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Home Page > English Wichaar > Law of Arbitration and Pakistan

Law of Arbitration and Pakistan

Sarang Aamir

September 5th, 2017

 

 


 The purpose of the alternate dispute resolution (ADR) has always been to mitigate the issues that a claimant/defendant would otherwise face during the trial procedure. Court hearings are often long, tedious and exhaustive for the parties involved; this, coupled with the fact that there has been growth in the global economy and an exponential increase in inter-country commercial activities over the past few decades, has led to a shift towards using ADR as the primary method for resolving disputes (specifically commercial).  Another trend that has been observed is a rise in global activities of multinational corporations, something which has been a big factor in the development of this new outlook on dispute resolution.

Being one of the primary methods of ADR, arbitration is frequently used in the commercial world to resolve issues between disputing parties. Foreign investment disputes are primarily dealt with through arbitration, as are disputes related to activities of multinational corporations, etc. The parties to a dispute refer it to arbitration by one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), and agree to be bound by the arbitration decision (the "award"). A third party reviews the evidence in the case and imposes a decision that is legally binding on both sides and enforceable in the courts.

Arbitration has an ancient lineage and a rich heritage in the subcontinent in the shape of the panchayat system. The panchayat system continued to flourish even after the British had colonised the subcontinent. In fact, it was not until 1899 with the enactment of the Abitration Act that the law moved towards having some semblance to the system in place today. In 1908, a Code of Civil Procedure through its second schedule enacted provisions for arbitration, albeit only in respect of pending suits. Thus, there was a gradual approach to making arbitration part of the corpus of laws. Recommendations and suggestions were made most prominently by the Civil Justice Committee in 1925, to provide for a new and comprehensive Arbitration Act. However, it was not until 1940 that the appropriate Act was passed by the Indian Legislative Assembly.

This 1940 Act of Arbitration primarily governs arbitration law in Pakistan. The Civil Court, which is the competent court for suits, has jurisdiction to oversee arbitration. Small Claims Court can be involved under exceptions mentioned in section 21 of the Act. The Act provides for three classes of arbitration: arbitration in suits through court; arbitration where no suit is pending, but through a court; and arbitration without court intervention. The Act also contains further provisions common to all three types of arbitration. The 1940 Act paves way for extensive court intervention, so much so that this is one of the main criticisms of the statute. According to section 20, if a party to an arbitration agreement refuses to go to arbitration, the other party can seek intervention of the court to compel a reference to arbitration. Section 17 stipulates that an award cannot be enforced by itself; the judgement of the court has to be obtained in terms of the award. The court may pass judgement in terms of the award (section 17), modify or correct the award (section 15), remit the award for reconsideration by the arbitrator (section 16), or set aside the award (section 30). The statute, of course, specifies the situations where these powers may be used by the courts. In domestic arbitral awards, if the court sees no cause to remit or set aside the award, after the expiration of the time allowed for either party to apply for the award to be set aside, the court will proceed with judgment and issue a decree, which may only be appealed if it is in not in accordance with the award. The award given by an arbitrator or umpire is final and cannot be appealed except if there has been procedural irregularity.

 

 

 

 

Sarang Aamir is student of Law and can be reach at sarangaamirriaz@gmail.com

 

 

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