Arbitration law refers to the procedure for settling disputes between two consenting parties. Disputes can be resolved through arbitration rather than going to court, which saves time and money. Arbitration aims to offer a fair platform for parties involved in commercial transactions and other related matters. Maintaining secrecy is essential, particularly when the parties want to safeguard their trade secrets and business interests. When conducting cross-border transactions involving international investment, neutrality in location, the law, and the arbitrators is seen by the parties as essential in resolving their disagreements. The neutrality of the arbitral tribunal handling the current dispute ensures that it is not subject to any direct national influence and that it remains loyal primarily to the parties.

Foreign investment is the most critical topic of arbitration Law services in the modern environment. Due to its reliable, trustworthy, and functional system, arbitration is a secure haven for settling international investment conflicts, particularly for foreign investors active in the global economy.

Arbitration Law Concept & Scope

Arbitration is a legal process outside of the courts that produces a binding decision. Arbitration is typically quicker, less costly, more informal, and private.

Parties are at liberty to discuss the ground rules under which they want the arbitration to take place, such as the number of arbitrators or if formal rules of evidence will apply, within the bounds permitted by legislation. The majority of contracts may include binding arbitration clauses, which stipulate that the parties must submit to binding arbitration rather than going to court if a disagreement occurs in connection with the agreement. In most cases, the parties split the expense of arbitration.

Arbitration Law Practice in Pakistan

Pakistan is a signatory to the New York Convention 1958 and the International Convention on Settlement of Investment Disputes. To establish and introduce these conventions into the law of the land, Parliament has passed two Acts, i.e.:

• Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011;
• Act to promote arbitration (International Investment Disputes), 2011.

The Courts of Pakistan can recognise and enforce awards under these Conventions as binding.

What is arbitration?

Arbitration is a dispute resolution process where a third party, an arbitrator, carries out an evidentiary hearing and/or written submissions submitted by the parties. When the evidence is taken into consideration, the arbitrator makes a legally binding decision, and that can be enforced just as a civil court judgment.

Arbitration, as opposed to mediation, is that once you go into the arbitration process, you are bound by the arbitrator’s decision. Mediation is a negotiation process where the negotiating parties are assisted by the mediator to settle on a solution that is acceptable to them.

How does arbitration work?

In most disputes, arbitration has several unique benefits over the court system. The fact that arbitration is a confidential strategy of resolving disputes implies that the parties may shape the arbitration process virtually the way they want to. As an example,  arbitration Law services parties may identify agreements on the number of witnesses each party will introduce, the parameters of the quantity and kind of evidence that will be presented, and the areas that the award of the arbitrator will address beforehand.

Since they are held by the consent of the parties, the hearings in arbitration are closed to the public, and all decisions made in the process are not of a public guideline.

What is high-low arbitration?

Under High-Low arbitration, a range is set at which the award should lie by the parties before the hearing. In case of the decision of the arbitrator to give between the high and the low figures, then that sum is the final award. But once there is an award above the predetermined maximum, it automatically shifts down to the high figure that had been agreed upon earlier. On the other hand, when the decision of the arbitrator falls below the set minimum, the award shifts to the pre-decided low point. Most of the time, the parties do not disclose the scope of their High-Low deal to the arbitrator.

Is arbitration final?

Arbitration awards are definitive and permissible on all concerned parties of the arbitration and cannot be appealed except under very restricted circumstances as established by statute. Awards can be authenticated in a court of jurisdiction and thereafter will have the same force and effect as a court order issued initially. 

Ultimate Role of Arbitration

The adaptation of arbitration as a method of resolving international trade issues has greatly improved following the escalation of international trade in the past few decades. The parties involved in a dispute should settle on the application of arbitration as a form of resolving their trade / commercial disputes. Nevertheless, arbitration is full of advantages compared to the common approach to the settlement of trade disputes in a lawsuit. Arbitration has several major benefits, which include:

• The processes are flexible; no jurisdictional problems exist; arbitrators are neutral; through procedural corporate skill, it is possible to appoint arbitrators; and the arbitration awards may be enforced by international treaties.
• In a case where the court order is usually liable to appeal by the superior courts of appeal, an arbitral award tends to be conclusive.
  

Organisations across the globe have realised the rise in popularity of international arbitration. A possible outcome is an increase in the number of arbitration centres to be developed to satisfy the requirements. The law has simplified the arbitration law and procedure and reacted by creating better national courts,

which has generally made it such that there is an appetite to introduce a people-friendly atmosphere of arbitration and that the parties have preconditioned responsibilities of settling disputes by arbitration. The local courts tend to interpret arbitration clauses broadly in such a way as to protect a wide range of disputes and will tend to complicate the appeal of arbitration awards in the courts.

In the case of an ad hoc arbitration, there is a plethora of various institutional arbitration entities, and there are also existing rules that are located globally. These can apply to international franchisees that are developed in Pakistan.

London Court of International Arbitration (LCIA) – 1892

London Court of International Arbitration (LCIA) -1892.

LCIA is among the most reputable international commercial dispute resolution institutions across the globe. LCIA offers effective, adaptable, and unbiased management of arbitration and other ADR cases, irrespective of geographical location and any legal system. The LCIA services are international, and this can be seen in the fact that in most of the pending cases in the LCIA, more than 80 per cent of the parties are not English nationals.

The LCIA can also call upon the most eminent and experienced arbitrators, mediators, and experts in most jurisdictions, as well as have the broadest possible array of expertise. The dispute resolution services of the LCIA are provided to all the contracting parties with no membership prerequisite.

This primarily concerns construction projects, real insurance transactions, and commodity contracts. It never demands an advance deposit like the ICC and collects interest for the parties on any amounts deposited with it.

Stockholm Chamber of Commerce (SCC) – 1917

Sweden has recently achieved a breakthrough in the international arbitration arena, and the SCC has its own rules that have been revised recently in order to facilitate the filing of transnational cases. Specifically, the parties can now more readily decide in which system of law a dispute should be subject to and apply the rules in cases being heard outside Sweden. Disputes of maritime interest, sales contracts, licensing and construction projects are specific to the SCC.

It is especially common in East / West conflicts between trade organisations in Russia and Germany, Poland and Hungary on the one side and the UK, the US, Italy and France on the other. Western European corporations, and later on the Chinese trade organisations, tend to have arbitration clauses in their contracts to refer the dispute to the SCC.

Since 1917, the SCC has been a member of the Stockholm Chamber of Commerce and, therefore, has gained a lot of experience in the field of dispute resolution over almost 100 years. It is in this period that the SCC has grown to be one of the best institutions in the world in matters of East-West related disputes and is currently the global centre in dispute settlement where parties representing up to 40 countries prefer to have their disputes resolved annually.

International Chamber of Commerce (ICC) – 1923

The ICC Arbitration is a guarantee of the highest quality of service. This is because it is presented by an established institution and a process that has been established and esteemed to be the international dispute resolution standard. Whether it is a simple contract concerning sale-related issues or intellectual property, joint ventures, share buy-backs or a state-funded construction project, ICC will be able to help with the dispute of any magnitude.

The ICC deals with cases founded on all legal systems, such as the civil law, common law and Islamic law. It resorts to the ICC Rules of Conciliation and arbitration Law services in its conflicts. According to the ICC Rules, in the event that an arbitrator has jurisdiction over specific questions of law, and the parties did not identify a governing law in relation to the questions, or an arbitration centre, the arbitrator will identify the prevailing law and the arbitration centre.

American Arbitration Association (AAA) – 1926

As a rule, AAA cases are settled prematurely and even before the arbitrator renders his decision, half of them are not associated with any arbitrator compensation. The members of the AAA panels are not only renowned judges but also legal and corporate community leaders, who have industry knowledge and expertise. Codes of Ethics have to be followed by arbitrators created by the AAA and the American Bar Association (ABA).

Choices Expert Panels are Aerospace, Aviation, and National Security; Construction, Cybersecurity, Employment, Energy, Healthcare, Intellectual Property, Judicial, Labour and Large and Complex Cases. The AAA has put in place the best practices, policies, technologies, and procedures that are aimed at assisting in the protection of the case data stored and managed within the AAA technology infrastructure. Though the AAA is yet to grow large enough to handle many complex international cases at this time, it is expected to be capable of dealing with most of the franchise cases.

International Centre for Settlement of Investment Disputes (ICSID) – 1966

ICSID is the international investment dispute settlement institution that is the leading institution in the world. It is widely experienced in the field, having adjudicated most of the international investment cases. In most international investment agreements and in many investment laws and contracts, States have settled investor-State dispute settlement at ICSID.

ICSID offers conciliation, arbitration, or fact-finding in settling disputes. The ICSID procedure is developed to consider the peculiar features of the international investment disputes and the parties to it in a strict balance between the interests of the investors and host States. An independent Conciliation Commission or Arbitral Tribunal is considered in each case, having heard the evidence and legal submissions of the parties. Each case is assigned a special ICSID case team that offers expert support to the case. ICSID has so far administered more than 600 such cases.

Centre for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (CAM CCBC) – 1979

The application of arbitration as a suitable approach to resolving a conflict is increasing with each passing year, where the involved parties establish an unbiased third party that is not bound by the necessity to interpret and evaluate the conflict. The parties can also clarify an institution so as to facilitate the administration of the proceeding by cost and document administration, which centres like the CAM-CCBC offer.

One more significant measure in Brazil was the adoption of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Decisions of 1958 (so-called New York Convention). It is regarded as the most significant multilateral treaty on International Arbitration, and it has been signed by over 150 nations.

Brazil became a signatory to the convention in 2002, and by doing this, the international community recognised that the country was favourable to the use of arbitration as an effective mode of resolving international conflicts.

Hong Kong International Arbitration Centre – 1985

According to Queen Mary University of London and White & Case 2018 International Arbitration Survey, Hong Kong has placed in the top five ranking of arbitration seats across the globe. HKIAC is a non-profit organisation that was started in 1985 and is independent. The HKIAC was practically the first arbitration in the region. There is no regional organisation that has been operating as long and as successfully.

GAR Guide to Regional Arbitration 2018. HKIAC is a single centre that deals with arbitration, mediation, adjudication, and domain name cases. HKIAC is at the forefront of the development of innovations in arbitration practices. It has many GAR awards and nominations for the best innovation.

The Secretariat based in Hong Kong, Shanghai, and Seoul has people with a wide range of backgrounds, such as nationals of Hong Kong, New Zealand, Morocco, mainland China, Singapore, Germany, Australi, and Canada. The members of the secretariat are those qualified in the civil and common law jurisdiction and speak 10 languages. The tribunal secretary may be appointed as a member of the Secretariat according to the detailed information concerning the tribunal secretaries’ usage presented by HKIAC.

Singapore International Arbitration Centre – 1991

Over the years of its successful operation since it was founded in 1991 as an independent, not-for-profit organisation, SIAC has managed to build a track record in offering the best-in-class arbitration Law services to the global business fraternity. In other jurisdictions such as Australia, China, Hong Kong SAR, India, Indonesia, Jordan, Thailand, the UK, the USA, and Vietnam, among other signatories to the New York Convention, SIAC arbitration awards have been enforced. SIAC is an international arbitral organisation offering parties worldwide limited-cost and efficient services in the management of cases.

The key roles of the Court are the appointment of arbitrators and the general control of the administration of cases at SIAC. SIAC boasts of a diverse international panel of more than 400 skilled arbitrators based in more than 40 jurisdictions. The appointments are done due to our expert knowledge of the expertise, experience, and track record of an arbitrator. The panel of SIAC has more than 100 grouped arbitrators in the fields of Energy, Engineering, Procurement,t and Construction of more than 25 jurisdictions.

WIPO Arbitration & Mediation Centre – 1994

The WIPO Arbitration and Mediation Centre is located in Geneva, Switzerland, and has an additional office in Singapore; the centre was established in 1994 to provide the possibility of Alternative Dispute Resolution (ADR) of international business disputes between private parties.

The procedures of arbitration, mediation, and expert determination provided by the Centre, developed by the foremost professionals in the field of cross-border dispute settlement have well known to be especially suitable for technology and entertainment cases, as well as other disputes that touch on intellectual property. The Centre has been based in Singapore since 2010, at Maxwell Chambers.

The WIPO Arbitration and Mediation Centre is an international and non-profit neutral dispute resolution provider that provides alternative dispute resolution (ADR) options to disputes that are time and cost-efficient. WIPO mediation, arbitration, expedited arbitration, and expert determination allow the parties to resolve their domestic or cross-border IP and technology disputes outside the court efficiently. The WIPO Centre also takes the lead in the world in terms of domain name dispute resolution services under WIPO developed UDRP.

Dubai International Arbitration Centre – 1994

The Dubai International Arbitration Centre (DIAC) is a non-profit making institution, permanent and autonomous, which offers the local and international business communities with high quality arbitration services and facilities at an affordable cost.

By using the associate membership of DIAC, the members could expand their experience and knowledge in international commercial arbitration Law services through undertaking seminars, training workshops, and international conferences.

Its services involve management of arbitration proceedings and business disputes, appointing of arbitrators, selecting where the arbitration will take place, and setting the price of arbitrators and mediators.

The other Regional Arbitration Centres are also present in nearly every country, and the parties are allowed to select them in accordance with their convenience and receive the settlement in the form of an Award.

SARDAR KHAN & CO assists clients in settling domestic and international disputes and enforcing awards in Pakistan.