International Commercial Arbitration at Pakistan
Sure! Here's a detailed overview of International Commercial Arbitration in Pakistan:
International Commercial Arbitration in Pakistan
1. Legal Framework
Arbitration Act, 1940 (based on the British Arbitration Act 1937) is the primary domestic law governing arbitration in Pakistan.
The Act applies to both domestic and international commercial arbitration, but it is relatively old and less comprehensive compared to modern arbitration laws.
Pakistan is in the process of reforming arbitration laws to align more closely with the UNCITRAL Model Law, but currently the 1940 Act remains in force.
2. International Treaties
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)
Pakistan acceded in 2005.
This treaty facilitates the enforcement of foreign arbitral awards within Pakistan and Pakistani awards abroad.
ICSID Convention
Pakistan is a member of the International Centre for Settlement of Investment Disputes (ICSID), facilitating resolution of investment disputes.
3. Key Features
Party autonomy: Parties are free to select the seat, language, rules, and arbitrators.
Arbitral tribunal’s jurisdiction: Courts in Pakistan generally respect the competence-competence principle — arbitrators decide their own jurisdiction.
Limited judicial intervention: Courts can intervene for appointment of arbitrators, enforcement, setting aside of awards on limited grounds (fraud, public policy, etc.).
4. Arbitral Institutions in Pakistan
Pakistan has several arbitration centers and organizations supporting dispute resolution:
Pakistan Institute of Arbitration & Mediation (PIAM)
Karachi Centre for Dispute Resolution (KCDR)
Chambers of commerce in major cities (Karachi, Lahore, Islamabad) often provide arbitration services.
However, international disputes often opt for international institutions such as ICC, LCIA, SIAC, or others.
5. Enforcement of Arbitral Awards
Enforcement of both domestic and foreign arbitral awards is provided under:
Arbitration Act, 1940 (domestic awards)
New York Convention (foreign awards)
Pakistani courts generally enforce awards unless:
The arbitration agreement was invalid,
The party was not given proper notice,
Award conflicts with Pakistan’s public policy or laws.
6. Challenges and Developments
The Arbitration Act, 1940, is considered outdated and courts sometimes exhibit a pro-litigation stance.
Delays and inconsistent judicial intervention can hinder efficient arbitration.
Recent discussions and draft legislation aim to introduce a new arbitration law based on the UNCITRAL Model Law to improve the arbitration landscape.
Pakistan is actively promoting arbitration for dispute resolution, especially for commercial and investment disputes.
7. Summary Table
| Aspect | Details |
|---|---|
| Governing Law | Arbitration Act, 1940 (Old but still in force) |
| International Treaties | New York Convention (2005), ICSID Convention |
| Key Arbitration Centers | PIAM, KCDR, Chambers of Commerce |
| Enforcement of Awards | Under Arbitration Act and New York Convention |
| Judicial Role | Supportive but sometimes interventionist |
| Reform Status | Draft new law in progress to align with UNCITRAL Model Law |
8. Practical Tips for Arbitration in Pakistan
Arbitration Clause: Clearly specify seat, applicable law, and institutional rules.
Institution choice: For international contracts, consider international arbitration institutions for neutrality and efficiency.
Local counsel: Engage lawyers experienced in arbitration and local court practice.
Enforcement: Be prepared for some judicial scrutiny but rely on Pakistan’s New York Convention commitment.
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