws in your country?
The following reforms to Pakistan’s arbitration regime are being considered:
(a) The Arbitration and Conciliation Bill, which is based on the UNCITRAL Model Law, was introduced in the Senate of Pakistan in January 2016.
The Arbitration and Conciliation Bill is based on the Arbitration and Conciliation Act, 1996 of India (before the amendments introduced to the Indian legislation in 2015). The Arbitration and Conciliation Bill aims to bring the arbitration law in Pakistan in line with the UNCITRAL Model Law and repeal the Arbitration Act, 1940. The Arbitration and Conciliation Bill has not seen any significant movement and has been pending in the Senate since January 2016.
(b) In June 2017, the Law and Justice Division of the Ministry of Law and Justice invited proposals, suggestions, and comments from the legal fraternity and stakeholders for purposes of revamping the arbitration laws of Pakistan. However, it appears that no legislative proposal has yet been submitted by the Law and Justice Division before the legislature.
(c) The Trade Dispute Resolution Organization has introduced the Trade Dispute Resolution Bill, which relates to ‘Trade Disputes’, which are disputes or complaints concerning, relating to, or arising out of the international export and import of goods and services conducted wholly or partially in, or otherwise conducted with, the territory of Pakistan.
The Trade Dispute Resolution Bill is presently being discussed by the National Assembly Standing Committee on Commerce and Textiles.
What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?
While ad hoc arbitration is fairly common in a few industries, the establishment of the Center for International Investment and Commercial Arbitration (CIICA) marks the creation of Pakistan’s first international arbitration center that also offers domestic arbitration and mediation services. CIICA’s rules went into effect in April 2016 and there have been no subsequent amendments thereto.
Is there a specialist arbitration court in your country?
No. Civil Courts or District Courts are the courts of competent jurisdiction for domestic arbitration matters whereas the High Court is the court of first instance for matters involving the enforcement of foreign arbitration agreements and awards.
What are the validity requirements for an arbitration agreement under the laws of your country?
Domestic Courts have held that the validity and effect of an arbitration clause in a contract is to be determined, unless the contract expressly provides otherwise, by the proper law of the contract as a whole and by gauging the intention of the parties after a perusal of the entire contract and its surrounding circumstances [See: Messrs Rupali Polyester Ltd v Dr. Nael G Bunni and others (PLD 1994 525 Lahore)].
Are arbitration clauses considered separable from the main contract?
Pakistani courts have held that frustration or repudiation of the main contract does not affect the arbitration agreement embedded therein since the latter was separable from the main contract. (See: Karachi Shipyard and Engineering Works Ltd. v. General Iron and Steel Works Ltd.PLD 1971 Karachi 501; Muhammad Sarwar Khan v. Federation of PakistanPLD 1958 Kar. 224 in which it was held that frustration or repudiation, respectively, of the main contract did not affect the arbitration agreement embedded therein, which was severable from the former. These judgments demonstrate that Pakistani jurisprudence has evolved to recognize the separability doctrine.
Do the courts of your country apply a validation principle under which an arbitration agreement should be considered valid and enforceable if it would be so considered under at least one of the national laws potentially applicable to it?
This issue has not been adjudicated by the courts yet.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
There is no express bar under Pakistani law on multi-party or multi-contract arbitration.
In what instances can third parties or non-signatories be bound by an arbitration agreement? Are there any recent court decisions on these issues?
Recent Court decisions have refrained from making third parties or non-signatories liable for arbitration agreements they are not a partyto. (See answer to Question No. 29 for a detailed analysis).
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
Domestic courts have held that criminal disputes are non-arbitrable and that the Act only applies to civil disputes [See: Ali Muhammad v Bashir Ahmad (1991 SCMR 1928). Additionally, in HUBCO v WAPDA PLD 2000 SC 841, the Supreme Court found that the agreements were prima facie obtained through fraud and bribery, were marred by corruption and criminal actions, could not be referred to arbitration.
Moreover, it is settled law that proceedings in relation to minority oppression under the Companies Ordinance, 1984 cannot be stayed in light of an arbitration agreement [See: WAPDA v Kot Addu Power Company Ltd (2002 MLD 829)]. Similarly, inORIX Leasing Pakistan v Colony Thal Textiles Ltd (PLD 1997 Lahore 443), it was held that the winding-up of a company cannot be the subject-matter of arbitration proceedings.
How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
Pakistani courts have cited with approval the three-stage enquiry formulated in the English case of Sulamerica v Ensea EWCA Civ 638 to determine the law governing the arbitration agreement. Pursuant to this three-step test, the courts must determine: first, whether the parties expressly chose the law of the arbitration agreement; second, whether an implied choice by the parties has been made; and, last, in the absence of express or implied choice, the system of law with which the arbitration agreement has the closest and the most real connection [See: Abid Associated Agencies v Areva(2015 MLD 1646)].
If there is no express agreement between the parties as to the law governing the arbitration agreement, the courts have held that the law which governs the main agreement shall also govern the arbitration agreement if the arbitration clause is stipulated as a part of the main agreement [See: Hitachi Limited v Rupali Polyester (1998 SCMR 1618)].
In the event that the parties have executed a stand-alone arbitration agreement, the courts are likely to follow the three-step inquiry, as set out in Abid Associated Agencies v Areva2015 MLD 1646, to determine the law of arbitration agreement, though there are no cases to this effect.
Have the courts in your country applied the UNIDROIT or any other transnational principles as the substantive law? If so, in what circumstances have such principles been applied?
The UNDROIT principles were applied in the case of Maulana Abdul Haque Baloch v Government of Balochistan through Secretary Industries and Mineral Development (PLD 2013 SC 641) where the Court invalidated a mining contract holding that:
“Under Article 3.2.7 of the UNIDROIT Principles of International Commercial Contracts under the title of gross disparity, a contract which has been conceived by a party seeking to take unfair advantage of the other party’s dependence, economic distress or its improvidence, ignorance, inexperience and lack of bargaining skill cannot be enforced”
In your country, are there any restrictions in the appointment of arbitrators?
While parties are free to nominate arbitrators without the intervention of the Court, courts may intervene in instances where the parties are unable to arrive at an agreement regarding the appointment of arbitrators. Nonetheless, the Act does not stipulate any qualifications or restrictions in connection with the appointment of arbitrators.
Are there any default requirements as to the selection of a tribunal?
The Act presumes that a tribunal shall, by default, consist of a sole arbitrator unless the parties have agreed otherwise. Additionally, it stipulates that where a tribunal has two arbitrators, one appointed by each party, the two arbitrators shall appoint a third arbitrator who shall be designated as the tribunal’s umpire.
Can the local courts intervene in the selection of arbitrators? If so, how?
Domestic courts may intervene with respect to the appointment of arbitrators in certain cases. The power to appoint arbitrators and the circumstances in which this power may be exercised is stipulated under sections 8 and 9 of the Arbitration Act, 1940. For ease of reference the said sections are reproduced here:
(8) Power of Court to appoint arbitrator or umpire- (1) In any of the following cases:
(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or
(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or
(c) where the parties or the arbitrators are required to appoint an umpire, and do not appoint him;
any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.
(9) Power to party to appoint new arbitrator or, in certain cases, a sole arbitrator-Where an arbitrations agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then, unless a different intention is expressed in the agreement:
(a) if either of the appointed arbitrators, neglects or refuses to act, or is incapable of acting or dies, the party who appointed him may appoint a new arbitrator in his place;
(b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent:
Provided that the Court may set aside any appointment as sole arbitrators made under clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an arbitrator or pas such other order as it thinks fit.
Explanation. The fact that an arbitrator or umpire, after request by either party to enter on and proceed with the reference, does not within one month comply with the request may constitute a neglect or refusal to act within the meaning of section 8 and this section.
Consequently, while domestic courts may interfere in the appointment of arbitrators, their power to do so is limited to the circumstances enumerated in sections 8 and 9 of the Act.
Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge?
Domestic courts have been vested with the power to remove arbitrators under the Act.Section 11 provides that the Court may remove an arbitrator or umpire upon the application of a party where the said arbitrator or umpire has failed to use all reasonable dispatch while proceeding with the reference and rendering an award or has committed misconduct during the proceedings.
Have there been any recent developments concerning the duty of independence and impartiality of the arbitrators
As stated earlier, section 11 of the Act auhorizes the Court to remove an arbitrator on grounds of misconduct. In Federation of Pakistan v Messrs James Construction Company (PLD 2018 Islamabad 1), the Court found an arbitrator guilty of misconduct on account of meeting the Petitioner’s representatives at his residence in the absence of the Respondent.
The Courts have additionally held that while arbitration proceedings are accorded a degree of sanctity, no sanctity can be attached to proceedings where the arbitrator failed to act fairly [See: Mst Daulan Bibi v Mst Aisha Bibi and 3 others (2014 YLR 1628)]
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
In case where a tribunal becomes truncated due to the unavailability, withdrawal, or death of an arbitrator, the party that nominated the arbitrator may nominate another arbitrator. In case the party authorized to make such a nomination fails to do so within fifteen days after the service by the other party of a notice in writing to make the appointment, such other party having appointed its arbitrator before giving the notice may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent in terms of section 9 of the Act.
Are arbitrators immune from liability?
Broadly, the understanding of the law is that no action particularly that of a criminal nature can be initiated against the arbitrators, a party may file a suit for damages where an arbitrator or the arbitrators have misused the property retained by them as security and have overstepped their authority. [(See: Haq Nawaz v the State (2005 YLR 1850)].
Is the principle of competence-competence recognized in your country?
Unlike the Model UNCITRAL law, the Act does not recognize an Arbitral Tribunal’s competence to determine its own jurisdiction (competence-competence).
What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
In case a party approaches domestic courts in breach of the arbitration agreement, the other party may file an application before the Court to stay the proceedings. The Court, thus, may stay the proceedings before domestic courts. Nonetheless, this is not a mandatory requirement and whether or not to stay court proceedings is within the discretion of the courts.
How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
Arbitral proceedings can commence with the consent of both the parties. Where both parties consent to submit a dispute to arbitration, the arbitration can commence without the intervention of the Court. Where a party to the dispute does not agree to submit the dispute for arbitration, however, the other party can approach the Court seeking referralof the matter to arbitration under section 20 of the Act.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
There is neither any statutory or case law on this issue.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?
If a party to an arbitration agreement refuses to take part in the arbitration, the other party can seek intervention of the court to compel participation.
Can third parties voluntarily join arbitration proceedings? If all parties agree to the intervention, is the tribunal bound by this agreement? If all parties do not agree to the intervention, can the tribunal allow for it?
Courts in Pakistan have traditionally refrained from ordering third parties to join arbitration proceedings. InSecretary Ministry of Religious Affairs v Dallah Real Estate and Tourism Holding Company (2003 CLC 1411), it was held that a person who was not a party to the arbitration agreement could not be proceeded against and that an agreement could not be implemented against such person. Similarly, in Mehdi K. Lavji v Province of Sindh (2010 MLD 561), the High Court did not refer the dispute between the petitioner and the Government of Sindh to arbitration because the latter, whose order the Petitioner had challenged, was not a party to the arbitration agreement.
Can local courts order third parties to participate in arbitration proceedings in your country?
Generally, interim measures are available during the course of arbitral proceedings or after the award is rendered. Nonetheless, there is no express bar on seeking the court’s intervention before the tribunal is constituted.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
There is no express bar under Pakistani law on the enforcement of anti-suit injunction issued by an arbitral tribunal. In terms of an anti-arbitration injunction, it is issued by courts.
Are anti-suit and/or anti-arbitration injunctions available and enforceable in your country?
There is no express bar under Pakistani law on the enforcement of anti-suit injunction issued by an arbitral tribunal. In terms of an anti-arbitration injunction, it is issued by courts.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence? Can local courts compel witnesses to participate in arbitration proceedings?
The 1984 Qanun-e-Shahadat Order, which sets out the law of evidence in Pakistan, does not apply to arbitration proceedings (Section 1(2) of the 1984 Qanun-e-Shahadat Order).
The Arbitration Act also does not regulate the arbitrators’ right to admit/exclude evidence in any detail. Pakistani courts have held that the arbitrator is the sole judge of the quality and quantity of evidence (GERRY’s International (Pvt.) Ltd. v Aeroflot Russian International Airlines 2018 SCMR 662).
The First Schedule of the Arbitration Act provides that the parties shall be deemed to have agreed to:
(a) Submit themselves to be examined by the arbitrator(s) on oath or affirmation in relation to the matters in the arbitration;
(b) Produce before the arbitrator(s) all books, documents, papers, accounts, writings, and documents within their power and possession; and
(c) Do all other things which the arbitrator(s) may require during the arbitration proceedings (within the limits of the rules of natural justice).
Pursuant to Section 43 of the Arbitration Act, the courts are empowered to issue a summons to parties or witnesses whenever the arbitrators desire to examine them. A summons may be issued for the examination of a witness or production of documents. Failure to comply with the summons can result in the same penalties and punishments that would result as if the offence was committed against the courts.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
The Arbitration Act provides that an arbitrator may be removed by the Court on grounds of misconduct and also that an award may be set aside where the arbitrator has been guilty of misconduct. Courts have defined misconduct to include serious judicial errors.
No ethical codes or similar requirements, however, exist for counsel in the Arbitration Act.
In your country, are there any rules with respect to the confidentiality of arbitration proceedings?
There is no express provision on confidentiality under the Act.
How are the costs of arbitration proceedings estimated and allocated?
The Act provides that the cost of the reference and the award shall be within the arbitrator’s discretion who may decide the quantum and manner in which a party or the parties may bear such costs. (See Entry 8 of the First Schedule). Moreover, the Act also stipulates that the Court may determine the costs of an arbitration where anysuch question arises and where the award contains no adequate provision in this regard [See Section 38(3)]
Can pre- and post-award interest be included on the principal claim and costs incurred?
Section 29 of the Act provides:
“Interest on awards– Where and insofar as an award if for the payment of money, the Court may in the decree order interest, from the date of the decree at such rate as the Court deems reasonable, to be paid on the principal sum as adjusted by the award and confirmed by the decree.”
Under the jurisprudence laid down by domestic courts, there are two parts of the interest awarded by the arbitrator. The first is interest which is included in the total amount of the award and second is the interest for which the award debtor would be liable in case it does not pay the amount of the award as directed[See:University of Engineering and Technology v Messrs Moderate Builders (2001 MLD 233); Messrs Ibrahim Fibres Limited v Hameed Masoof (Pvt.) Limited (2006 YLR 1523)].
What legal requirements are there in your country for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?
Section 14 of the Arbitration Act provides that an arbitral award must be signed and filed with the competent court. Section 14(1) states that the arbitrators shall sign the award once they have made it and shall give notice in writing to the parties of the making and signing thereof. Under Section 14(2), the arbitrators shall cause the award or a signed copy of it to be filed with the court upon the request of any party to the arbitration agreement or at the direction of the court, and the court shall thereupon give notice to the parties of the filing of the award.
What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
It varies on a case-by-case basis. Generally, the expected timeframe for enforcement of a domestic award is 2-3 years.
Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
Different principles and procedures apply to the recognition and enforcement of local and foreign awards.
For local awards, section 14 of the Act provides that once the award has been made, the arbitrators must sign the award and notify the parties in writing of the making of the award. Further, the arbitrators shall, at the request of any party, cause the award or signed copy of it to be filed in the Civil Court. The Court shall then give notices to the parties of the filing of the award. The court shall then proceed to issue a judgment according to an award under section 17 of the Act provided that the following conditions are satisfied:
(a) The court sees no cause to remit the award or any of the matters referred to in arbitration for reconsideration to the arbitral tribunal;
(b) No application for setting aside the arbitral award has been made within 30 days of the service of notice of filing of the award; and
(c) If any application for setting aside the arbitral award has been made, it has been refused by the court.
After the court pronounces a judgment recognizing the award under Section 17 of the Arbitration Act, a decree shall follow and “no appeal shall lie from such decree except on the ground that it is in excess of, or no otherwise in accordance with, the award”.
For foreign awards, however, the High Court has jurisdiction over matters involving their enforcement. A party applying for recognition and enforcement of a foreign arbitral award under the Foreign Awards Act shall, at the time of the application, furnish the following documents to the High Court in accordance with Article IV of the New York Convention:
(a) Duly authenticated original award or a duly certified copy thereof;
(b) Original arbitration agreement or a duly certified copy thereof;
(c) Translation of the documents above, if required.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts
The Arbitration Act limits the grounds on which an award may be challenged. For a detailed analysis of these grounds, please refer to the answer to the following question.
Can arbitration awards be appealed or challenged in local courts? What are the grounds and procedure?
A party cannot appeal an arbitral award. Pursuant to the Arbitration Act, the party may seek three remedies against the arbitral award, which are as follows:
First, the court may order the modification or correction of an award under Section 15 of the Arbitration Act where:
(i) Part of the award rendered a decision on matters not referred to arbitration, is separable from the other parts of the award, and does not affect the decision of matters referred to arbitration;
(ii) The award is imperfect in form or contains obvious errors, which can be amended without affecting the decision; or
(iii) The award contains clerical mistakes or errors arising from an accidental slip or omission.
Second, the court may remit the award for the reconsideration of the arbitral tribunal under Section 16 of the Arbitration Act where:
(i) The award has not rendered a decision on a matter referred to arbitration;
(ii) The award has rendered a decision on a matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred;
(iii) The award is indefinite and incapable of execution; or
(iv) The objection to the legality of the award is apparent on the face of the award.
Third, the award can be set aside under Section 30 of the Arbitration Act on the grounds amongst others, “that an arbitrator has misconducted himself or the proceedings” or that “an arbitral award has been improperly procured or is otherwise invalid”.
The Supreme Court has held that a court while hearing objections against an award in proceedings under Section 30 of the Arbitration Act could not sit as a court of appeal against an award and interfere on the merits [See: President of Pakistan v Tasneem Hussain (2004 SCMR 590).
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
Yes. Parties, in their arbitration clause, can waive their right of appeal against an award.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
There is no precedent/case law on this issue.
In what instances can third parties or non-signatories be bound by an award? To what extent might a third party challenge the recognition of an award?
Third parties can neither take advantage of an arbitration agreement nor be bound by it. [See: Pakistan Real Estate Investment and Management Company (Pvt) Ltd v SohailA Khan (PLD 2018 Islamabad 115)
Have courts in your jurisdiction considered third party funding in connection with arbitration proceedings recently?
Although third party funding in connection with arbitration has not been considered/discussed by courts, the issue of agreements to finance legal proceedings by third parties was considered by the Lahore High Court in Muhammad Ramzan v Shamas–ud-din (2012 CLC 1541). Holding that such agreements are not unlawful per se, the Court held that
“Every agreement to finance litigation per se is not opposed to public policy rather there may be a case in which it would be in the furtherance of law, equity, justice and necessary to resist oppression… Such agreements are to be carefully scrutinized and when found to be unconscionable, unjust and inequitable, for improper object, against law, oppressive or leading to vexatious litigation, the same should be treated as against the public policy.”
Is emergency arbitrator relief available in your country? Is this frequently used?
There is no express provision on emergency arbitrator under the law. However, CIICA’s arbitration rules include provisions on an emergency arbitrator.
Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
The Center of International and Commercial Arbitration has promulgated its Expedited Arbitration Rules which provides for a simplified and expedited procedure for claims under USD $600,000. Nonetheless, given that the institution is still nascent, there is no evidence of this procedure being frequently used.
Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
CIICA being the only arbitral institution has organized conferences/events in which a wide range of issues including transparency have come up for discussion.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
There are no judgments in this regard and where parties do not consent to the appointment an arbitrator and where the arbitration agreement is silent as to the number of arbitrators, the courts often appoint a single arbitrator. No judgments have included an express intention to promote diversity with respect to the choice of arbitrators.
Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
Have there been any recent court decisions in your country considering the issue of corruption? What standard do local courts apply for proving of corruption? Which party bears the burden of proving corruption?
The issue of corruption was considered by the Supreme Court of Pakistan inMaulana Abdul Haque Baloch v Government of Balochistan (PLD 2013 SC 641) in which it was observed that parties may consider corruption a relevant factor in legal proceedings “to annul or rescind a contract, withdraw a concession or other similar instrument or take any other remedial action”
Have there been any recent court decisions in your country considering the definition and application of “public policy” in the context of enforcing or setting aside an arbitral award?
Yes. This issue was recently considered by the Lahore High Court in Orient Power Company (Private) Limited v Sui Northern Gas Pipeline Limited (PLD 2019 Lahore 607) where the Court held that:
“Accordingly, public policy under Article V(2)(b) of the Convention is kept fluid and adaptive and can be invoked in cases of patent illegality or matters which are fundamental for a State. We are of the opinion that the public policy exception allows a Contracting State to safeguard its core values and fundamental notions of morality and justice which may change over time. The public policy exception acts as a safeguard of fundamental notions of morality and justice, such that enforcement of a foreign award may offend these fundamentals. However, the Act requires the recognition and enforcement of foreign awards. In this way, the Act encourages parties to an alternate dispute resolution mechanism for quicker and less costly resolution of disputes. It makes the foreign arbitral award binding on the parties and prima facie as of right, calls for recognition and enforcement of foreign arbitral awards. Consequently, we find that the public policy exception should not become a back door to review the merits of a foreign arbitral award or to create grounds which are not available under Article V of the Convention as this would negate the obligation to recognize and enforce foreign arbitral awards. Such kind of interference would essentially nullify the need for arbitration clauses as parties will be encouraged to challenge foreign awards on the public policy ground knowing that there is room to have the Court set aside the award.”
Have there been any recent court decisions in your country considering the judgment of the Court of Justice of the European Union in Slovak Republic v Achmea BV (Case C-284/16) with respect to intra-European Union bilateral investment treaties or the Energy Charter Treaty? Are there any pending decisions?
There is no such judgment or a pending decision in this regard.
Have there are been any recent decisions in your country considering the General Court of the European Union’s decision Micula & Ors (Joined Cases T-624/15, T-694/15 and T-694.15), ECLI:EU:T:2019:423, dated 18 June 2019? Are there any pending decisions?
There is no such judgment or a pending decision in this regard.
What measures, if any, have arbitral institutions in your country taken in response to the COVID-19 pandemic?
In response to the Covid-19, with a view to facilitating the Micro, Small and Medium Sized Enterprises, CIICA offered a 40% discount on its administration fee for expedited arbitration and also raised the upper limit of the value of such disputes from USD 500,000 to USD 600,000.
In your country, does the insolvency of a party affect the enforceability of an arbitration agreement?
Regardless of the insolvency of a party, an arbitration agreement may still be enforced.
Is your country a Contracting Party to the Energy Charter Treaty? If so, has it expressed any specific views as to the current negotiations on the modernization of the Treaty?
No, Pakistan is not a signatory or a contracting party to the Energy Charter Treaty.
Have there been any recent developments in your jurisdiction with regard to disputes on climate change and/or human rights?
While courts have dilated upon climate change in human rights on multiple occasions, there have been no developments in this regard by arbitral tribunals.
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Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.