International arbitration in Pakistan is governed by two primary legislative instruments: the Arbitration Act, 1940, which applies to domestic arbitrations, and the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, which pertains to foreign arbitrations. These laws are mandatory and ensure Pakistan’s compliance with international conventions such as the New York Convention, to which Pakistan is a signatory.
The Arbitration Act, 1940, and the Foreign Arbitral Awards Act, 2011, form the cornerstone of arbitration law in Pakistan. The former governs domestic arbitration, while the latter implements the New York Convention’s provisions into domestic law, facilitating the recognition and enforcement of foreign arbitral awards. Pakistan has ratified the New York Convention, with the reservation that it applies only to awards made in the territory of another contracting state. Additionally, Pakistan is a signatory to the ICSID Convention, further embedding international arbitration practices into its legal framework.
Comparison with UNCITRAL Model Law
Pakistan’s arbitration laws differ significantly from the UNCITRAL Model Law. Key distinctions include the allowance for two arbitrators and an umpire under the Arbitration Act, the courts’ power to remit matters back to the arbitral tribunal, and the broader grounds for setting aside an award, which include serious errors of law and apparent errors on the face of the record. Unlike the Model Law, the Arbitration Act does not provide arbitrators with the power to grant interim measures, leaving such authority to the courts.
Institutional and Procedural Aspects
Pakistan hosts the Center for International Investment and Commercial Arbitration (CIICA), which provides domestic arbitration and mediation services. Despite the availability of institutional support, there are no specialist arbitration courts in the country. The courts play a pivotal role in appointing arbitrators if parties fail to do so and can intervene in various procedural aspects, including granting interim measures and compelling witnesses to participate in arbitration proceedings.
Arbitration Agreements and Arbitrability
A valid arbitration agreement in Pakistan must be in writing and can cover present or future disputes. Arbitration clauses are considered separable from the main contract, and the courts generally uphold arbitration agreements unless the disputes fall into categories deemed non-arbitrable, such as criminal matters or issues involving public policy.
Challenges and Reforms
The arbitration landscape in Pakistan faces challenges, particularly regarding the alignment of its laws with international standards. The Arbitration and Conciliation Bill, pending since 2016, aims to modernize arbitration law by aligning it more closely with the UNCITRAL Model Law and repealing the outdated Arbitration Act, 1940. This reform is crucial for enhancing the efficacy and attractiveness of arbitration in Pakistan.
Recognition and Enforcement of Awards
For the recognition and enforcement of arbitral awards, both domestic and foreign, the award must be in writing, signed by the arbitrators, and filed in court. The process can take between three to six months, and courts will enforce an award if it is duly reasoned. Parties can challenge awards on grounds of misconduct or improper procurement, but the courts also have a duty to ensure the validity of the award independently.
Interim Measures and Court Intervention
Interim measures are within the exclusive domain of the courts, which can grant a range of orders to preserve parties’ rights pending the outcome of arbitration. Although the Arbitration Act does not specifically address anti-suit or anti-arbitration injunctions, such measures are available under the general scheme of the Specific Relief Act.
Future Directions
While Pakistan’s arbitration framework has a solid foundation, the pending Arbitration and Conciliation Bill highlights the need for continuous improvement and modernization. Aligning with international best practices, including the UNCITRAL Model Law, and addressing issues such as third-party funding and expedited procedures for smaller claims, will significantly bolster Pakistan’s arbitration regime.
In conclusion, while Pakistan’s current arbitration laws provide a functional framework for both domestic and international arbitration, ongoing reforms and alignment with global standards are essential for fostering a more robust and efficient arbitration environment