Pakistan

Ashtar Ausaf Ali, Nida Aftab & Asad Rahim Khan

Ashtar Ali & Co.

Efficiency/integrity of process
Introduction
Pakistan is governed by a written constitution; that is to say, that the grundnorm (basic law)
is collated in a basic document called the Constitution of the Islamic Republic of Pakistan,
1973, as opposed to dispensations such as England and Israel, where there are no written
constitutions.1 The Constitution contains the most important rules relating to the State and
its organs. It organises the government and defines the powers of the organs of the State, i.e.
the legislature, the executive and the judiciary. The Constitution epitomises the fundamental
and paramount law of Pakistan, and all public powers, including the legislative powers to
make laws, emanate from it. James Madison described the dilemma of constitutionalism in
the following words: In framing a government which is to be administered by men, the great
difficulty lies in this: you must first enable the government to control the governed; and in the
next place oblige it to control itself.2 The Constitution of Pakistan seeks to achieve this ideal:
a government of laws, and not of men.
The Constitution has created a Federal Republic known as the Islamic Republic of Pakistan,
with the President as the head of the Federation, and the Prime Minister being elected by
the members of the National Assembly.3 Sovereignty is distributed amongst the centre and
the provinces. Each of the provinces has its own provincial parliament, and the provinces
are empowered to make laws pertaining to matters enumerated in the legislative list of the
Constitution. The Constitution (Eighteenth Amendment) Act, 2010 has altered the legislative
list, and has granted greater autonomy and control to the provinces. All residuary powers not
reserved exclusively for the Federation now fall within the domain of the provinces.
Article 4 of the Constitution embodies the doctrine of the rule of law.4 This Article confers a
right which is even more cardinal than the fundamental rights, as fundamental rights can be
suspended in the event of martial law or in a state of emergency, yet the rights under Article
4 cannot.5 This Article provides the back door to judicial access in times of emergency. The
doctrine of separation of powers is not a hallmark of the Constitution of Pakistan, however, the
Constitution deals with the legislature, the executive and the judiciary in separate parts and this
can be deemed as an implicit recognition of the concept of separation of powers.
Pakistani law is based on the common law of England and Wales, with an adversarial court
procedure and other common law practices such as the doctrine of precedent, also known as
the concept of stare decisis. However, recent activist tendencies exhibited by the superior
judiciary in Pakistan hint at a shift in favour of the inquisitorial process. At present, a mix of
the two prevails.
Independence and impartiality of the judiciary
In a Federal State, the impartiality of the judiciary stems from the logic of federalism.6 In the
Constitution of Pakistan, the independence of the judiciary has been expressly provided for.
The preamble to the Constitution declares that it is the responsibility of the State to secure the

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independence of the judiciary. This is also contained in the substantive part of the Constitution
in terms of Article 2A. Hence, the independence of the judiciary is one of the basic and most
intrinsic general principles of the Constitution.7 Article 175(3) of the Constitution also provides
for the independence of the judiciary from other organs of the State.
The case of Government of Sindh v. Sharaf Faridi8 is a definitive pronouncement of the
principles underlying the independence of the judiciary and what it essentially entails. It means
that every judge is free to decide a matter before him according to this understanding of the
facts and law without improper influences and pressures from any quarter, and that the judiciary
is independent of the executive and the legislature, and has jurisdiction directly or by way of
review, over all issues of a judicial nature.
It is also important to note that the principle of judicial independence is equally applicable
to the lower courts, and is not just limited to the superior courts. Article 175 envisages an
independent judiciary which includes the lower judiciary as well. The lower judiciary is a
part of the judicial hierarchy; its independence is to be equally secured as that of the superior
judiciary.9
In light of the above-noted provisions of the Constitution and various judgments delivered by
the superior courts of Pakistan, it becomes apparent that the judiciary is completely separated
from the other organs of the State, including the legislature and the executive.
Overview of court procedure
The law of civil procedure is contained in the Code of Civil Procedure, 1908 (hereinafter the
CPC). Its preamble states that it consolidates and amends the law relating to the procedure of
the courts of civil judicature. It is a law of general application and therefore cannot override the
express provisions of a special Act.10 However, if there is no express provision which excludes
the application of the provisions of the CPC, its provisions will apply to any proceedings of
a civil nature.11 Section 3 of the CPC provides that the District Court is subordinate to the
High Court, and every civil court of a grade inferior to that of a District Court, and every court
of small causes, is subordinate to the High Court and the District Court. The civil courts in
each province have been established under different statutes, titled the Civil Courts Ordinance
1962 (hereinafter the Ordinance). The Ordinance mainly lists the classes of courts to be
established for civil justice, along with detailing the operation of these courts. All civil courts
are subordinate to the High Court and subject to the general superintendence and control of
the High Court; the District Judge has control over all civil courts within the local limits of his
jurisdiction.12
(i) Bringing a claim
A suit is instituted by presentation of a plaint,13 which is a formal document containing the
claim of the plaintiff and the reliefs that he seeks for redressal of his grievances. Hence, the
plaint, so to speak, sets the law in motion for the purpose of enquiry into disputes of a civil
nature between two parties.
(ii) Parties to a suit
Order I of the CPC makes provisions for parties to suits. All persons may be joined in a suit
as plaintiffs, in whom any right to relief with respect to the same transaction or series of acts
or transactions is alleged to exist, whether jointly, severally or in the alternative, where if such
persons brought separate suits, any common question of law or fact would arise.14 However,
where it appears to the court that any joinder of plaintiffs is likely to delay and frustrate the trial
of the suit, the court may put the plaintiffs to their election, or order separate trials, or make
such other order as may be expedient.15
(iii) Procuring presence of the defendant
The next step after the presentation of the plaint is to procure the presence of the defendant,
and the mode of doing so is provided in Order V of the CPC. Section 27 of the CPC states
that where a suit has been duly instituted, a summons is issued to the defendant to appear and

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answer the claim. The defendant is then to file his defence in the form of a written statement
within a period of 30 days of the receipt of summons.16 However, the court may grant more
time to the defendant to file the same at its discretion. Under Order VIII, Rule 10 of the CPC,
the court may pronounce a judgment against a party if it fails to file the written statement within
the prescribed time period.
(iv) Pre-trial proceedings and Alternative Dispute Resolution
The main design and object of pre-trial proceedings is to ensure that there is expeditious and
economical disposal of the suit. This stage is thus pivotal, as it provides the parties with an
opportunity to gauge and assess the strength of their respective cases, and perhaps to narrow
down the grounds of conflict.
Methods of resolving disputes through channels other than conventional litigation have gained
wide acceptance and popularity across various jurisdictions. Most importantly, Alternative
Dispute Resolution (ADR) now forms an indispensable plank in the reform of the civil justice
system. In the year 2002, in recognition of the fact that the provision of ADR is a necessary
prerequisite for the improvement of the investment environment in Pakistan, reforms were
introduced in the CPC to incorporate ADR. Section 89A of the CPC is entitled Alternative
Dispute Resolution, and it authorises the court where it considers necessary for securing the
expeditious disposal of a case, to adopt ADR methods including mediation and conciliation,
with the consent of the parties. Order X, Rule 1A of the CPC, also makes reference to ADR.
Historically, the courts have had little role to play in the procurement of settlements, but now
they seem to have, under the dispensation of Section 89A of the CPC, a legal obligation to
encourage them, and the stage to do that is the pre-trial stage. A manifestation of this can be
found in Section 7(4) of the Muslim Family Laws Ordinance, 1961 and Section 10(3) of the
Family Courts Act, 1964 whereby an obligation has been placed on the judge hearing the matter
to try and effect reconciliation between the parties before proceeding to the stage of recording
evidence.
A detailed account of the law that governs arbitration and mediation in Pakistan has been provided
below under separate headings, yet it would be useful to make a handful of observations about
the overall effectiveness of ADR. Lord Denning famously said in his judgment in the seminal
case of Bremer v. South Indian Shipping Corporation,17 When I was young, a sandwich-man
wearing a top-hat used to parade outside these courts, proclaiming arbitrate, dont litigate. It
was very good advice, so long as arbitrations were conducted speedily. This statement stresses
the importance of ADR, while asserting that arbitrations serve no practical ends if they are not
conducted speedily. This precisely describes why the current ADR framework in Pakistan is
underdeveloped and at the stage of infancy. Despite the fact that Pakistan is a signatory to the
New York Convention and that legislation has been promulgated to make the ADR structure
more attractive to investors, nevertheless ADR in Pakistan has not yet become an expeditious
method for the resolution of commercial disputes. The high costs, and the entire process being
fraught with inordinate delays, render ADR an unattractive alternative to litigation. However,
there have been promising developments on the mediation front, as will be examined below.
(v) Framing of issues
Under Order XIV, Rule 1 of the CPC, the court has to frame issues on all disputed facts which
are necessary for the decision of the suit. Issues arise when a material proposition of fact
is affirmed by one party and denied by the other. Material propositions of fact are those
propositions which a plaintiff must allege in order to show that he has a right to sue, and which
a defendant must allege in order to constitute his defence.18
Articles 117-129 of the Qanun-e-Shahadat Order, 1984 (hereinafter the Qanun-e-Shahadat
Order) relate to the burden of proof. In civil cases, the court is required not only to frame
the issues of law and fact, but also to determine on which of the parties the burden to prove an
issue falls.

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(vi) Recording of evidence

The question of hearing arises when the parties are at issue on a question of fact or law. The
mode of taking and recording evidence is contained in Order XVIII of the CPC. The Qanun-e-
Shahadat Order provides a comprehensive code of general rules of evidence.
(vii) Judgment and decree
Section 33 of the CPC provides that, after the case has been heard, the court shall pronounce
its judgment, followed by a decree. Section 48 of the CPC provides that the judgment debtor
has six years from the date of pronouncement of the decree to go back to court and have the
decree executed.
(viii) Guidelines for improvement of the civil justice system
The civil process is sometimes referred to as inefficacious and tedious. The Judicial Policy,
2009 has sought to remedy these criticisms and has suggested that banking, tax, duty and such
similar cases should be dealt with in an expeditious manner, and should be disposed of within six
months. The Judicial Policy also provides that priority must be given to cases of a commercial
nature that relate to trade and investment for which special laws and special courts have been
established. An example of this is that banking matters go to Banking Courts under the Financial
Institutions (Recovery of Finances) Ordinance, 2001. It has been suggested that such cases
should be dealt with on a fast-track basis in order to improve the overall efficiency of the justice
system. The courts have been directed to dispose of frivolous cases at the earliest possible stage
in order to save the precious time of the court and to preserve the integrity of the system.

Enforcement of judgments/awards
Enforcement of foreign judgments
The expression foreign judgment means the judgment of a foreign court,19 and foreign
court means a court situated beyond the territorial limits of Pakistan, which has no authority in
Pakistan and is not established or continued by the Government of Pakistan.20
A party that has obtained a foreign judgment has the option of getting that judgment enforced
under Section 44A of the CPC. It provides that a certified copy of a foreign decree may be filed
in a District Court, and such a decree may be executed in Pakistan as if it had been passed by
that District Court. Section 44A, however, relates only to judgments/decrees that have been
passed by a superior court of the United Kingdom or the court of a reciprocating state. The
court shall presume, upon the production of a certified copy of a foreign judgment, that such
judgment was pronounced by a court of competent jurisdiction unless the contrary appears
on the record.21 Enforcement under Section 44A is subject to the exceptions listed in Section
13 of the CPC, which states that a foreign judgment operates as res judicata. It provides that
a foreign judgment would be conclusive in relation to any matter directly adjudicated upon
between the same parties, expect where: it has not been pronounced by a court of competent
jurisdiction; it has not been given on the merits of the case; it is against international law or
against the law of Pakistan in cases in which such law is applicable; the proceedings in which
the judgment was obtained are opposed to natural justice; it has been obtained by fraud; or it
sustains a claim founded on a breach of any law in force in Pakistan. It is, however, important
to note that the provisions of Section 44A do not apply to arbitration awards, even if such an
award is enforceable as a decree or judgment.
A foreign judgment can create obligations but, as a general rule, it is not executable by itself
except in circumstances enumerated in Section 44A. When the judgment has not been passed
by a superior court of the United Kingdom or of a reciprocating state, the only way of enforcing
it is to file a suit on the basis of the foreign judgment/decree, treating it as a cause of action
under Section 13 of the CPC. Again, Section 13 does not apply to foreign awards.
Sections 13, 14 and 44A of the CPC symbolise the deeply rooted principle of private international
law that a foreign judgment is recognisable on the principles of comity and reciprocity.

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Cross-border litigation
Enforcing freezing orders and pursuing asset-tracing claims
A freezing injunction can be sought before the commencement of proceedings, during the course
of proceedings, and after judgment has been obtained, to prevent the disposal of assets before
the judgment is enforced. Freezing orders can be granted by the court in respect of overseas
proceedings in certain limited circumstances. Freezing orders preserve assets for enforcement
purposes and also render assistance in asset-tracing claims, by ordering the party subject to the
freezing order to disclose the details of its assets.
In Pakistan, the enforcement of freezing orders passed by a foreign court would be governed
by the same principles that have been expounded above, under the heading of Enforcement
of judgments/awards. A freezing order is not executable by itself, and would not be binding
unless the courts in Pakistan are moved for its recognition and execution following the procedure
detailed above.

Privilege and disclosure

Disclosure and production of documents
Order VII Rule 14 of the CPC relates to the disclosure/production of documents on which the
plaintiff sues. This rule divides the plaintiffs documents in two different categories, namely:
the documents on which the party bases its claim or defence; and
the documents on which the party relies as evidence of his claim or defence.
The documents described in the first category must be produced with the plaint or the written
statement. If this is not done as prescribed by the Rule, then the plaintiffs cannot produce the
documents at a later stage except by way of obtaining leave of the court under Order VII, Rule
18.22 In case of the defendant, although he too is bound by the said provision and must produce
such documents with the written statement, no penalty has yet been provided in the event of his
non-compliance.23
The documents described in the second category have to be entered in a list which is to be annexed
with the plaint, irrespective of whether they are in the plaintiffs possession or not.24 If the
documents are in possession of the plaintiff, they should be filed along with the plaint, as per the
requirement in Order VII, Rule 14. If this is not the case, all such documents are to be produced
at the first date of hearing of the suit, as required under Order XIII, Rule 1. If the plaintiff later on
relies on a document that is not in his possession, he should specify the same in the list annexed.
These provisions are to be strictly complied with. Order VII, Rule 18 provides the penalty for
non-compliance with the requirements expounded above: it is that a document which should
have been produced with the plaint, or should have been entered in the list of reliance, but which
is not so produced or entered, cannot without leave of the court, be received on his behalf at the
date of hearing of the evidence. Nevertheless, the court is empowered to order production of
documents in the power and possession of a party at any time that the suit is pending adjudication.
An order of that nature will not be made as a matter of course. It should be governed by sound
judicial discretion, and keeping in mind the following facts: ability of the plaintiff to produce
the document at the proper stage; reasons for non-production being good or bad; nature and
authenticity of the document itself; and whether an intention of delaying the proceedings is the
cause of default of the plaintiff to produce the document at an earlier stage.25
The court may require any person present in court to give evidence or to produce a document,
then and there in his possession or power,26 and if the person so required is a party to the suit and
refuses to do so without lawful excuse, the court may pronounce judgment against him, or make
such order in relation to the suit as it thinks fit.27 The powers of the court in relation to ordering the
production of documents can extend to privileged documents in possession of the Government or
any third party. In such cases, privilege can only be claimed by filing an affidavit with the court.

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The court can deal with the document as it deems fit, unless validity of the cause is determined. In
some instances, however, a third party can refuse to disclose documents that are in his possession
for some other person.28
Access to court files and documents
All documents, evidence and court proceedings essentially form part of the public record by virtue
of Article 85(3) of the Qanun-e-Shahadat Order. The only exception to this is if the information
contained is privileged or confidential, disclosure of which is prohibited either by virtue of law or
by persons furnishing that information. Thus, in the ordinary course of events, all the information
provided to the court is available on record.
Lawyers ethics and conflicts of interest
Legal ethics comprise the chained relationship of the lawyer to his clients, to his professional
brethren, to the court and to the public. In Pakistan, the law that governs the professional ethics
of lawyers is contained in The Legal Practitioners and Bar Councils Act, 1973 and The Pakistan
Legal Practitioners and Bar Council Rules, 1976 made thereunder. Section 55 of the Act empowers
the Pakistan Bar Council to make rules that regulate the standard of professional conduct and
etiquette to be observed by advocates. The provisions as embodied in the canons of professional
conduct prescribed for the advocates are contained in Chapter VII of the Rules. These rules are
divided into four broad categories, namely: conduct with regard to other advocates; conduct with
regard to clients; conduct with regard to the court; and conduct with regard to the public. Further,
at Rule 175A, it is provided that any violation of the canons of professional conduct and etiquette
contained in Chapter VII by an advocate shall be deemed as professional misconduct, making him
liable for disciplinary action. Punishment for any such misconduct is detailed in Section 41 of the
Act, and it includes suspension of the advocate from practice for such period as may be deemed
fit, or removal of the advocate from the roll of advocates.
The most fundamental aspect of the conduct of lawyers in relation to their clients is that they
must avoid any conflict of interest with their client.29 Further, it is provided that a lawyer must
not accept professional employment adverse to a client, with reference to a matter in which he
has obtained confidential information from the client. At the time of accepting professional
employment, an advocate should disclose his relation, if any, with the adverse party. Further,
being an officer of law, an advocate is not expected to advise the violation of any law.
Client confidentiality and privilege
Trust is the hallmark of the lawyer-client relationship, and the overarching principle of attorney-
client privilege constitutes the very foundation of that trust and reliance. The principle of
confidentiality of client information is deeply entrenched in the canons of professional ethics of
lawyers. This principle protects the confidential communications between a client and his legal
adviser for the dominant purpose of legal advice.30
An evidentiary privilege is a rule of evidence that allows the holder of the privilege to refuse to
provide evidence about a certain matter, or to bar such evidence from being disclosed or used in
judicial proceedings. An exposition of this evidentiary privilege in Pakistan is found in Article 12
of the Qanun-e-Shahadat Order. It expressly provides that no-one shall be compelled to disclose
to the court any confidential communication which has taken place between him and his legal
adviser, unless the person communicating such evidence offers himself as a witness. In such an
instance, he can only be compelled to disclose any communication as may appear to the court
necessary in order to explain any evidence which he has given, but no other. The essence of
the principle of confidentiality is also contained in Article 9 of the Qanun-e-Shahadat Order. It
expounds that an advocate is obliged not to disclose any communication made to him by his
client, even if there are no legal proceedings pending or apprehended, but any communication in
furtherance of an illegal design is not protected, nor can this privilege extend to any fraud or crime
committed since the commencement of his employment as advocate.31 The object behind these
rules is to instill unrestricted and unbounded confidence in a persons professional agent, and that
the communication he so makes to him should be kept secret.32

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The Qanun-e-Shahadat Order also contains provisions detailing the disclosure of confidential
information. Article 6 of the Order prohibits any person from giving evidence derived from
unpublished official records relating to any affairs of the State, except with the permission of the
officer at the head of the concerned department. Article 7 of the Order relates to privileged official
communications, and it provides that no public officer can be made to disclose communications
made to him in official confidence when he considers that such disclosure would prejudice public
interests. Further, a magistrate or a police officer cannot be compelled to disclose the source of
information pertaining to an offence.33

Costs
Section 35 of the Code leaves it to the discretion of courts to award costs of and incidental to a suit,
subject to conditions and limitations set by the law. Costs awarded can be actual or compensatory.
Actual costs can be awarded to reimburse the expenses incurred by a successful litigant in the
assertion of his rights before the court. Compensatory costs, on the other hand, can be granted
under Section 35A of the Code, in a case of false or vexatious claim. Where costs are awarded
wrongly and beyond the limit prescribed, their payment may be exonerated. After withdrawal
of suit on the condition of payment of costs, a fresh suit on the same cause of action will not be
competent where default was made on payment. It is settled in law that a suit for recovery of
costs is not competent.34 In practice, the discretion granted under Sections 35 and 35A is rarely
exercised, and parties are made to bear their own costs of litigation.

Interim relief
Interim relief in Pakistan is regulated by the Code of Civil Procedure, 1908 but is granted at
the courts discretion. Section 151 of the Code relates to the courts inherent powers and its
explanation follows that the inherent powers have not been conferred by the Code, but are inherent
to the court by virtue of its duty to do justice between parties before it. It is under this section that
most applications for interim relief are made. This section can be pressed into service for securing
the ends of justice or preventing abuse of the process of court. Accordingly the court can grant
injunctions, vacate a mistaken order, order restitution, correct its own mistake, etc. However,
proceedings cannot be pursued under Section 151 where there are other remedies available for
securing redress. This inherent power is only to be exercised where there is no other provision or
procedure for providing redress or rectifying a clear injustice.
Rules under Order 39 specifically deal with injunctions and interlocutory orders in relation to
property and contracts. Injunctions granted under Rules 1 and 2 in the absence of the defendant
cannot ordinarily exceed 15 days. Where the injunction has been granted after hearing the parties
or after notice to the defendant, it will cease to have effect on expiration of six months unless
extended by court.

International arbitration
Introduction
Litigation remains the principal method for resolving disputes in Pakistan, primarily because the
Arbitration Act, 1940 (hereinafter the Act) has been viewed as involving inefficient and tedious
processes. However, introduction of new laws on the subject, albeit during subsistence of the Act,
have been viewed as a welcome advance.
Although arbitration finds no mention in the Constitution, it has been referred to in Section
89A of the Code. The said section grants the court power to resort to arbitration, conciliation
or mediation for the expeditious disposal of cases. The procedural framework for the exercise
of this power can be found in the Arbitration Act, 1940. However, certain special laws surpass
the jurisdiction of the court under the Act. These laws provide their own dispute-resolution
mechanisms and include: the Punjab Consumers Protection Act, 2005; Cooperative Societies Act,

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1925; Companies Ordinance, 1984; and Small Claims and Minor Offences Courts Ordinance,
2002.
Most of the law on domestic and international arbitral awards in Pakistan has developed under
the Arbitration (Protocol and Convention) Act 1937 and the 1940 Act. While the former has
been repealed by the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral
Awards) Act 2011 and is only applicable to foreign awards made before 14 July 2005, the latter
still holds sway.
Arbitration Act, 1940
The Act provides three schemes: a) arbitration without intervention of court; b) arbitration with
court intervention; and c) arbitration in a suit pending before court. A written agreement is a
prerequisite under the Act, although a formal document is not necessary. Terms and conditions
must be stated unequivocally, and in view thereof parties will not be allowed to get out of an
unfavourable agreement. Under the Act, parties agreeing to have their dispute resolved through
arbitration are bound to proceed to arbitration, even though such arbitration may be held abroad.35
The court has the power to appoint or remove arbitrators or umpires where, for instance: there is a
disagreement as to appointment; the arbitrator neglects or fails to fulfil his duty; in case of death of
the arbitrator; or in the event of misconduct by the arbitrator. Courts may also decline to enforce
the award where: there is a defect floating on the face of the awards; the award is beyond the scope
of reference; or it is in contradiction with well-settled legal principles.36 While the Act does not
specify the matters capable/incapable of resolution, it is settled law that matters of criminality or
public policy cannot be referred to arbitration.37
An award will acquire legal effect only when it is made a rule of court through the procedure
envisioned in the Act. It is the arbitrators responsibility to file the award in court upon direction
from any party to the arbitration, or from court. Thereafter, he must serve notice upon the parties
to inform them of filing. The primary object of notice is to enable the parties to file their objections
or to move the court for setting the award aside. An award not made a rule of court does not by
itself create or transfer any interest in property, and as such does not require registration. While
the arbitrator cannot give a second award, the court can direct the arbitrator to give award afresh.38
The Act has been criticised for involving highly technical proceedings that are time-consuming
and which defeat the purpose of choosing an informal mechanism for speedy disposal of
disputes. In light of the said difficulties, a Bill for a new consolidated arbitration law based on
the UNCITRAL Model Law was introduced in Parliament and is still pending before the National
Assembly. The Bill endeavours to introduce an all-encompassing law that incorporates domestic
arbitration, international commercial arbitration, recognition and enforcement of foreign arbitral
awards, and settlement of international investment disputes.
Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011
Pakistan, a party to the New York Convention (hereinafter the Convention), first gave effect
to the Convention with the promulgation of the Recognition and Enforcement (Arbitration
Agreements and Foreign Arbitral Awards) Ordinance, 2005 (hereinafter the REA Ordinance)
with a view to promoting foreign direct investment in the country. The REA Ordinance was later
presented before the National Assembly and promulgated as the Recognition and Enforcement
(Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (hereinafter the REA Act)
with a view to protecting foreign direct investment in the country.
All foreign awards and international arbitration agreements are subject matter for the REA Act.
The REA Act confers exclusive jurisdiction on the High Courts to adjudicate matters brought
in relation to it. This provision altogether eliminates the role of Civil Courts, expediting the
process by excluding a delay-ridden system. Section 4(2) of the REA Act limits the courts
power to carry on legal proceedings in matters covered by an arbitration agreement to cases
where the arbitration agreement is null and void, inoperative or incapable of being performed.
Recognition and enforcement of an award may only be refused on grounds provided in Article

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V of the Convention, i.e. when the Pakistani court determines that the arbitration tribunal lacked
jurisdiction, or that the arbitration agreement was invalid.39 For matters that fall within the ambit
of the REA Act, the Convention indicates the law of the country where the award was made as
the applicable law.
The REA Act leans heavily towards upholding the sanctity of an arbitration agreement, and leaves
little room to wriggle out of it.
The Arbitration (International Investment Disputes) Act 2011
The International Centre for the Settlement of Investment Disputes (ICSID) provides facilities
for conciliation and arbitration of investment disputes between contracting States and nationals
of other States, under the Convention for the Settlement of Investment Disputes (hereinafter the
SID Convention). The SID Convention was transposed into Pakistani law with the promulgation
of the Arbitration (International Investment Disputes) Act 2011 (hereinafter the AIIDA) in order
to secure foreign investments and bring transparency in the settlement of investment disputes.
The High Courts in Pakistan play a considerably important role in the recognition and enforcement
of awards granted under the SID Convention. Parties seeking recognition and enforcement of an
award must register it with the High Court. The award can be registered for pecuniary obligations
granted thereunder, and reasonable costs of and incidental to registration. It is significant to
note that if pecuniary obligations imposed under the award have been satisfied partly, then
registration will only relate to the part which remains unsatisfied. If the obligation has been
satisfied completely, the award is not liable to be registered.
Once an award is registered, it has the same force and effect as a judgment of the High Court for
the purposes of enforcement in respect of the pecuniary obligations imposed therein. However,
one important caveat lies in Section 5, which states that Sections 3 (Registration of Award) and 4
(Effect of Registration) will bind the Government, but not in a manner in which a judgment would
not be enforceable against the Government.
Although the AIIDA provides High Courts with significant discretion, by providing a clear
framework for enforcement, the law grants essential security to investors.
Foreign arbitral bodies
Pakistani courts also have experience in handling arbitral awards made under the Rules of
Arbitration of the International Chamber of Commerce. Awards are granted by an impartial
tribunal, which can be enforced pursuant to implementation of the New York Convention in the
country.

Mediation
Aside from mediation facilitated by a court under Section 89A of the Code, two important
institutions have also marked their place in Pakistan. With the support of the Sindh High Court
and financial backing from the International Finance Corporation (IFC)/World Bank Group, the
first reliable ADR institution was set up in Pakistan in 2007 in the form of the Karachi Centre for
Dispute Resolution (hereinafter the KCDR). The KCDR provides mediation services to a wide
array of clients including private parties and Government entities. The KCDRs primary objective
is to institutionalise ADR with the help of its accredited mediators. In 2012, a Memorandum of
Understanding was signed between the KCDR and the Karachi Chamber of Commerce with the
intention of providing members of Karachis business and industrial community with a forum to
resolve their disputes through ADR. All mediation proceedings before the KCDR are subject to
international standard rules and codes of ethics governing mediation.
In view of the success of KCDR, the Lahore Chamber of Commerce & Industry (hereinafter
the LCCI), in collaboration with International Finance Corporation, established the LCCI
Mediation Centre to provide mediation services to local and foreign companies in relation to
business disputes. The LCCI Mediation Centre offers its services through more than two dozen
accredited mediators enrolled with LCCI and trained by CEDR, a UK-based company.

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Ashtar Ali & Co. Pakistan

Endnotes
1. Justice Fazal Karim, Access to Justice in Pakistan, p1, (2003).
2. Federalist Paper No. 51.
3. Article 1 of the Constitution.
4. Manzoor Elahi case, PLD 1975 SC 66, 101.
5. Muhammad Munir CJ in his Commentary on the Constitution of Pakistan 1973, 1976 ed.
p82.
6. AG of Australia v. Reginam, (1957) 2All ER 45 (PC).
7. Al-Jehad Trust v. Federation, PLD 1996, SC 324.
8. PLD 1994 SC 105,107.
9. Government of Balochistan v. Aziizullah Memon, PLD 1993 SC 341.
10. Section 4 of the CPC; Maqsoodan Bibi v. Bhano, PLD 1965 WP Lah. 183,185.
11. Section 141 of the CPC.
12. Section 14 of the Ordinance.
13. Section 26 of the CPC.
14. Order I, Rule 1 of the CPC.
15. Order I, Rule 2 of the CPC.
16. Order VIII, Rule 1 of the CPC.
17. (1980) 1 All ER 420.
18. Order XIV, Rule 1(2) of the CPC.
19. Section 2(6) of the CPC.
20. Section 2(5) of the CPC.
21. Section 14 of the CPC.
22. Ali Akbar Khan v. Hassan Noor, PLD 1968 AJ&K 41.
23. Ibid.
24. Ibid.
25. Shabbir Ahmad v. UBL, PLD 1981 Kar. 596.
26. Order XVI, Rule 7 of the CPC.
27. Order XVI, Rule 20 of the CPC.
28. Article 14 of the Qanun-e-Shahadat Order.
29. Rule 148 of The Pakistan Legal Practitioners and Bar Council Rules, 1976.
30. Esso Australia Resources Ltd. v. The Commissioners of Taxation, (1999) 201 CLR 49.
31. 1993 CLC 747.
32. AIR 1954 Mad. 741 (745).
33. Article 8 of the Qanun-Shahadat Order.
34. 1990 MLD 587.
35. 1999 CLC 1320.
36. 2001 MLD 99.
37. Ali Muhammad et al v Basheer Ahmad, 1991 SCMR 1928.
38. PLD 1954 Lah 58.
39. Dallah Real Estate & Tourism Holding Co v Ministry of Religious Affairs, Government of
Pakistan 2008 EWHC 1901 (Comm).

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Ashtar Ali & Co. Pakistan

Ashtar Ausaf Ali

Tel: +92 423 5842914/ Email: info@ashtarali.com
Ashtar Ausaf Ali is the founding partner of the firm. He has served as the
Advocate General of Punjab twice, from 1998 to 1999, and 2012 to 2013. He has
also served as Prosecutor General of the province from October 2011 to January
2012, and as Advisor to the Prime Minister on Law and Human Rights.
Ashtar Ausaf Ali completed his BA from Forman Christian College in 1975, and
his LLB from Punjab University in 1980, where he also taught as adjunct lecturer
for international law from 1984 to 1988. He became a member of the Lahore
Bar Association in 1980, and was awarded an MCL from George Washington
University. He later enrolled as an Advocate of the High Court, and in 1995,
was admitted to the Supreme Court Bar. He is both a member of Phi Delta Phi
International Legal Fraternity and the American Arbitration Association.
In over 30 years of practice, Ashtar Ausaf Ali has advised on various landmark
transactions as well as represented clients in cases that have shaped the countrys
constitutional history. He focuses on complex commercial transactions and
constitutional litigation in the countrys superior courts.

Nida Aftab
Tel: +92 423 5834428/ Email: nida.aftab@ashtarali.com
Nida Aftab was awarded her LLB (Hons.) degree from the University of
London in 2010, with a world distinction in 2008. She went on to complete
her LLM from University College London in 2011, specialising in International
Business Law. Nida joined Ashtar Ali & Co. in 2012, and works in the litigation
department, where she focuses on civil procedural law, and commercial and
corporate litigation. She is a member of the Lahore Bar Association, the Punjab
Bar Council, and the visiting faculty at University College Lahore, where she
teaches commercial law.

Asad Rahim Khan

Tel: +92 423 5834428/ Email: asad.rahim@ashtarali.com
Asad Rahim Khan graduated from the London School of Economics with an LLB
(Hons.) in 2012, before being called to the bar at Lincolns Inn. While pursuing
his degree, he gained experience in private equity, mergers and acquisitions, and
corporate litigation working at Hogan Lovells LLP in London. After clerking for
Justices Mansoor Ali Shah, Ijaz-ul-Ahsan and Manzoor Malik, he joined Ashtar
Ali & Co. His areas of interest include commercial litigation, constitutional law,
and competition, besides having focused on energy, taxation, and election mat-
ters. He is a member of the Punjab Bar Council, and writes a weekly column
for The Express Tribune.

Ashtar Ali & Co.

91 Iftikhar Ali Sheikh Road, Garden Block, Garden Town, Lahore, Pakistan
Tel: +92 423 584 2914 / Fax: +92 423 584 1191 / URL: http://www.ashtarali.com

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