Pakistan runs two arbitration systems: a 1940 statute for arbitrations seated at home, and a 2011 statute for foreign awards. Our research paper traces how 51 judgments have applied them, and what the Draft Arbitration Bill 2024 would change. This article summarises it.

Domestic arbitration: the Arbitration Act, 1940

The 1940 Act is court-supervised. It has no statutory rule of competence-competence, so questions about the tribunal's jurisdiction tend to go to the court (Karachi Dock Labour Board v. Quality Builders Ltd, PLD 2016 SC 121).

An award does not bind the parties until it is filed in court and made a rule of court. Filing by the arbitrator and the limitation for it were considered in Zhongxing Telecom Pakistan (Pvt) Ltd v. Imperial Electric Co (Pvt) Ltd (2026 CLD 642), and the time limit for making an award a rule of court in Sultan Mehmood Rana v. Naeem Ahmad (PLD 2025 Lahore 818).

Can the court look at an award even without objections?

Yes. Under section 17 the court may examine an award on its own for patent illegality, material irregularity or lack of jurisdiction (Capital Development Authority v. Habib Rafique (Pvt) Ltd, PLD 2026 Islamabad 85). That power is distinct from the grounds for setting aside under sections 30 and 33 (A. Qutubuddin Khan v. Chec Millwala Dredging Co, 2014 SCMR 1268). Bare objections under section 30(a) carry little weight (Injum Aqeel v. Latif Muhammad Chaudhry, 2023 SCMR 1361).

Misconduct, and how far the court will review an award

  • Misconduct must be proved; a dispute about the facts is not enough (Muhammad Ramzan v. ADJ Multan, 2005 SCMR 1542). It is read in its judicial sense (National Highway Authority v. Sambu Construction, 2023 SCMR 1103).
  • Patent illegality means an error apparent on the face of the award (Gerry's International v. Aeroflot, 2018 SCMR 662).
  • Where an award is defective but curable, the court may remit it rather than set it aside (Muhammad Farooq Shah v. Shakirullah, 2006 SCMR 1657).

Staying a suit because of an arbitration clause

Stay under section 34 is discretionary. In Kausar Rana Resources (Pvt) Ltd v. Qatar Lubricants Co WLL (2025 SCMR 517) the Supreme Court accepted a section 34 application and referred the dispute to arbitration, and courts have cautioned against bypassing a clause lightly (Mian Ahmed Akbar v. Al-Dahra Agriculture Co Pak (Pvt) Ltd, 2026 CLD 1029). The ingredients of a stay are set out in Yusuf Muhammad Siddiq v. Muhammad Rafique (PLD 2015 Sindh 319). A party who takes "other steps" in the suit may lose the right to a stay (Hajvairy Associates v. Power Construction Corporation of China, 2024 CLD 1507).

A petition to enforce an arbitration agreement where there is no award is incompetent (Petrosin CNG (Pvt) Ltd v. Mari Energies Ltd, 2026 CLD 517).

Foreign awards: the 2011 Act and the New York Convention

Under the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, the court must refer the parties to arbitration where there is a valid agreement, and may refuse to enforce a foreign award only on the grounds in Article V of the Convention.

  • Whether an award is foreign depends on the seat, not the governing law (Taisei Corporation v. A.M. Construction Co (Pvt) Ltd, 2024 SCMR 640).
  • Public policy is read narrowly, with a high standard of proof (Orient Power Co (Pvt) Ltd v. Sui Northern Gas Pipelines Ltd, 2021 SCMR 1728). The same case extended an arbitration clause to a later related agreement, applying commercial sense.
  • The enforcing court may not revisit the merits outside Article V (Hunaneng Fuyun Port, PLD 2026 Sindh 42). A non-speaking foreign award is not for that reason unenforceable (Nan Fung Textiles v. Sadiq Traders, PLD 1982 Karachi 619).
  • Enforcement was refused where there was no binding agreement (Virgoz Oils and Fats Pte Ltd v. Faisal Exports (Pvt) Ltd, PLD 2026 Sindh 75), and recognition where the tribunal mischaracterised the seat (SpaceCom International LLC v. Wateen Telecom Ltd, 2024 LHC 5494).
  • Section 6 of the 2011 Act, not the Companies Act 2017, governs where a foreign award is enforced (Touchstone Communication (Pvt) Ltd v. Farrukh Aslam, PLD 2026 Islamabad 189).
  • The 1940 Act's limitation rules do not apply to foreign awards (Cosco Shipping, PLD 2026 Sindh 58).

The older Supreme Court cases

Hub Power Co Ltd v. Pakistan WAPDA (PLD 2000 SC 841), a 3:2 decision, treated disputes involving allegations of corruption as non-arbitrable. Maulana Abdul Haq Baloch v. Government of Balochistan (PLD 2013 SC 641, the Reko Diq case) is difficult to reconcile with the principle that an arbitration clause is separable from the main contract.

What would the Draft Arbitration Bill 2024 change?

  • It would replace the 1940 Act for domestic arbitration with a structure based on the UNCITRAL Model Law: stay, competence-competence, interim measures by the tribunal, and an exhaustive definition of public policy.
  • It would distinguish international from domestic arbitration.
  • It would abolish even-numbered tribunals.
  • It would create an Arbitration Council for each High Court.
  • Awards would be enforceable without being made a rule of court.
  • A deposit would be required to challenge an award, save in exceptional circumstances.
  • Patent illegality would remain a ground for domestic awards, confined to the face of the award.

The Bill has not been enacted; its passage needs provincial resolutions under Articles 144 and 147 of the Constitution.

Practical checklist

  • In your contract, name the seat expressly and keep it separate from the place of hearings.
  • Under the 1940 Act, diarise the deadlines for filing the award and making it a rule of court.
  • Expect the court to examine a domestic award under section 17 even without objections.
  • Move promptly for a stay under section 34, and avoid any step that could count as taking part in the suit.

Read the full research paper

The full paper, with a summary of every judgment, is free to download:

📄 Download the full research paper (PDF)

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This article is general information on the law, not advice on your own case. Time limits can matter, so speak to an advocate promptly about your own matter.