Procedure & Law: How Arbitration Starts in Pakistan

Arbitration Experts in Pakistan regularly guide businesses and individuals on how arbitration begins under Pakistani law. Arbitration provides a faster and more private alternative to court litigation. Therefore, parties must understand the correct procedure before starting any legal action.

In Pakistan, arbitration begins through clear contractual steps and limited court involvement. When parties follow the correct process, courts actively support arbitration and discourage delays.

Legal Framework Governing Arbitration in Pakistan

The Arbitration Act, 1940 governs arbitration in Pakistan. This law explains how parties invoke arbitration, appoint arbitrators, and seek court assistance when needed.

In addition, the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 enforces foreign arbitral awards and implements the New York Convention. As a result, parties can enforce international arbitration awards in Pakistan.

Step One: Issue the Notice of Arbitration

The arbitration process usually begins when one party issues a Notice of Arbitration. This notice formally informs the other party about the dispute and confirms reliance on the arbitration clause.

The notice must clearly:

• Refer to the arbitration clause

• Describe the dispute briefly

• Request the appointment of an arbitrator

Once the claimant serves the notice, the arbitration process formally begins. Therefore, lawyers should draft and serve this document carefully.

Step Two: Appoint the Arbitrator

After issuing the notice, the parties appoint an arbitrator according to their agreement. In many contracts, the arbitration clause already explains the appointment process.

However, when parties fail to agree, either party may apply to the court under Section 8 of the Arbitration Act, 1940. In such cases, courts appoint an arbitrator to avoid delay and move the dispute forward.

Step Three: File a Petition Under Section 20

Sometimes, one party refuses to cooperate despite the arbitration clause. In response, the aggrieved party may file a petition under Section 20 of the Arbitration Act.

Through this petition, the court may:

• Direct the parties to proceed with arbitration

• Place the arbitration agreement on the court record

As a result, arbitration continues even when one party resists participation.

Step Four: Apply for Stay of Civil Proceedings Under Section 34

In some disputes, one party files a civil suit instead of pursuing arbitration. When this occurs, the opposing party should immediately apply under Section 34 to stay the suit.

To succeed, the applicant must demonstrate:

• The existence of a valid arbitration agreement

• That the dispute falls within the agreement

• Readiness and willingness to arbitrate

If the applicant files the application promptly, courts usually stay the civil proceedings and refer the matter to arbitration.

How Courts Approach Arbitration in Pakistan

Pakistani courts actively support arbitration. They discourage parallel litigation and enforce arbitration clauses wherever possible. Therefore, courts intervene only when a serious legal defect exists.

In practice, courts focus on enforcing agreements rather than delaying dispute resolution.

Practical Results of Following the Correct Procedure

When parties follow the correct arbitration procedure:

• Courts stay civil suits

• Arbitrators receive appointments without delay

• Disputes progress efficiently

• Parties maintain confidentiality

Consequently, arbitration becomes an effective solution for commercial disputes.

Why Consult Arbitration Experts in Pakistan

At Mughal Barristers, our Arbitration Experts in Pakistan assist clients at every stage of arbitration. We guide clients on notices, court applications, arbitrator appointments, and dispute strategy. As a result, clients avoid procedural mistakes and achieve faster dispute resolution.