Supreme Court Justice Mansoor Ali Shah has expressed hope that the federal government will prioritize the nation’s larger economic interests and ensure the swift enactment of fresh arbitral legislation.
He also emphasized the significant economic benefits of arbitration as a cost-effective, efficient, and confidential means of resolving disputes.
“Arbitration alleviates the burden on national courts, enhances business productivity, and provides a faster resolution process, thereby minimizing disruptions to businesses,” observed Justice Shah in his judgment in a case related to the alleged fraudulent transfer of shares.
Both parties, before a three-judge bench headed by Justice Mansoor Ali Shah, and comprising Justice Irfan Saadat Khan and Justice Aqeel Ahmed Abbasi, agreed to resolve their matter through arbitration. The bench referred the dispute to arbitration. Since the parties could not agree on the name of an arbitrator, the bench proposed the name of Justice (R) Maqbool Baqar as the arbitrator, to which neither party raised any objection.
In his judgment, Justice Shah further observed that the ability to enforce international arbitration awards strengthens trade and commerce, while arbitration’s stable and predictable dispute resolution mechanism promotes investor confidence, making the country an attractive destination for foreign investment.
“These factors collectively foster a favorable business environment, drive economic growth, and enhance the country’s competitiveness on the global stage.”
“In this context, we are informed that a draft bill for a new Arbitration Act, prepared by the Law and Justice Commission of Pakistan, was submitted to the federal government through the Ministry of Law and Justice on May 2, 2024.”
“This draft bill aims to modernize the outdated arbitral dispute resolution framework, which has remained largely unchanged since 1940.”
Justice Shah directed the office to send a copy of the instant judgment to the Attorney General for Pakistan for onward correspondence and as a reminder to the concerned Ministry. The judgment further noted that in enforcing an arbitration agreement, the courts' role is not to preempt the jurisdiction of the arbitrators but to support the arbitral process and ensure that the parties adhere to their agreement.
“By prioritizing arbitration, courts uphold the principle of party autonomy and reinforce the parties’ choice to resolve their disputes outside traditional litigation.”
“This approach not only respects their agreement but also addresses the inefficiencies inherent in conventional judicial proceedings.”
Justice Shah recommended that courts adopt a resolute stance of non-interference, encouraging arbitration and other forms of alternative dispute resolution (ADR), such as mediation, as the preferred modes of resolving disputes.
“This judicial mindset is particularly vital for our country, where an overburdened judicial system and burgeoning case backlogs impose immense economic costs on both the judiciary and society.”
“By respecting arbitration agreements and fostering an environment conducive to swift dispute resolution, courts can play a pivotal role in alleviating this crisis.”
“Courts in Pakistan must therefore embrace this ethos, recognizing that promoting arbitration is not merely a legal necessity but also an economic and commercial imperative for ensuring the country’s progress and prosperity.”