"ARBITRATION - PAKISTANwith the Protocol on the process of arbitration clauses, it is mainly relating to theinstitutions of legal proceedings in the matters of arbitration agreement and the secondschedule deals with the Convention for the execution of the foreign awards that havebeen implemented by Pakistan courts. For further consideration of these provisions itis essential to glance and acknowledge section 9 of this act which states the provisionsof this act are not applicable to those arbitration proceedings where the award isdeclared on those arbitration agreements that have been governed by the laws ofPakistan. The scope of this act is limited only to those matters that have beenconsidered commercial disputes under the laws of Pakistan. But this also limits theroom for flexibility or change accordingly. This limitation will affect the developmentof arbitration law if it is not adhering and making amendments as per the dailychanging needs of all people. Additionally, this act is also applicable as stated earlierto Geneva Protocol that is if it satisfies the provisions of the Pakistan regarding theapplication of the protocol (as far as Pakistan is concerned) only to all thosearbitration agreements that deal in commercial matters even though there has not beenany clear definition as to what is termed as „commercial.?The other important provision under this act is the approach of the courts in casesrelated to the enforcement of the foreign award and it is very essential to consider thesubject matter of the award and under section 4 of this act the award is applicable ifthe subject matter basically as if it were mostly made on the matters referred toarbitration in Pakistan that is the foreign award is in the same footing as a domesticaward and if this award survives the challenges it faces by the aggrieved party. Theother important provision is Section 7 of the act explaining the conditions for Page 31 ARBITRATION - PAKISTANenforcement of the foreign award as explained in the previous chapter of the57 dissertation.The Geneva convention and the protocol the 1937 act supported and recognized havelong since been superseded by the NY convention, but many scholars commented thatthe protocol and convention of Geneva were the first step towards internationalrecognition of foreign awards and agreements, thus based on this view it can beinterpreted that the 1937 act is also the first step taken by the Pakistan government for58 recognizing and enforcing the foreign award in the nation.From the above brief note it can be understood that the Pakistan Courts have not beensloppy in upholding and implementation of the foreign award in relation to its filingand enforcement. Thus, after understanding the APC act of 1937 we continue indiscussing the other important law that dealt with the implementation of domesticaward in Pakistan that is the AA of 194059 ? The Arbitration Act, 1940:This statue is considered to be the ready reference on arbitration law in Pakistan. ThisAct is a pre-partition enactment that is still in force in Pakistan till date. Even thoughit scope is limited to the enforcement of domestic award, this act is still considered asthe principle governing legislation on arbitration laws in Pakistan.This act provides balance between the arbitration proceedings and the proceedings ofthe court where the former is flexible, efficient and informal, while the later providesprotection, authenticity and support from the courts. This act is observed to be asimple piece of legislation where the parties to the contract are given the freedom toagree mutually upon the modalities of the arbitration mechanism.57Justice Nisar Saqib Main,International Arbitration in the Context of Globalization: A Pakistan Perspective, p.no. 1to 4;http://supremecourt.gov.pk/ijc/articles/8/2.pdf 58Redfern & Humter, er. Al., Law and Practice of International Commercial Arbitration, 4th ed., 2004 At para 1-14659http://www.ma-law.org.pk/pdflaw/Arbitration%20Act,%201940.pdf Page 32 ARBITRATION - PAKISTANConsidered as a simple piece of legislation this act plays a very vital role in all thearbitration proceedings conducted in Pakistan, but on the other hand this law has itsown limitations, it is applicable only when a comprehensive arbitration agreement ismade, this act does not provide any guidance on the process of arbitration proceedings60 in the absence of such agreements.The AA, 1940 being the consolidated law of arbitration in Pakistan it is divided intoseven chapters and four schedules. Of all the seven chapters, chapter 2, 3 and 4 whichexplain the three important classes of arbitration. The other chapters of act provide ageneral and introductory view of arbitration process in the nation. Chapter 5 of the actprovides a general overview over the enforcement of award. When the three abovestated chapter state the situations on enforcement of the arbitral agreement thischapter gives a general overview over award, its enforcement and the reasons to setaside it. It also provides brief note on the Jurisdictions on application of award andalso explain regarding the remuneration of arbitrator and also defines those provisions61 of the limitation act that are applicable under the Pakistan arbitration act.Chapter 6 of the act explains those orders that can be appealed under the provision ofthe act as explained in section 39 of the act. The section also explains that an ordercan be appealed only to extent that it is not exercised by the Small Cause Court andall that there shall be no second appeal shall be made on the order once the appeal is62 made under this section except at the Supreme Court.Below is a brief note on the main features of the AA, 1940. This act provides threearbitration classes such as:60Jamal Mujtaba, Yaldram Fareed & Hayat Sara,Arbitration World – Chapter Pakistan, 2012, P. no. 1;http://www.mjlalegal.com/uploads/1/7/8/7/17874169/pakistan_chapter_-_arbitration_world_-_2012.pdf 61The Arbitration Act, 1940; Chapter 5; Source: http://www.sja.gos.pk/Statutes/Miscellaneous/THE_ARBITRATION_ACT_1940.htm62Ibid Chapter 6 Page 33 ARBITRATION - PAKISTAN1. Arbitration mechanism without the intervention of the court: This class ofarbitration is explained under Chapter II, sections 3-19 of the act. Under theprovisions of this chapter it explains that the parties to the contract are free toresolve their commercial differences through the process of arbitration if suchclause is mentioned in the arbitration agreement that has been mutually agreedby the parties to the contract. Thus, it can be presumed that under this class theprocess of arbitration can be enforced by default when a commercialdifference arises between the parties to the contract, there is no requirementfor either party to approach the court and take permission for the63 implementation of arbitration process.2. Intervention of courts in the arbitration process when there is no suit pending:This class of arbitration is explained under Chapter 3, section 20 of the act,which states that under this class the provisions of section 20 are applicableonly under situations where the court has the option to intervene in thearbitration process when there is no suit pending except through courtproceedings. In other words, this class is applied mainly when the parties tocontract have concluded an arbitration proceedings and on the accrual ofdifferences when either of the parties have approached the court for enforcingthe arbitration agreement then the court has the authority to order the filing ofthe arbitration process and need the parties to either to refer their differencesto one or more arbitrators who have been appointed in accordance to thearbitration agreement. Thus, under this class of arbitration the parties approach64 court for enforcing their arbitration agreement.63Haji Abdul Rashid Arif v. Aziz Rehman and Others (2010 CLC Peshawar 1014)64Messrs James Construction Company (Pvt.) Ltd v. Province of Punjab (2002 PLD Supreme Court 310) Page 34 ARBITRATION - PAKISTAN3. Process of arbitration through courts in form of suit: This class is explainedunder Chapter IV, from sections 21-25. The provisions under this section statethat arbitration can be filed and an award can be executed through courtproceedings. This class is applicable under those arbitration situations wherethere is no arbitration agreement between the disputed parties to the contract,prior to or during the time of filing the suit. However, when there are suits?pending then it is to be agreed by all the parties that the court should referthese suits to the arbitration process.The AA of 1940 contains provisions that are commonly applicable to all the three classes ortypes of arbitration. The other important section to be discussed under this act is Section 31which states that the interested party to the contract can request the court to enforce orvalidate or contest an arbitration agreement or an award. Additionally, other importantsection is section 34 which gives the court the power to order filing of the arbitration or staythe legal proceedings, but this section is limited to the extent that it does not require the stayin legal proceedings in all those cases where the arbitration is concluded based on arbitration65 agreement.? The Arbitration Act Bill:The other provision implemented regarding the enforcement of the award is the AAbill that was propagated in Pakistan with a view to enhance an AA bill thatacts as aconsolidated bill dealing with laws relating to both foreign and domestic awards thatincludes the commercial and investment disputes as well. This proposal waswithdrawn shortly because it was problematic to read arbitration of foreigncommercial and investment as one consolidated statue. There was additional problemobserved in enacting the bill that is, the providing rules for domestic arbitration under65AA Chapter V, Section 26-38, Messrs Tradesmen International (Pvt.) Ltd. v. Federation of Pakistan (2005 MLD Karachi 541), para.(a) Page 35 "