How to Start Arbitration in Pakistan

Arbitration in Pakistan is governed primarily by the Arbitration Act, 1940, while foreign awards are enforced under the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011.

Below is the practical process clients follow when initiating arbitration.

1. Serve a Notice of Arbitration (Section 2(a), Arbitration Act 1940)

The process starts by issuing a Notice of Arbitration to the opposing party.
The notice must:

• Invoke the arbitration clause
• Describe the dispute
• Call upon the other party to appoint an arbitrator

This notice is legally significant — Pakistani courts treat it as the formal trigger for arbitration.

2. Appointment of Arbitrator(s) (Section 8, Arbitration Act 1940)

If the parties cannot agree on an arbitrator, or if one party refuses to nominate one, you may file an application under Section 8 requesting the court to appoint an arbitrator.

Courts generally support arbitration and will appoint an arbitrator unless the clause is void or inapplicable.

HOW TO COMPEL ARBITRATION IF THE OTHER SIDE REFUSES: SECTION 20 ARBITRATION ACT

Section 20 Arbitration Act — Petition to Refer the Dispute to Arbitration

If the other party refuses to arbitrate — even though the contract contains an arbitration clause — you may file a petition under Section 20 of the Arbitration Act, 1940.

Purpose of Section 20:

To request the court to:

• Order the parties to arbitration, and
• Direct that the arbitration agreement be filed in court

Once the court accepts the petition, it compels the parties to proceed with arbitration, even if one side is unwilling.

Section 20 is strategic because:

• It prevents the opposing party from delaying
• It secures judicial recognition of the arbitration agreement
• It formally moves the dispute into arbitration

We regularly file Section 20 petitions for clients to ensure arbitration proceeds without obstruction.

IF SOMEONE FILES A CIVIL SUIT DESPITE AN ARBITRATION CLAUSE: SECTION 34 STAY OF SUIT

This is another key area businesses face.

How to Stop a Civil Suit and Demand Arbitration (Section 34, Arbitration Act 1940)

If the opposing party tries to bypass arbitration by filing a civil suit, you must file a Section 34 application requesting the court to stay the suit and direct the parties to arbitration.

Your application argues that:

1. A valid arbitration agreement exists
2. The dispute in the suit falls within the arbitration clause
3. You are ready and willing to arbitrate (a mandatory requirement)
4. The civil court lacks jurisdiction because the parties contractually agreed to arbitrate

Important:

You must file the Section 34 application before filing a written statement — otherwise, the court may treat your conduct as submission to jurisdiction.

What Courts Look At (Key Case-Law Principles)

Pakistani courts consistently hold that:

• Arbitration agreements must be honoured
• Courts should not allow parallel civil litigation
• Arbitration is the preferred forum where the contract so provides
• “Minor technical objections” do not invalidate arbitration clauses
• Ready-and-willingness must be shown through conduct

The policy is simple: Courts support arbitration, not litigation, where parties agreed to arbitrate.

Practical Outcomes of Section 34 & Section 20 Applications

When handled correctly, courts will:
✔ Stay the civil suit
✔ Refer the parties to arbitration
✔ Order filing of arbitration agreement
✔ Recognise the arbitration clause as binding
✔ Allow arbitration to proceed independently

Mughal Barristers regularly prepares and argues these applications and has a strong record of success.

Why Clients Prefer Mughal Barristers

• Successful representation in high-value arbitrations, including USD 900 million matters
• Expertise in both domestic and international arbitration regimes
• Strong litigation support for Section 20 petitions and Section 34 stay applications
• Commercially practical and outcome-oriented advice
• Deep cross-sector experience (telecom, construction, engineering, corporate)
• Full confidentiality and professionalism
• Trusted by multinational corporations and diplomatic missions