PAKISTAN has been trying to solve 21st-century commercial disputes with a colonial straitjacket since independence.
The Arbitration Act of 1940 was designed for a world where the British Empire still ruled, where cross-border trade was a luxury and where “alternative dispute resolution” meant little more than a judge suggesting the parties talk it out. That world is long gone. Today, Dubai is under threat. The cranes that once defined its skyline now share space with military tensions. DIAC, once the crown jewel of Gulf arbitration, faces an uncertain future. Qatar’s impressive rise, built on Law No. 15/2021 and QICCA’s 2024 rule modernization, rests on a foundation of regional stability that no one can guarantee. The world’s merchants are quietly asking: Where do we go when the Gulf closes for business? Islamabad has an answer. But only if it kills the 1940 Act first.
The Arbitration Bill of 2024, submitted to the Ministry of Law in May 2024, is the most significant legal document Pakistan which is need of the time. Based on the UNCITRAL Model Law, it would finally give Pakistan a framework that international investors recognize and trust. The Bill enshrines kompetenz-kompetenz, the principle that arbitrators decide their own jurisdiction, not courts. It limits judicial intervention to a handful of narrow grounds. It defines “public policy” for the first time, confining it to fraud, corruption, material breaches of natural justice, and violations of fundamental morality.
But the Bill is not perfect, and pretending otherwise would cost us this historic opportunity. First, the interim relief regime is a disaster waiting to happen. Under Section 19(3), any interim measure ordered by an arbitral tribunal can be appealed to a court. This is a reckless departure from the Model Law, and it invites precisely the kind of judicial interference the Bill claims to reject. If a party can slow-walk arbitration by appealing every interim ruling, the entire process becomes as inefficient as litigation. The solution is to delete Section 19(3) and replace it with the Model Law’s Article 17H, which gives tribunal-ordered interim measures the same enforceability as awards, subject only to the same narrow refusal grounds.
Second, the Bill contains language that could resurrect the public policy problem it supposedly solves. Section 39(3)(b) refers to “material breach of the rules of natural justice” and Section 39(3)(c) to “the most fundamental norms of morality and justice.” Both phrases are vague enough for a determined judge to expand into whatever meaning suits the moment. These provisions should be revised to remove ambiguities, including an interpretive note that courts must exercise restraint and that errors of law or fact alone do not constitute a breach of fundamental norms.
Third, the Bill creates a two-tier system: domestic awards can be set aside for “errors apparent on the face of the record,” while international awards cannot. This is a pragmatic nod to local realities, many domestic arbitrators remain unsophisticated, and Pakistani courts have a history of interventionism that cannot be undone overnight. But it also means that any dispute involving a foreign party but seated in Pakistan could end up in the domestic tier if the parties are not careful. The fix is to provide an opt-in provision: parties to any arbitration seated in Pakistan should be able to elect the international regime by agreement, regardless of whether the dispute meets the statutory definition of “international commercial arbitration.”
The Special Investment Facilitation Council (SIFC) is the correct institutional home for this reform. SIFC bridges civilian and military leadership, ensuring continuity beyond electoral cycles, critical for a project requiring sustained commitment and ensuring the investors confidence. Within 90 days, SIFC should establish an Arbitration Implementation Cell with three mandates: establishing a physical seat of the Pakistan International Arbitration Centre (PIAC), issuing PIAC’s administered arbitration rules modeled on DIAC 2022 and UNCITRAL, and curating an international panel of 100 arbitrators drawn from CIArb, LCIA, SIAC, and ICC. Credibility is imported through personnel, not declared through press releases.
Why Islamabad? Unlike Singapore (tied to the West) or Dubai (vulnerable to regional war), Islamabad offers genuine neutrality: a common law jurisdiction with English judicial heritage, a Supreme Court that issued pro-enforcement rulings in cases like China Water & Electric v. National Highway Authority (2024), and geographic distance from Gulf flashpoints. The “Global South Seat” branding is not marketing—it reflects reality. Pakistan sits at the crossroads of CPEC, Central Asian energy routes and African trade corridors. If Singapore serves East Asia and Dubai serves the Middle East, Islamabad can serve the connective tissue between them.
The timeline is unforgiving but achievable. By September 2026, Parliament must enact the revised Arbitration Bill with the amendments identified above after due diligence on the proposed Act. By December 2026, PIAC must be operational with its full panel and rules. Meanwhile PIDW 2026—Pakistan International Disputes Weekend, Pakistan must host all arbitrators and centres of the global south.
By June 2027, Pakistan must host its first international commercial arbitration under the new regime, with a published award enforced through Pakistani courts. That single data point will be worth more than a thousand policy papers. Dubai and Qatar became hubs because they offered predictability when the region offered chaos. That window is open again. Pakistan must walk through it—or watch the world walk past.
—The writer is an international law expert and an internationally accredited arbitrator and mediator.
