"ARBITRATION - PAKISTANimplementation especially at the international level and the enforcement of foreign award hasbeen a little complex. Being one of the consensual modes in resolving commercial disputesthe process of Arbitration is considered to be most advantageous in resolving cross-bordercommercial disputes. In the current segment of the dissertation we would discussion on theevolvement of the process of arbitration in Pakistan from its history till the recentdevelopments. This segment plays the foundation role as it explains the friendly nature ofArbitration from the prospects of one of the fast developing nations Pakistan – the nation indiscussion.I.I HISTORYFor understanding any concept it is very essential to have a brief knowledge on the Historyof that concept, thus from the dissertation point of view it is very essential to understand thehistory and evolution of arbitration process in Pakistan. The evolution of the process ofarbitration in Pakistan can be dated back to the same era as its evolution in India that is thepre-partition period, thus we briefly discuss the arbitration process in Pakistan before thepartition before discussing in detail the process of arbitration after the partition. The reasonfor discussing the process before partition is because the procedure of arbitration in Pakistaneven after many amendments still follows the pre-partition arbitration act of 1940.Pre-Partition Arbitration in Pakistan:The arbitration mechanism is understood to be one of the has been known to be an efficientform for administrating speedy and inexpensive means of justice, nevertheless this processcan be understood of not being a recent observable fact as it had evolved from the GreaterIndian civilization (includes both India and Pakistan) in form ofPanchayat Raj Systemwhere the parties that have been aggrieved due to a dispute approach the panchayat rajsystem for resolving these disputes, these tribunals consisted of wise men of the village who Page 16 ARBITRATION - PAKISTAN29 try to provide suggestions in resolving the dispute and reconcile the aggrieved party . Eventhough this was never a formal form of regulation for resolving the disputes it has beenpredicted in history that many disputes were resolved through ADR especially arbitration,mediation and conciliation process. Normally, either the King or the head of the PanchayatRaj involved for resolving the disputes between the aggrieved parties and gave their decision.The disputed parties were obliged to the conclusion of the Panchayat Raj mainly as a respectto the elders. Kula, Sreni and Gana were considered as the important platforms for resolving30 disputes in ancient India (before partition) . Many scriptures of the ancient India have givenenough proof on the significance and pervasiveness of the dispute resolution system in thenation. The proof of these scriptures provides explain the existence of this form of resolution31 system in the society.The Panchayat Raj System has been implementing the process of arbitration in differentfields such as civil offences, certain criminal offences, property, etc., with the aim to render32 justice and maintain rule of law in the society during the pre-independence period .However, a need was felt for more regulation in the domestic arbitration, thus resulting in the33 enforcement of „the Arbitration Act 1940, based on the English Arbitration Act 1940.Post-Partition Arbitration in Pakistan:As stated in above section Pakistan does have a historical connection with the arbitrationprocess through different platforms such as jirgas and panchayaths for resolving commercialdisputes. Certain set of tribal people in Pakistan opt to resolve their disputes through thisprocess by appointing a senior member as the arbitrator. While, this form cannot be compared29“Kinds of Arbitration”, online: Disputes Settlements Trust http://www.dst.org.in/kinds_of_arbitration.htm; 30Law Notes for Student, p.no. 1; http://lawnotesindia.blogspot.in/2012/02/arbitration-and-conciliation-adr.html;31Same as above32Panchayat in Pre-Independence Days, 1931, Young India; http://www.mkgandhi.org/panchayat_raj/preindependence_panchayats.htm; 33Goel Vijay & Jain Jitender, 2012,Indian Arbitration Law: A New Regime Begins; http://www.singhania.com/Publication/SCO- Indian%20Arbitration-Law-A-New-Regime-Begins.pdf;Page 17 ARBITRATION - PAKISTANwith the present modernized institutional arbitration, it just rectifies disbeliefs that Pakistanhas prejudice towards this ADR mechanism.Post the partition it can be observed that there had been many effective measures taken by thegovernment for enhancing the position of the arbitration procedure in the nation. Manymeasures such as providing this system a constitutional support were been taken. TheConstitution of Pakistan 1973 has effectively given the arbitration process in Pakistan a legalrecognition that is a legal process for resolving disputes. Additionally, there have been certainenactments laid for resolving disputes through the technique of arbitration such as the Co- operative Society Act, 1925, Electricity Act, 1910 etc., While India and Pakistan have been part of the British Empire, the 1937 Act that had beenimplemented in British India to give it the capacity of a signatory in the Geneva Conventionhad continued its existence even after the 197 partition. The independent Islamic statePakistan adhered to the existence of the Arbitration (Protocol and Convention) Act of 1937for dealing directly in the International Arbitration. Even though, Pakistan had been one ofthe signatories of NY arbitration convention in the year 1958, it was not until July 2005 thisact had been given the privilege of being part of the Pakistani law till the ordinance waspassed in this year.The two acts as stated under the research methodology that have been ruling the process ofarbitration in Pakistan are the AA, 1940 and the APC Act, 1937. These two acts have beengoverning the procedure of arbitration in this nation for a period of 60 years. The main34 features of the AA, 1940 were based on the English acts of 1889 and 1934. This Act aimedat providing three different classes of arbitration such as the arbitration process without the34Anees Jilani,Recognition and Enforcement of Foreign Arbitral Awards in Pakistan, International and Comparative Law Quarterly, Vol.37, No.4, p.no 27, 1998 Page 18 ARBITRATION - PAKISTANintervention of the courts, with intervention of courts in case there is no separate suitepending and arbitration in suits.Even though the AA, 1940 was propagated to regulate the domestic commercial disputes,nevertheless the inexact provisions made in both these acts with regards to the power and thejurisdiction of courts, the Pakistani courts have taken steps to adhere to the provisions ofthese acts by applying them on juxtaposition when deciding matters in relation to executionand enactment of the foreign arbitral awards and agreements. This approach of the Pakistanicourts has resulted in many procedural issues.However, with the promulgation of the NY convention through REFA ordinance in 2005,which paved way for many reforms and modern approach in the process of arbitration inPakistan. Thus, after a concise note on the history of existence of arbitration in Pakistan wemove ahead in discussion certain case laws that have been resolved through this mechanism.I.II CASE STUDYAs we understand that post the independence period the process of arbitration existed inPakistan based on two important Acts. It is with the help of these acts that the nation hasresolved many disputes, few of which would be discussed in the current section. The courtsin Pakistan viewed both the AA and APC as the applicable laws for the arbitration procedurein the nation. Courts applied the provisions of APC for enforcement of the foreign award ifthe said award satisfied the provision stated under section 2 of APC but in case the awardfailed to fulfill the provisions it was ruled under the AA as domestic award. The existence of35 this correlation between AA-APC was determined firstly in the Yangtze case where theprovisions of the case dealt with the implementation of foreign award that has been renderedby the English court. The SHC based on the given facts concluded that under the provisions35Messrs Barlas Bros. (Karachi) & Co. v Messrs Yangtz (London) Ltd1958 PLD WP Karachi 24 and 1959 PLD WP Karachi 423. Page 19 ARBITRATION - PAKISTANof section 46 of AA it brings the application of the AA provisions on arbitration to APCunless and until there have been any other enactments provided by the other laws or APC byother provisions restricts the application of the APC act for resolving the dispute.36 The other case in row would be the Cosmopolitan Case where the court clearly gives theAA the privilege of being applicable not only to the domestic awards but also the foreignawards by the force of section 47 of AA and also that under section 33 of AA the parties canmaintain the power in challenging the existence or legality of the foreign award. But thisobservation was overridden by the cosmopolitan court stating that section 47 had beenwrongly interpreted and when read with section 46 of AA it clearly states that the authority ofAA is limited only to foreign arbitral agreement and not the foreign award.The other case explaining the foreign arbitration agreement in Pakistan under the AA-APC37 regime is the Petroleum Case, under this case the scope of parties associated with foreignarbitration of two different states has been limited under section 2 of APC which emphasis byreferring to foreign arbitral agreement under the Geneva Protocol which is annexed to APCas first schedule. SHC in this case clarified confusion on the condition of the foreign awardstating that nothing in the definition of APC on foreign award implies to the condition thateither of the parties to the arbitration agreement of arbitration should not reside in Pakistan.This clarification gives a clear view that the provisions of APC are applicable to a foreignaward if both the parties are from Pakistan, but the intriguing question is what would be thecondition or rule if both the parties to the contract are not from Pakistan but do business inPakistan.In answer to the above question the SCP in the Hitachi Case stated that if both the parties tothe foreign agreement are not from Pakistan but have agreed to resolve their dispute under the36Cosmopolitan Development Company Ltd. V. Alfered C. ToepferInternational 1991 CLCKarachi 1087, especially para 7.37See note 20 Page 20 "