In the next 12 months, Pakistan stands at a critical juncture, explains Mian Sheraz Javaid FCIArb, Chair of Ciarb Pakistan Branch. 

Pakistan's alternative dispute resolution (ADR) landscape has been significantly influenced by the introduction and implementation of recent Acts. The Alternative Dispute Resolution Act 2017 and the Punjab Alternate Dispute Resolution Act 2019 as amended in 2023 have provided a robust framework for the resolution of disputes outside the formal court system. The Khyber Pakhtunkhwa ADR Act further extended this framework to the Khyber Pakhtunkhwa province, ensuring inexpensive and expeditious justice. 

The incorporation of Section 89-A CPC, which empowers the court to refer parties to alternative dispute resolution methods, and Order IX CPC into the Code of Civil Procedure has been instrumental in integrating ADR methods into the formal legal system by outlining the procedures and consequences of non-appearance, thereby promoting accountability. Moreover, the Punjab Commercial Courts Ordinance 2021, which established Pakistan’s first Commercial Courts, includes a provision regarding ADR under Section 17. This provision states that any suit or appeal shall be referred to alternative dispute resolution in accordance with the provisions of Order IX B of the Civil Procedure Code. 

These legislative measures have collectively contributed to a more efficient and accessible justice system in Pakistan, reducing the burden of pending cases and paving the way for a modern and effective ADR ecosystem. However, these legislations, while empowering the courts to refer the dispute to some form of ADR, are still dependent on the parties’ consent and are not mandatory. This means that the effectiveness of ADR in Pakistan is still largely reliant on the willingness of the parties to engage in these methods. 

The Arbitration Act 2023 

In terms of arbitration, the Arbitration Act 1940 governs domestic arbitration, while the Enforcement of Foreign Awards Act 2011 provides the framework for the enforcement of foreign arbitral awards. These laws provide a legal basis for arbitration proceedings and the enforcement of arbitral awards in Pakistan. 

The Ciarb Pakistan Branch produced the first draft of a new Arbitration Act in 2023, which serves as an amendment to the pre-colonial Arbitration Act of 1940. The draft was designed to address the challenges of the existing legal framework and to promote the use of arbitration and other ADR mechanisms in Pakistan. It introduced several significant changes, such as deputing the District Court as the supervisory court instead of the Civil Court and allowing the direct enforcement of an award. 

The development of the new Arbitration Act was a collaborative effort involving various stakeholders. It involved discussions and consultations with legal practitioners, representatives from Pakistan’s judiciary and law committee, and international flag-bearers of best global practiceto produce the model law compliant Arbitration Act of 2024. 

This led to the constitution of a committee by the then Chief Justice of Pakistan, under the Chairmanship of the current Senior Puisne Judge of the Supreme Court of Pakistan, Honorable Mr Justice Syed Mansoor Ali Shah   The Branch’s draft was shared with the committee, who incorporated the majority of the amendments into a draft Act which will soon be tabled before the National Assembly of Pakistan for enactment. 

ADR centres 

Pakistan is strengthening its ADR landscape through a wave of capacity-building via delivery of Ciarb-accredited courses and other local courses on ADR. Seminars, memorandum of understanding with diverse stakeholders, and dispute events contribute to the ADR landscape. ADR Centres, such as the TCC ADR Centre and Pakistan Engineering Council ADR Centre are becoming common features, providing an alternative pathway to litigation. Recent judgments handed down reflect the shifting attitude towards ADR as a necessary component of Pakistan’s legal system. 

For example, the judgment given in A.M. Construction Company (Pvt) Ltd. v. Taisei Corporation marks a significant shift in the judicial attitude towards arbitration. It highlights the court's approach of minimal interference, and support for the arbitral process is a clear indication of a developing "pro-enforcement bias". This judgment signifies a paradigm shift in the perception of courts towards arbitration, emphasising their supportive role rather than a competitive or impeding one. 

Various businesses are incorporating arbitration and mediation in their commercial contracts to ensure efficient dispute resolution. To support change at the root level, prominent universities in Pakistan are integrating ADR into curricula to capitalise on its benefits. 

Mediation 

Recent judgments delivered by Senior Courts are a testament to the growing recognition of the value of mediation in the dispute resolution process. In 2023 SCMR 1856, Honorable Mr. Justice Syed Mansoor Ali Shah, the Senior Puisne Judge of the Supreme Court of Pakistan underscored the significance of pre-litigation opportunities for resolving disputes through routes such as mediation. The same judge has passed a judgment to encourage the use of mediation in the public sector in addition to the private sector. Additionally, mediation formed the resolution basis for a dispute which was pending for 42 years in Pakistan in the case of Morgah Valley v Netherlands Financierings Maatschappij FMO by the Honorable Mr. Justice Jawad Hassan. This was followed by the commendable action by the Honorable Mr. Justice Yousuf Ali Sayeed from the Sindh High Court who has issued judgment by referring disputes related to Rauf Textiles & Printing Mills (Private) Limited to mediation. 

Lastly, Honorable Mr. Justice Shahid Karim from the Lahore High Court has delivered a landmark judgment that has further bolstered the role of mediation in Pakistan’s legal system. His Order IX judgment reviewed the provisions of the Code of Civil Procedure (Punjab Amendment) Ordinance, 2021, and emphasised the importance of referring any suit or appeal to alternative dispute resolution. This judgment has not only brought dispute resolution into the mainstream, but also marked a significant step forward for commercial courts in Pakistan, reflecting the evolving mindset of judges in weaving ADR into Pakistan’s legal landscape. 

Modernisation of the legal framework and adoption of global best practice in dispute resolution means progress is being made and the future of private dispute resolution in Pakistan looks promising. 

Challenges and Opportunities: 

While the Arbitration Act 2024 is tabled with the National Assembly and nears ratification, the challenge lies in implementation. Many stakeholders, including legal professionals, businesses, and the general public, may not be fully aware of the provisions and implications of the new Act. 

Effective outreach and awareness campaigns are needed to ensure widespread understanding and compliance with the Act's requirements and benefits. Effective implementation requires a robust infrastructure of trained arbitrators, mediators, and other ADR practitioners. Capacity-building initiatives mandated by the Government must be undertaken to equip professionals with the necessary skills and expertise to handle disputes under the new legal framework. 

Pakistan is facing the challenge of a sparse pool of experts to effectively cater for the volume of disputes. An area which Ciarb, with its gold standard qualifications, is well placed to assist with. 

Pakistan faces a challenge in terms of adequate institutional support, which is essential for the administration of arbitration proceedings and enforcement of arbitral awards. This includes establishing and strengthening arbitration centres, appointing qualified personnel, and providing logistical and administrative support to ensure smooth operations. 

New ADR Centres in the country and the shifting judicial and Government attitude are positive steps forward. The judiciary plays a crucial role in supporting arbitration by enforcing agreements, providing interim measures, and recognising and enforcing arbitral awards. 

In addition to the current awareness campaigns, judicial training programs and awareness campaigns may be necessary to ensure that judges are well-equipped to handle arbitration-related matters effectively. 

China-Pakistan Economic Corridor 

The China-Pakistan Economic Corridor (CPEC) is a $100 billion infrastructure and development endeavor launched in April 2015 which aims to establish a modern-day “New Silk Road,” connecting China’s Xinjiang region to Pakistan’s Gwadar port. CPEC embodies the nation's aspirations for economic growth, regional connectivity, and global relevance. This monumental project encompasses a vast array of energy, power, and construction initiatives, which include coal-fired power plants, hydropower projects, wind farms, and solar parks. 

CPEC is seen as a game-changer project that will significantly enhance the general geopolitical structure of Asia and reshape the monetary perspective of states in the region. However, the sheer scale and complexity of these projects, coupled with the involvement of multiple stakeholders, inevitably indicates a rise in a multitude of potential disputes in the future. These could range from contractual disagreements, regulatory compliance matters, construction disputes and power disputes in addition to the issues related to land acquisition, environmental concerns, and labour disputes. Given the nature of CPEC as an international investment treaty, the main concern is how commercial and investment disputes will be resolved under the CPEC framework in the future. These considerations are crucial in understanding the dynamics of dispute resolution within the context of CPEC. 

The infrastructure and power projects under CPEC are executed under the International Federation of Consulting Engineers (FIDIC) Red Book and Silver Book. FIDIC envisages the International Chambers of Commerce (ICC) as the desired forum for dispute resolution. If so, this requirement creates a unique opportunity for international practitioners to engage in CPEC business, opening a pathway for procuring business opportunities in this billion-dollar project. 

Pakistan International Disputes Weekend (PIDW) took place in Karachi from 11 to 12 May 2024. Ciarb was proud to co-host PIDW24, organised by Ciarb Pakistan Branch. The event facilitated international practitioners to explore transnational dispute-related business opportunities, particularly for the China-Pakistan Economic Corridor (CPEC).  

Mian Sheraz Javaid FCIArb is Partner of MK Consultus LLP and works as a counsel, arbitrator, mediator and adjudicator. He is a dual qualified civil engineer and barrister with more than 20 years of experience in all aspects of construction litigation and contract drafting and negotiation. 

Sheraz is highly qualified in dealing with land development-related matters, with his core area of expertise being dispute avoidance with special emphasis on the role of Dispute Resolution Advisor (DRA) for commercial entities both in private and government sector. 
 
Sheraz is a Fellow of the Chartered Institute of Civil Engineering Surveyors, Fellow of Prime Dispute, Member of the Honorable society of Gray’s Inn, Member of Institute of Civil Engineers, Member of Pakistan Engineering Council (PEC), Member of Institution of Engineers Pakistan (IEP), member of Lahore Bar Association and Member of the Lahore High Court Bar Association. 
 
He is the founding Chair of the Chartered Institute of Arbitrators Pakistan Branch.