Repeating the past: the new Arbitration Bill, 2024

The Arbitration Bill 2024 marks a significant step toward modernizing Pakistan’s arbitration framework, but several critical issues remain unresolved.While the Bill is designed to replace the outdated Arbitration Act of 1940, aligning Pakistan’s laws with international best practices, it still faces several ambiguities that could undermine its effectiveness.The Bill broadens its applicability to both domestic and international arbitration. It mandates that courts refer matters to arbitration even when the parties have agreed on a foreign venue. These steps align with the UNCITRAL Model Law and the New York Convention, promoting consistency in arbitration procedures and reducing unnecessary judicial intervention.Notably, the Bill also supports party autonomy, allowing stakeholders to determine the seat, governing laws, language, and procedural rules. Institutional arbitration is encouraged to ensure greater reliability, and emergency arbitration is recognized, further improving the arbitration process.However, the Bill still contains significant flaws that could hamper the transition to a more efficient arbitration system.•One of the most pressing concerns is the tension between judicial and executive powers. The Bill grants the judiciary extensive control over arbitration, raising questions about who should ultimately oversee the system. This power imbalance could lead to inefficiencies in the long run.• The Bill lacks clear guidance on its applicability to ongoing arbitrations under the Arbitration Act of 1940, unless agreed otherwise by the parties, hindering a smooth transition. This oversight perpetuates the inefficiencies of the old system, preventing a full shift toward the new arbitration framework.•Another critical issue is the Bill’s failure to address the overlap with other federal laws governing arbitration, such as the Alternative Dispute Resolution Act (ADR) 2017 and its accompanying rules. For example, the eligibility criteria for arbitrators in the ADR Act differ from those outlined in the Bill, leading to potential confusion and inconsistencies in arbitrator selection. This overlap needs to be resolved to ensure legal clarity and consistency.•In cases where parties cannot agree on procedural rules, the Bill defaults to the Civil Procedure Code (CPC) of 1908 and the Qanun-e-Shahadat Order of 1984. This imports litigation-style formalities into arbitration, undermining the key benefits of efficiency and flexibility that arbitration offers. The Bill also fails to establish clear timelines for emergency arbitration and the mandatory disclosure of conflicts of interest, potentially leading to delays.•One of the significant concerns with the Arbitration Bill 2024 is its potential interaction with the Limitation Act of 1908, which could delay arbitration proceedings. Under the current framework, the Limitation Act applies to arbitration matters unless otherwise specified. This means that procedural timelines could be extended by up to three years, as permitted under the Limitation Act, for all procedural steps for which no timeframe is defined, causing unnecessary delays at each stage of the arbitration process. Given that one of the core advantages of arbitration is its ability to resolve disputes efficiently and within a set timeframe, the application of the Limitation Act could undermine this fundamental benefit. To address this issue, the Bill should include explicit provisions that limit the impact of the Limitation Act on arbitration, ensuring that arbitration procedures remain swift and free from the delays typically associated with litigation. This could involve establishing shorter, more defined timelines for arbitration proceedings to maintain efficiency and prevent prolonged delays.• While the Bill excludes matters that contravene public policy, it does not provide a clear definition of what constitutes “public policy.” This lack of clarity could lead to inconsistent judicial decisions. Furthermore, the Bill fails to explicitly identify non-arbitrable matters, leaving room for ambiguity.•Despite efforts to reduce judicial interference, some provisions in the Bill still increase court involvement, potentially undermining the autonomy of the arbitration process. There is also no provision for incorporating settlement agreements into arbitral awards, which is a common practice in international arbitration. Additionally, the Bill lacks a clear procedure for determining arbitrators’ fees, anonymizing sensitive information, and enforcing interim awards, further complicating the process.• The Bill does not address the growing role of technology in arbitration, such as online dispute resolution (ODR) platforms or artificial intelligence (AI). Incorporating these technologies would enhance the efficiency, accessibility, and appeal of arbitration, making it more attractive to both domestic and international parties.• Annex A of the Bill proposes the creation of an Arbitration Court, which would centralize the arbitration system within the judiciary. Given the already strained capacity of Pakistan’s courts, this proposal could exacerbate the judicial backlog and stifle the growth of institutional arbitration.To address these issues, the following improvements are recommended:The Bill should apply retrospectively as a procedural law to resolve inefficiencies in ongoing arbitrations under the 1940 Act. This would allow for a smoother transition and eliminate disparities between old and new arbitration processes.The Bill should explicitly exclude arbitration from the scope of the ADR Act or assert its supremacy in arbitration-related matters to eliminate legal overlap.Institutional arbitration should be mandated as the default mechanism when parties fail to agree on procedural and evidentiary rules. This would ensure consistency, reduce judicial involvement, and enhance the credibility of the arbitration process.The Bill should include provisions for expedited arbitration, specifying reduced timelines, streamlined procedures, and safeguards to ensure fairness. The framework for emergency arbitrators should also be introduced, including their powers and the enforceability of interim orders.To limit court intervention, the Bill should specify clear grounds for non-enforcement of arbitration agreements, as prescribed by the New York Convention. Additionally, it should include thresholds for court intervention in granting interim measures and clarify the procedures for multi-party arbitration appointments.The Bill should address the integration of technology into arbitration proceedings, including provisions for ODR platforms and the ethical use of AI to improve efficiency and accessibility.The Bill should foster a diverse pool of arbitration professionals, moving beyond the current trend of appointing retired judges as arbitrators. This would encourage innovation, specialization, and increased efficiency in the arbitration process.While the Arbitration Bill 2024 represents a significant step forward for Pakistan’s arbitration framework, it requires careful revision to address the existing ambiguities and procedural flaws. By making the recommended changes, Pakistan can establish a more efficient, transparent, and globally competitive arbitration system.Copyright Business Recorder, 2025

The Arbitration Bill 2024 marks a significant step toward modernizing Pakistan’s arbitration framework, but several critical issues remain unresolved. While the Bill is designed to replace the outdated Arbitration Act of 1940, aligning Pakistan’s laws with international best practices, it still faces several ambiguities that could undermine its effectiveness. The Bill broadens its applicability to both domestic and international arbitration.

It mandates that courts refer matters to arbitration even when the parties have agreed on a foreign venue. These steps align with the UNCITRAL Model Law and the New York Convention, promoting consistency in arbitration procedures and reducing unnecessary judicial intervention. Notably, the Bill also supports party autonomy, allowing stakeholders to determine the seat, governing laws, language, and procedural rules.

Institutional arbitration is encouraged to ensure greater reliability, and emergency arbitration is recognized, further improving the arbitration process. However, the Bill still contains significant flaws that could hamper the transition to a more efficient arbitration system. •One of the most pressing concerns is the tension between judicial and executive powers.

The Bill grants the judiciary extensive control over arbitration, raising questions about who should ultimately oversee the system. This power imbalance could lead to inefficiencies in the long run. • The Bill lacks clear guidance on its applicability to ongoing arbitrations under the Arbitration Act of 1940, unless agreed otherwise by the parties, hindering a smooth transition.

This oversight perpetuates the inefficiencies of the old system, preventing a full shift toward the new arbitration framework. •Another critical issue is the Bill’s failure to address the overlap with other federal laws governing arbitration, such as the Alternative Dispute Resolution Act (ADR) 2017 and its accompanying rules. For example, the eligibility criteria for arbitrators in the ADR Act differ from those outlined in the Bill, leading to potential confusion and inconsistencies in arbitrator selection.

This overlap needs to be resolved to ensure legal clarity and consistency. •In cases where parties cannot agree on procedural rules, the Bill defaults to the Civil Procedure Code (CPC) of 1908 and the Qanun-e-Shahadat Order of 1984. This imports litigation-style formalities into arbitration, undermining the key benefits of efficiency and flexibility that arbitration offers.

The Bill also fails to establish clear timelines for emergency arbitration and the mandatory disclosure of conflicts of interest, potentially leading to delays. •One of the significant concerns with the Arbitration Bill 2024 is its potential interaction with the Limitation Act of 1908, which could delay arbitration proceedings. Under the current framework, the Limitation Act applies to arbitration matters unless otherwise specified.

This means that procedural timelines could be extended by up to three years, as permitted under the Limitation Act, for all procedural steps for which no timeframe is defined, causing unnecessary delays at each stage of the arbitration process. Given that one of the core advantages of arbitration is its ability to resolve disputes efficiently and within a set timeframe, the application of the Limitation Act could undermine this fundamental benefit. To address this issue, the Bill should include explicit provisions that limit the impact of the Limitation Act on arbitration, ensuring that arbitration procedures remain swift and free from the delays typically associated with litigation.

This could involve establishing shorter, more defined timelines for arbitration proceedings to maintain efficiency and prevent prolonged delays. • While the Bill excludes matters that contravene public policy, it does not provide a clear definition of what constitutes “public policy.” This lack of clarity could lead to inconsistent judicial decisions.

Furthermore, the Bill fails to explicitly identify non-arbitrable matters, leaving room for ambiguity. •Despite efforts to reduce judicial interference, some provisions in the Bill still increase court involvement, potentially undermining the autonomy of the arbitration process. There is also no provision for incorporating settlement agreements into arbitral awards, which is a common practice in international arbitration.

Additionally, the Bill lacks a clear procedure for determining arbitrators’ fees, anonymizing sensitive information, and enforcing interim awards, further complicating the process. • The Bill does not address the growing role of technology in arbitration, such as online dispute resolution (ODR) platforms or artificial intelligence (AI). Incorporating these technologies would enhance the efficiency, accessibility, and appeal of arbitration, making it more attractive to both domestic and international parties.

• Annex A of the Bill proposes the creation of an Arbitration Court, which would centralize the arbitration system within the judiciary. Given the already strained capacity of Pakistan’s courts, this proposal could exacerbate the judicial backlog and stifle the growth of institutional arbitration. To address these issues, the following improvements are recommended: The Bill should apply retrospectively as a procedural law to resolve inefficiencies in ongoing arbitrations under the 1940 Act.

This would allow for a smoother transition and eliminate disparities between old and new arbitration processes. The Bill should explicitly exclude arbitration from the scope of the ADR Act or assert its supremacy in arbitration-related matters to eliminate legal overlap. Institutional arbitration should be mandated as the default mechanism when parties fail to agree on procedural and evidentiary rules.

This would ensure consistency, reduce judicial involvement, and enhance the credibility of the arbitration process. The Bill should include provisions for expedited arbitration, specifying reduced timelines, streamlined procedures, and safeguards to ensure fairness. The framework for emergency arbitrators should also be introduced, including their powers and the enforceability of interim orders.

To limit court intervention, the Bill should specify clear grounds for non-enforcement of arbitration agreements, as prescribed by the New York Convention. Additionally, it should include thresholds for court intervention in granting interim measures and clarify the procedures for multi-party arbitration appointments. The Bill should address the integration of technology into arbitration proceedings, including provisions for ODR platforms and the ethical use of AI to improve efficiency and accessibility.

The Bill should foster a diverse pool of arbitration professionals, moving beyond the current trend of appointing retired judges as arbitrators. This would encourage innovation, specialization, and increased efficiency in the arbitration process. While the Arbitration Bill 2024 represents a significant step forward for Pakistan’s arbitration framework, it requires careful revision to address the existing ambiguities and procedural flaws.

By making the recommended changes, Pakistan can establish a more efficient, transparent, and globally competitive arbitration system. Copyright Business Recorder, 2025.