Establishing ADR and investor confidence in Pakistan

The role of the judiciary in promoting investor confidences through alternative dispute resolution (ADR) in Pakistan was the topic for the Chartered Institute of Arbitrators’ (CIArb) Pakistan Branch latest seminar. Held on 11 July 2022 at the Honourable Society of Gray’s Inn, the seminar was hosted by the Branch Chair Barrister Mian Sheraz Javaid and Vice Chair Nasir Khan MBE. It was sponsored by MK Consultus LLP, an energy, construction and infrastructure law firm.

Barrister Mian Sheraz opened by outlining the objectives of the seminar:

• To compare international arbitration practice between Pakistan and England.
• To focus on how strengthening ADR can improve inward investor confidence.
• To build an international arbitration community to deal with cases in ICSID, LCIA and other institutional arbitrations.
• To promote messages of judicial support for inward investment, to highlight the Commercial Court’s initiative and the Overseas Pakistani Courts initiative, and look forward to a new arbitration regime.

Statements of support

Speakers at the events included senior figures from the Pakistan judiciary, Pakistan government, UK ADR community and CIArb.

H.E Moazzam Ahmed Khan, Pakistan’s High Commissioner to the UK said that the foreign office is working on improving these relationships and extended their offer of support.

Lahore High Court’s Mr Justice Jawad Hassan said that Pakistan’s judiciary stands with international institutions and international obligations. He said Pakistan’s judges had come to London to take part in this seminar to send a message to the international financial and legal institutions that Pakistan’s judiciary and institutions respected international legal obligations.

He noted that London’s arbitration courts were seen as a success model across the world because the courts encouraged resolution of disputes outside of the courts to save time, money and efforts. Also, that foreign nationals and foreign cases were making their way to London because there was no interference of the executive in the legal jurisprudence.

Justice Jawad Hassan described how the establishment of arbitration courts in Pakistan has helped Pakistan economically. Remittances from overseas Pakistanis sent up until 2019 stood at about 19 billion Rupees but after the establishment of these courts they have now reached 32 billion Rupees.

For investor confidence to improve, he noted that international investors need guarantees and trust that their investments will be safe and that ADR and commercial courts for overseas Pakistanis provide solutions that will be instant and just.

Mr Justice Syed Mansoor Ali Shah, a Supreme Court of Pakistan judge, pointed out that due to the lack of ADR, Pakistan has suffered enormously at many levels. He shared that Pakistan’s superior courts have a backlog of around 2.2 million cases and there are only about 4,000 judges to deal with these cases, with more cases adding to the backlog. He said: “It is imperative to develop an alternative system. We need to move towards a smart and time effective and system of disputes resolution. ADR is crucial for growth, development and investment and to strengthen national institutions.”

For ADR to be established, training is essential. Justice Syed Mansoor Ali said that it’s a fact that judges and lawyers struggled to grasp the ADR rules and need more training and knowledge to understand this very important area which has gained importance internationally in various jurisdictions. He said: “Pakistan has to develop its own commercial centres. It’s about time we mainstream arbitration and mediation. We are turning out lawyers of adversarial mindsets; we need lawyers who are of pro-settlement mindset, it cannot be disputes all the time. We need to think about moving ahead, we need to have the most advanced version of meditation and arbitration, we need to have and adopt arbitration of international standards. We set up ADR courts in Punjab and we showed that another world is possible. It is imperative to develop an alternative system.”

Joining the London seminar virtually, the Federal Law Minister Azam Nazeer Tarar said the current coalition government was open to all kinds of assistance to the judiciary to take forward the reform agenda and to enhance the capacity of arbitration courts.

He said: “We will not only be amending the law if need be but will also provide other logistical support too.”

This was followed by a panel discussion with the speakers above and also Ben Giaretta C.Arb, Jonathan Wood FCIArb, Audley Sheppard QC, Dame Elizabeth Gloster, and Mohammad Zaman QC.

Pakistan Construction Dispute Report

Nasir Khan MBE, the last speaker, provided a briefing on Pakistan’s first construction dispute report (available at www.PCDR.pk). He explained the objectives of this report:

• To understand and identify the root causes and analysis of key factors disrupting Pakistan’s construction industry.
• To enable awareness about dispute avoidance and collaborative working.
• To support and identify appropriate strategies to mitigate and avoid disputes.
• To pave the way for appropriate legislation governing the construction industry and ADR mechanisms.
• To enable year-on-year comparison of industry performance by establishing benchmarked data through regular publication of this report.

Nasir shared key statistics from the report, including the following:

• 95% of projects had 1 or more disputes, with 11% of projects having more than 11 disputes.
• The value of disputes ranges from less than 1 million Rupees for 29% of the disputes to greater than 500 million Rupees for 8% of the disputes.
• The disputes that were of low value were largely resolved through negotiation with 58% of the disputes being resolved in less than one year.

The event showcased the commitment from Pakistan’s government, judiciary and private institutions to work together to improve investor confidence and update the laws relating to commercial and ADR.