Alternative Dispute Resolution in Pakistan

“Litigation is a scenario in which you go in like a bull but leave as a sausage” – Justice Mansoor Ali Shah, Supreme Court of Pakistan.

Alternative Dispute Resolution, or ADR, is an effective, cost, and time efficient alternative to litigation which parties in a dispute resolution cab mutually consent to.

With an ever-increasing backlog of cases in the courts of Pakistan, the judiciary having exceeded its capacity and the final verdicts being handed out decades after filing the case, ADR ensures speedy justice, without the high costs associated with years of litigation.

What Are the Types of ADR In Pakistan?

Alternative Dispute Resolution has different types, any one of which the parties may mutually decide to adopt in order to resolve their dispute resolution. The methods within ADR are either adjudicative, or non-adjudicative.

Adjudicative methods include: i) Arbitration; ii) Adjudication; and iii) Expert Determination.

Non-Adjudicative methods include: i) Mediation; ii) Negotiation; and iii) Conciliation.

Adjudicative methods are much more formal, with parties having lesser control over the outcome, which is enforceable against them.

Non-adjudicative methods are less formal, with greater personal involvement by the parties in the outcome, which is non-binding and for the parties to determine whether it is acceptable to both.

What Are the Most Common ADR Methods In Pakistan?

The following four methods are most commonly used for out-of-court settlements in Pakistan and world-wide:

1. Mediation

An independent, trained mediator aims to resolve the dispute resolution between the two parties and helps the reach a mutually-beneficial settlement by facilitating communication between them.

The mediators discuss the matters and issues involved, and seek opinions of the parties without providing their own assessments or opinions on the matter.

The final decision reached after a mediation is non-binding, i.e., the parties can either decide to go ahead and act according to the final decision, or they can choose not to.

1. Arbitration

An arbitration is a much more formal process than a mediation; a neutral third-party arbitrator is nominated who has the requisite qualification to conduct an arbitration.

The arbitrator attempts the resolve the issues between the parties; this process is more suited where the dispute resolution requires some technical knowledge or expertise, and where non-disclosure of information is important.

It is also the preferred ADR method in international dispute resolution, and many contracts even contain arbitration clauses for dispute resolution settlements. Hence, for companies looking to resolve matters swiftly, and looking for privacy, arbitration is the best option.

The process of the arbitration is similar to that of a tribunal, the arbitrator after examining the issues provides his own verdict, and that decision is binding upon all parties.

1. Conciliation

Conciliation is a non-adjudicative ADR method more suited for employment related dispute resolution, rather than commercial or corporate matters.

The conciliator helps to reach an understanding between parties after listening to both sides, often giving his own opinion to resolve the dispute resolution. Many Rules or By-Laws of companies or associations have conciliation clause.

The Conciliation Courts Ordinance, 1961 provides for parties to apply to the Union Council of their respective areas to set up Conciliation Courts to resolve matters between them.

1. Adjudication

Adjudication, mostly reserved for construction contracts, has a formal process, starting with the submission of a Written Notice of Adjudication detailing the issues and the dispute resolution between the parties.

After this, an adjudicator is appointed, and the other party provides a referral notice, or its defense. The adjudicator, listening to both parties, makes the final decision which is binding on both parties.

What Are the Domestic Laws of Pakistan Which Provide For ADR?

Provisions with regards to Alternative Dispute Resolution can be found in multiple legislations of Pakistan; some of these are specific legislations on ADR, while others have provisions related to ADR within them.

Specific ADR Legislations:

• The Arbitration Act of 1940.
• The Conciliation Courts Ordinance, 1961
•  The Alternate Dispute Resolution Act, 2017
• Punjab Alternate Dispute Resolution Act, 2019

Other Legislations with ADR Provisions:

• The Small Claims and Minor Offences Courts Ordinance of 2002;
• Chapter XXII of the Code of Criminal Procedure (CrPC) of 1898 (summary trial provisions)
• Sections 102-106 of the SBNP Local Government Ordinance of 2001.
• Sections 96–99 of the Local Government Act, 2013.
• Section 89-A, Order X Rule 1A of The Civil Procedure Code of 1908 (CPC)
• The Probation of Offenders Ordinance, 1960
• Article 163 of the Qanun-i- Shahadat Order, 1984 (decision on oath)
• Sections 10 and 12 of the Family Courts Act, 1964
• Section 195C of Customs Act, 1969 and Chapter XVII of the Customs Rules, 2001
• Plea Bargaining (sec. 25 of NAB Ordinance, 1999)
• Section 38 of the Federal Excise Act, 2005 and Rule 53 of the Federal Excise Rules,
• Section 134A of the Income Tax Ordinance, 2001 and Rule 231 C of the Income Tax Rules, 2002.
• Section 47A of the Sales Tax Act, 1990 and Chapter X of the Sales Tax Rules, 2004;

Why Is ADR Needed in Pakistan?

With the current backlog of cases in Pakistan, it is recommended that issues between parties be resolved without having to resort to the lengthy and expensive court procedures.

With the varying types of ADR methods, parties can choose the ones most suited for them, whether they be of the binding or the non-binding sort.

This is in the best interest of the parties, as they resolve their dispute resolution timely and affordably, and it is in the interest of our judicial system as well, as it refrains from the additional burden of cases which can be resolved through ADR.

Do You Have a Dispute Which Needs to Be Resolved?

At KLA, we always put the interests of our clients first. Our priority is to resolve our clients’ dispute resolution swiftly and with minimal financial burden.

Hence, we have a team of qualified mediators and arbitrators available to resolve all matters without having to resort to litigation.

For both domestic and international dispute resolution, the highly qualified, and multi-lingual team at KLA can hold ADR proceedings whenever our clients require them.

For more information on our work with ADR and dispute resolution settlement, check: https://demo.kl-associate.com/practice/litigation-dispute-resolution/