2.6.

1 Alternative Disputes Resolution (ADR)

International commercial entities always preferred ADR methods for the settlement of
international commercial disputes rather than referring the matter to the formal proceedings of a
court. This trend started in the 20th Century and likely to continue into the 21 st Century.1 ADR
may be defined as encompassing all legally permitted processes of dispute resolution other than
litigation.2 It is also known as an appropriate or amicable dispute resolution process. 3 ADR is
considered to be the mode in which the dispute resolution process is qualitatively distinct from
the judicial process.4 Disputes are settled with the assistance of a neutral third person on the
choice of the parties. The proceedings are informal free procedural complexities and are
conducted by large in the manner agreed by the parties. The confidentiality of the subject matter
of disputes is maintained to a great extent. The decision-making process aims at substantial
justice keeping in view the interest involved and the contextual realities.5 At present, there is a
very broad range of alternative means of dispute resolution used in an equally broad array of
circumstances. ADR modes and techniques are designed in such a way that these techniques are
practicable and applicable in the resolution of all civil and commercial issues. These processes
and techniques are negotiations, conciliation, mediation, arbitration and mini-trial, and summary
trial.6 These techniques are emerged as an important instrument to resolve the commercial and
investment disputes speedily and expeditiously. The following are the different modes of ADR.

[Link] Negotiation
“Negotiation can be defined as a bilateral or multilateral process in which parties who differ over
a particular issue attempt to reach an agreement or compromise through communication.7 It is
about communication which entails dialogue, deliberation and round table conference to reach an
agreement or settlement over a determined subject or object. It may be generally defined as a
consensual bargaining process in which parties attempt to reach an agreement on a disputed

1Haque, Inaamul; Evolving Paradigm Relating to Alternative Dispute Resolution (ADR) in Pakistan, March
2012,Interdisciplinary Journal of Contemporary Research in Business;Mar2012, Vol. 3 Issue 11, p. 881
2 S. J. WARE, Alternative Dispute Resolution, St. Paul, (2001), at p. 5.
3 J. M. NOLAN-HALEY, Alternative Dispute Resolution in a Nutshell, St. Paul, (2008), at p. 2
4 Angelica Rosu, The Various forms of Alternative Dispute Resolution (ADR) in International Commercial Disputes,

(2010), at p. 437
5 Jean Claude Goldsmith, Gerald [Link], Arnold Ingen Housz, ADR in Business. Practice and Issues across

Countries and Cultures, Kluwer Law International, (2006) at p. 6-7

6
J. M. Nolan-Haley, Alternative Dispute Resolution in a Nutshell, St. Paul, (2008), at p. 2
7 Douglas H. Yarn, Dictionary of conflict resolution, (1991) at p.394
matter. The whole point of parties negotiating is to achieve an advantage that is not possible by
unilateral action. Multiparty or multilateral negotiations present additional challenges. In dealing
with groups in multiparty negotiations, lawyers must be skilled in developing and maintaining
coalition agreements with other individuals or groups to engage in joint action on particular
issues. Negotiation differs from other methods of dispute resolution in the degree of autonomy
experienced by the disputing parties. In negotiation, parties attempt to reach on agreement
without the intervention of third parties such as judges, arbitrators or mediators. Parties also have
the power to decide process norms in negotiation.8 In another opinion, negotiation is the most
flexible and informal method of dispute resolution.9 It represents the first stage in resolving the
disputes through mutual understanding. This is a mutual goodwill measure expected to lead to
the resolution of the disputes and has been successful in many cases 10.

There are two kinds of negotiation namely transactional and adversarial negotiations.11
Transactional negotiation is also known as cooperative, interest-based, integrative, value-
creating, and win-win negotiation12. It is based on a positive-sum negotiation principle that
means negotiation is perceived not as a war to win or lose but a communication to iron out
differences and keep the relationship going. 13 Therefore, it is cooperative and it is a win-win
deal. Transactional negotiation is an everyday life experience, with enormous collaboration from
the parties involved. It is a mutual dialogue approach to a problem. It seeks to maintain a
personal relationship with the other party. Adversarial negotiation is problem-solving and the
problem is resolving a conflict through communication.14 It entails four general principles which
include planning and analysis, exchanging information, exchange concessions and compromise,
reaching an agreement. 15 It can be done by the interested parties themselves or through their
agents.16 Adversarial negotiation is winning-lose proposition.”17

8 Jacqueline M. Nolan-Haley, Alternative Dispute Resolution, Third Edition, Thomson West, USA, 2008, p.16-17
9 Dennis Campbell, Dispute Resolution Methods. The Comparative Law Yearbook of International Business Special
Issue, published under the auspices of the Center for International Legal Studies, London (1994) at p 90-91
10See supra note 175,at p. 881
11 See supra note 177, at p.23
12 Ibid, at p.147
13 Stephen J. Ware, Alternative Dispute Resolution(2001), at p.147
14 Ibid at p.120 & 121
15See supra note 177, at p.31
16 Ibid, at p. 14
17 Ibid , at p.22
[Link] Mediation
“Mediation is an extension of the negotiation process 18. It means a process whereby parties
attempt to reach an amicable settlement of their disputes with the assistance of a third person or
persons (“the mediator”) irrespective of the expression used or the basis upon which the process
is carried out.19 It facilitates negotiation through an independent mediator to assist parties in
disputes to reach an agreement.20Amongst ADR techniques, mediation has proved to be the most
flexible, powerful and user-friendly. Many people now use the term ADR and mediation
interchangeably. It is an ADR technique that enables the parties to resume or some times to
begin negotiations. Mediation is a voluntary, non-binding, private dispute resolution process in
which a neutral person helps the parties to reach a negotiated settlement.21The beauty of this
process is that the mediator does not render any decision or order. The very presence of the
mediator changes the underlying dynamic of the negotiating process. One of the greatest
strengths of mediation is that parties have a major input for the direction of the process and
complete control over the final decision. The dispute is owned by the parties and so is the
decision. This makes the process not only transparent but also acceptable to the parties. Most
central to the effectiveness of the mediator is the ability and skill to establish a relationship of
confidence and trust with others.22

The mediation process works under three basic principles. First is the principle of the party’s
self-determination23 which means parties resolve their differences without coercion and with free
will. This also means that the mediator helps them to make an informed choice or decision.
Second is that the mediator is impartial and evenhanded24 and has no personal interest or benefit
of the substantive issue. Three, the mediator should keep proceedings private and confidential.”25

18 Ibid, at p.68
19 Article 2(3), United Nations Convention on International Settlement Agreements Resulting from Mediation,
available at [Link] (Last visited January
29th, 2020)
20 Christopher W Moore, The Mediation Process: Practical Strategies for Resolving Conflict (2nd ed, 1996) at p. 15
21 Kovach, Meditation, in The Handbook of Dispute Resolution, at p.305
22 See supra note 170
23 I.H., ABRAMSON, Mediation Representation, Advocating in a problem-solving process, at p. 69
24 Ibid
25 Ibid
[Link].1 Legal Sources for Mediation
“The Singapore Convention on Mediation (also known as the United Nations Convention on
International Settlement Agreements Resulting from Mediation) is a new multilateral treaty
developed by the United Nations Commission on International Trade Law (hereinafter called the
UNCITRAL).26 The convention provides a uniform and efficient framework for the recognition
and enforcement of mediated settlement agreements that resolve international commercial
disputes. The text of the convention was finalized by UNCITRAL on June 25, 2018, and after
adoption by the U.N. General Assembly, it was opened for signature in August 2019. The
primary goal of the convention is to promote the use of mediation for the resolution of cross-
border commercial disputes. Mediation is seen as not only a faster and less expensive form of
dispute resolution but also as more likely to preserve commercial relationships.27 The convention
has filled the gap of lack of a cross-border mechanism for giving legal effect to mediated
settlement agreements. Before this convention, there was a significant barrier to the willingness
of companies to use mediation because of the absence of recognition and enforcement of
mediation agreement. The enterprises find it hard to convince their business partners in some
jurisdictions to engage in mediation because of the lack of a stamp of international legitimacy
like the New York Convention has given to arbitration agreement and arbitral award since 1958.
Thus the development of the convention has expressed a hope that it will be able to give
mediation the same type of boost that arbitration received from the New York Convention.
Currently, fort six countries are signatory to the convention which include China.” 28

[Link] Conciliation
“Conciliation is an informal process similar to mediation. In conciliation, a neutral third party
intervenes in a conflict to assist parties in arriving at a resolution. The parties to different
nationalities in a contract can seek conciliation and resort to an amicable settlement of their
disputes which have either arisen or may arise in the future between the parties. Conciliation

26 Text available at [Link] (Last visited January 29th,

2020)
27 See, e.g., interventions of the United States and Belarus, in Audio Recording: U.N. Comm’n on Int’l Trade L., 48th

Session (United Nations 2015), July 2, 2015, 9:30-12:30, available at

[Link] , The General Assembly has also noted that it produces
savings for states in the administration of justice. G.A. Res. 57/18, U.N. Doc. A/Res/57/18 (Jan. 24, 2003)
28 List of signatories, available at [Link] (Last visited

January 29th, 2020)

means to console for settlement of the conflict by mutual agreements.29 Primarily, conciliation is
a mild form of intervention limited to scheduling conferences, trying to keep the disputants
talking, facilitating other procedural niceties, carrying messages back and forth between the
parties. It is generally being a good fellow who tries to keep things calm and forward-looking in
a tense situation.30 The conciliator is intended to facilitate agreement between the disputants. The
conciliator has no power of decision. The conciliation stresses the power of diplomacy and
mental acuteness as contrasted with the judicial process and decision making aspect of
adjudication and arbitration. The conciliation process requires the involvement of a conciliator
who is a knowledgeable and experienced person. The person to be appointed or acting as
conciliator should possess three basic qualities31:

a. He must possess knowledge and experience of compromise settlements

b. He should have broad thinking with objectivity
c. He must maintain Independence and Impartiality,
d. He should have the capability to employ the conciliation techniques efficiently like
persuasion, rationalization, suggestions, and coercion on equal footings on both the
parties.

Conciliation is also considered as an emerging trend in international commercial arbitration.

There is an ever-increasing emphasis on conciliation in the arbitration process or as a separate
preliminary step of arbitration proceedings.32 The international community generally supports
the combination of conciliation with arbitration but different views exist on whether an arbitrator
should be permitted to serve as a conciliator in the same dispute, either before the arbitration
proceedings or in the middle of arbitration proceedings.”33

29 [Link] & William Sheffield, Alternative Dispute Resolution : What it is and How it Works, (2002), at p.88
30 William [Link], Mediation and the Dynamics of Collective Bargaining, (1971), at p-26
31 [Link], Law and Practice of Industrial Disputes with Central, Punjab and Haryana Rules, (1984), at p.1
32 William K Slate and others, ‘UNCITRAL Its Workings in International Arbitration and a New Model Conciliation

Law’ (2004) 6 Cardozo J Conflict Resol 73, at p.96

33 See supra note 64, at p. 3
[Link].1 Legal Source for conciliation
UNCITRAL34 constituted a Model Law on International Commercial Conciliation 35 in 2002 for
the settlement of international commercial disputes through conciliation. The Model Law
provided uniform rules in respect of the conciliation process to encourage the use of conciliation
and ensure greater predictability and certainty in its use. To avoid uncertainty resulting from an
absence of statutory provisions, the law addressed procedural aspects of conciliation, including
appointment of conciliators, commencement and termination of conciliation, conduct of the
conciliation, communication between the conciliator and other parties, confidentiality and
admissibility of evidence in other proceedings as well as post-conciliation issues, such as the
conciliator acting as arbitrator and enforceability of settlement agreements. But it is recalled and
replaced by United Nations Convention on International Settlement Agreements Resulting from
Mediation, 2019.36

34 The United Nations Commission on International Trade Law (UNCITRAL) was established by the General
Assembly in 1966 (Resolution 2205(XXI) of 17 December 1966). In establishing the Commission, the General
Assembly recognized that disparities in national laws governing international trade created obstacles to the flow of
trade, and it regarded the Commission as the vehicle by which the United Nations could play a more active role in
reducing or removing these obstacles. The General Assembly gave the Commission the general mandate to further
the progressive harmonization and unification of the law of international trade. The Commission has since come to
be the core legal body of the United Nations system in the field of international trade law. The Commission is
composed of sixty member States elected by the General Assembly. Membership is structured so as to be
representative of the world's various geographic regions and its principal economic and legal systems. Members of
the Commission are elected for terms of six years, the terms of half the members expiring every three years.
35 UNCITRAL Model Law on International Commercial Conciliation with Guide to Enactment and Use 2002, adopted

on 24 June 2002,available at [Link]

90953_Ebook.pdf (Last visited January 29th, 2020)
36 Preamble, United Nations Convention on International Settlement Agreements Resulting from Mediation,

available at [Link] (Last visited

January 29th, 2020)
4.1 Alternative Dispute Resolution (ADR) and International Commercial
Dispute in Pakistan

The greater interdependence of nations on global trade and overseas investments multiplied the
number of cases in courts of law and consequently, ADR started gaining grounds. The trend for
the disposal of international commercial disputes through ADR has picked up in Pakistan as well
as the other countries with the expansion of the free-market philosophy and commercial activism
throughout the globe.37 The legal provisions for the use of ADR system have been developed in
Pakistan up to a reasonable standard in the international business field.38 This development has
been permitted by several factors including tremendous expansion of international commerce
and an efficacious way of handling international commercial disputes.39 It preserves and
maintains the relationships unstrained which is the essence of the corporate world. The leading
strength of ADR is probably its ability to offer procedural and substantive flexibility. It offers the
resolution of disputes to parties at their terms inexpensively and expeditiously. ADR techniques
can be used in almost all contentious matters, which are capable of being resolved under the law
by agreement between parties including industrial and commercial disputes. The informal nature
of the ADR allows matters to be resolved much earlier than other process-driven alternatives.
There is no long wait for court dates and conflicts are usually resolved within a short time.40
Interestingly, Pakistan has taken many cases on commercial disputes to international arbitration
forums than any other country in South Asia.41

4.2 Legal Basis of ADR for the Settlement of International Commercial

Disputes
Pakistan is a common law country and always follows the legal development of England. ADR
movement in England is the result of Lord Woolf Reforms wherein a clear signal has been given

37 Mr. Suhail Shiraz Noor Saani (District and Session Judge), Commercial Dispute and ADR, Paper presented at:
National Conference on Alternative Dispute Resolution 16th & 17th November 2017, Islamabad. See the Report on
02 days National Conference on Alternative Dispute Resolution 16th & 17th November 2017, available at
[Link]
november-2017 last visited on (Last visited January 28th , 2020).
38 Naeem Ullah Khan, Manual of International Economic Law, Chapter 6, Alternative Dispute Resolution and

Inclination in Pakistan , 2014, at p. 136 .

39 Pc. Rao and W. Sheffied, Alternative Dispute Resolution, (2009) at p. 79.
40 See supra note 640.
41 Ibid.
to litigants and their advisers for settling the disputes through ADR at the earliest opportunity.42
It was followed immediately in Pakistan. In the first decade of the 21st Century, several legal
provisions were enacted in civil law by introducing the concept of ADR by the parliament of
Pakistan. But it is also important to mention here that ADR itself is not a brand new procedural
concept for Pakistani jurisprudence. A pre-partition arbitration law of 1940 43 is available in
Pakistan that allows parties to settle disputes through alternative means of dispute resolution with
the express permission of the court.44 The study of legal landscape establishes that there is a
bouquet of legal provisions in statute books which provide the basis of ADR for the settlement of
international commercial disputes. The statutory provisions and legal basis of ADR are
elaborated hereunder.

4.2.1 The Constitution of Islamic Republic of Pakistan, 197345

The dispensation of justice to the commercial enterprises has been rendered to be the soul of
good government.46 It requires the creation of an ultra-modern disseminating infrastructure
according to the need for new judicare technology, models and remedy-oriented jurisprudence. 47
Interestingly, no express allusion about ADR has been made in the constitution of 1973, but a
reference to commercial and financial activities can be pinpointed in the constitution which may,
however, implicitly lead to a view that Pakistan practices certain methods of ADR.48 A quick
review of the constitution reveals that National Economic Council (NEC) is established to
formulate plans and policies in respect of financial, commercial and economic development. 49
The state is bound to ensure inexpensive and expeditious justice which shows its intention for the

42 Caller, Russell. (Ed.) ADR and Commercial Disputes, London: Sweet & Maxwell, 2002, at p. v.
43 The Arbitration Act, 1940 [It is pertinent to mention that before the enactment of the Arbitration Act, the
relevant provision in the CPC was its original section 89. However, after enactment of 1940 Act, section 89 was
omitted. See s.49 of the Arbitration Act, 1940 and its Third Schedule.].
44 Sec. 21 of the Arbitration Act, 1940.
45 The Constitution of the Islamic Republic of Pakistan, 1973, available at

[Link] [Link] (Last visited January, 20th , 2020).

46 Avtar Singh, Law of Arbitration and Conciliation, 7th Ed 2005, Eastern Book Company, Lucknow, India, at p.398.
47 Ibid.
48 Salman Ravala, Alternative Dispute Resolution in Pakistan,2010, available at

[Link]/globalex/Pakistan_ADR1.htm (Last visited December, 20th,2019).

49 The Constitution of the Islamic Republic of Pakistan, 1973, Articles 156.
development of ADR. The orthodox courts have always there but ADR laws have been created
by the Parliament to fulfill its constitutional obligation. 50

4.2.2 Provisions of the Code of Civil Procedure, 1908

The Code of Civil Procedure, 1908 was amended in 2002 and Section 89. A and Order X-Rule 1-
A were introduced concerning ADR for the settlement of civil disputes. 51 These provisions were
introduced for expeditious disposal of cases.52 The relevant provision of Section 89-A explains
that the court may, where it considers necessary, having regard to the facts and circumstances of
the case with the object of securing expeditious disposal of a case, in or concerning a suit, adopt
with the consent of the parties alternative dispute resolution method, including mediation and
conciliation.53 It is supplemented by Rule 1-A of Order X which reads as the Court may adopt
any lawful procedure not inconsistent with the provisions of this Code to:54

i. Conduct preliminary proceedings and issue an order for expeditious processing of the
case.
ii. Issue, with the consent of parties, commission to examine witnesses, admit
documents and take other steps for trial.
iii. Adopt, with the consent of parties, any alternative method of dispute resolution
including mediation, conciliation or any such other means.
The terms “Alternative Dispute Resolution”, “mediation” and “conciliation” have expressly been
used in these provisions. However, above-quoted provisions are not limited only to these
methods of ADR. By using words “or any other method” vast discretion has been vested in
courts. At the same time, the litigants have been given a choice to consider any other appropriate
method to achieve the goal of dispute resolution. The above provisions being open-ended are
beneficial for the courts and parties alike to consider any lawful option to be used for resolution

50 Ibid, Articles 37(d).

51 Added by the Code of Civil Procedure (Amendment) Ordinance No. (XXXIV of 2002).
52 2011 CLC 758.
53 Code of Civil Procedure, 1908, Section 89-A.
54 Ibid,Rule 1-A of Order X.
of disputes. However, to remain within the bounds of the law, as a general understanding, the
courts can have recourse to the following techniques:55

i. Case Management
ii. Judicial Settlement
iii. Early Neutral Evaluation
iv. Mediation
v. Expert Determination
vi. Summary Judgment.
The resolution of the disputes through the above alternative modes relieves the parties from
expensive and lengthy agonizing litigation. It saves a lot of time and cost.56 These clauses for
the amicable resolution of disputes find a place in almost all commercial contracts. The courts
are also expected to encourage the parties to adopt such modes given in the provisions of Section
89-A and Order X, Rule 1-A.57

4.2.3 The Small Claims and Minor Offences Courts Ordinance, 2002

Small Claims and Minor Offences Ordinance, 2002 was enacted as a means to promote ADR.58
It aimed to consolidate and enact the law relating to small claims and minor offences and matters
incidental thereto or connected therewith for providing inexpensive and expeditious disposal of
claims and offences. 59 The purpose of the law is to provide legal cover to amicable modes of
settling disputes between parties easily and expeditiously.60 It defines the term amicable
settlement as a settlement through arbitration, mediation, conciliation or any other lawful means
mutually agreed upon by the parties.61 The important feature of this law is that it provides the
appointment of a salis (the arbitrator) for the resolution of disputes with the consent of the
parties. This law has provided a complete ADR mechanism for the courts to move forward in the

55 Bench book Regarding Musalihat Anjuman and Alternative Dispute Resolution, published by The Gender Justice
through Musalihat Anjuman Project, Govt of Pakistan. [Link] (Last visited December 10th, 2018.
56 PLD 2005 Lah 742.
57 PLD 2007 Lah 581.
58 Small Claims and Minor Offences Ordinance, 2002
59 Preamble, The Small Claims and Minor Offences Courts Ordinance, 2002.
60 The National Judicial Policy-Making Committee presided over by the Chief Justice of Pakistan, Justice Nazim

Hussain Siddiqui, on 29th May 2004 asked the government to enforce Small Claims and Minor Offences Ordinance
2002[Link] (Last visited
December, 20th,2019).
61 Section 2(a), Small Claims and Minor Offences Courts Ordinance, 2002.
domain of non-adversarial litigation. However, no comprehensive figures are available to
demonstrate the effectiveness of this law. This legislation is one of the tools available to courts
for considering the use of ADR on case to case basis. The ordinance also provides for a simple,
specific, and expeditious procedure for the process serving to finalize the case for trial. The court
is also awarded with the power to persuade the parties to adopt any of the processes of ADR to
reach an out‐of‐court settlement for the expeditious disposal of their cases. But in the event of a
failure in the ADR proceedings, the court would proceed to determine the suit through a
prescribed summary procedure. The purpose of the law is to provide an inexpensive and
expeditious disposal of claims. 62 This law is also on the parallel lines with amendments
introduced in the Civil Procedure Code. Both were brought in the same year. It seems that the
legislator was quite eager to establish the ADR system.

4.2.4 Alternative Dispute Resolution (ADR) Act, 2017

Alternative Dispute Resolution (ADR) Act, 2017 63 was legislated to ensure inexpensive and
expeditious justice through ADR which can facilitate settlement of disputes without resort to
formal litigation.64 It is the first step to institutionalize the ADR method as a proper dispute
settlement system to settle the commercial disputes including any claim, right or interest arising
out of trade and commerce. This law also includes the cases relating to companies, banking
matters, insurance, negotiable instruments suits, patent, trademark and copyright, compensation,
and damages.65 This act like the previous laws as mentioned above enforced, implemented and
institutionalized the ADR method through civil courts which are the courts of ultimate
jurisdiction. These courts have to refer the dispute to ADR with the consent of the parties.66
According to this Act, ADR means a process in which parties resort to a method of resolving the

62 Sung Kwon Won, Overview of Alternate Dispute Resolution with Special Reference to Arbitration Laws in
Pakistan, Journal of Arbitration Studies, Vol. 23 No.3(2013)at p. 161.
63 Act No. XX of 2017, No. F. 22(39)/2016-legis.-Thc following Act of Majilis-e- Shoora (Parliament) received the

assent of the President on 30th Day of May, 2017, available at

[Link] (Last visited December 20th,2019).
64 Ibid, Preamble.
65 Ibid, Schedule.
66 Ibid, Section 2(f) and 3.
dispute other than by adjudication by courts and includes arbitration, mediation, conciliation,
neutral evaluation, and dispute resolution through panchayat.67

4.2.5 Companies Act, 2017

The companies Act, 2017 has been promulgated to reform company law, facilitate
corporatization and promote the development of the corporate sector.68 Its prime purpose is to
protect the interests of shareholders, creditors, other stakeholders, and the general public
inculcating the principles of good governance. It is providing an alternative mechanism for
expeditious resolution of the corporate disputes.69 This law is implemented through the Security
Exchange Commission of Pakistan (hereinafter called SECP) which was established in 1997
under the Securities and Exchange Commission of Pakistan Act, 1997.70 SECP is the financial
regulatory agency whose objective is to develop a modern and efficient corporate sector on
market-based sound regulatory principles to foster economic growth and prosperity. 71 According
to this law, the enterprises are allowed to adopt the ADR method for the settlement of disputes.
Sections 276 to 285 deal with the ADR provisions including mediation, conciliation, and
arbitration.72 It explains that enterprises may refer a dispute, claim or controversy to mediation
and conciliation for resolution by written consent to any individuals enlisted on the mediation
and conciliation panel maintained by the SECP before taking recourse to formal dispute
resolution.73 The law elaborates that a company may by written agreement refer to any existing
or future difference between itself and any other company or legal person to arbitration under the
Arbitration Act, 1940 (X of 1940).74

67 Ibid, Section 2(a).

68 ACT NO. XIX OF 2017, No. F. 22(40)/2016-Legis.—This Act of Majlis-e-Shoora (Parliament) received the assent of
the President on the 30th May, 2017 available at [Link]
2017/?wpdmdl=28472 (Last visited December 20th, 2019 ).
69 Ibid, Preamble.
70 Act No. XLII of 1997, No. F.9(51)/97-Legis. This Act of Majilis-e-Shoora (Parliament) received the assent of the

Acting President on the 19th December, 1997 available at [Link]

act-1997-for-your-information-and-record/?wpdmdl=17801 (Last visited December 20th, 2019).
71 Introduction of SECP available at [Link]

[Link] (Last visited December 20th, 2019).

72 Companies Act, 2017, Part VIII.
73 Ibid, Section 277.
74 Ibid, Section 278.
4.3 Recognized Techniques of Alternative Dispute Resolution for the
Settlement of International Commercial Disputes
Due to the heavy pendency of cases, currently, the judges, experts and legal professionals in
Pakistan are wanted to encourage the use of mediation and arbitration to settle disputes, rather
than settling the disputes in courts.75 Different ADR modes and techniques have been recognized
in the legal provisions which have been discussed above. These techniques are practicable and
applicable to all commercial and civil disputes. The purpose of their inclusion in the laws is the
amicable settlement of disputes to achieve the objective of timely and inexpensive justice. The
most important forms or techniques of ADR are the following:

i. Mediation
ii. Arbitration

4.3.1 Mediation

Mediation means a process in which a mediator facilitates dispute resolution by encouraging

communication and negotiation between the parties to arrive at a mutually satisfactory
agreement.76 It is a voluntary dispute resolution process in which a neutral person helps the
parties to reach a negotiated settlement.77 The focus of mediation is the solution and
strengthening of relationships of parties which help them to redress existing conflict and to avoid
the possibility of future conflict. The mediator assists the dispute resolution thoroughly and
helps the parties to offer alternatives, isolate the issues of dispute and influence them towards the
mutual agreement.78 “Amongst ADR techniques, mediation is considered to be the most flexible,
powerful and user-friendly. The greatest strength of mediation is that the parties have a major
input concerning the direction of the process and complete control over the final decision that
makes the process not only transparent but also acceptable to the parties. Most central to the
effectiveness of the mediator is the ability and skill to establish a relationship of confidence and
trust with others because developing the ability to work with others impartially is a skill in

75 Majid Ali & Li Lu Geng, Alternative Dispute Resolution (Adr) In Pakistan: The Role of Lawyers in Mediation
Procedure, International Journal of Research, Volume 06, Issue 04,(2019) at p. 421.
76 Section 2(i), Alternative Dispute Resolution (ADR) Act, 2017.
77 Mr. Justice Tassaduq Hussain Jillani, Delayed Justice and Growth of ADR, available at

[Link] (Last visited July 25th, 2019).

78 Ibid.
itself.79 The mediation inserted in law is substantively provided to avail such a tool for
expeditious disposal. This is a fact that due to arguable reasons mediation still needs to be
realized and promoted by the judges and lawyers equally.80 There are many reasons for the
acceptability of mediation as a system of dispute resolution. It is a non-binding procedure in
which the parties may select the mediator according to their choice.” It offers flexible options to
the parties and helps to avoid litigation. It reserves the freedom to withdraw from conciliation at
any stage. It maintains confidentiality through its proceedings. It is speedy and maintains
continuity in the relations of the parties and eliminates the scope of corruption.81

[Link] Efforts to Promote Mediation in Pakistan

The settlement of international commercial disputes through mediation has been especially
focused recently because delay in settling commercial disputes cast a negative effect on the
investment climate in Pakistan. The litigation procedure for settling the disputes are slow and
inadequate and hence discourage the market-based growth and foreign investments. ADR
Centres have been established in the province of Punjab for providing a forum for mediation and
conciliation under the ADR Act. The constitution of Companies Act, 2017 also took the initiative
to promote the mediation and conciliation for resolution of disputes. In compliance with this law,
SECP amended relevant rules to implement the utilization of mediation and conciliation for
dispute resolution in the corporate sector. The efforts to support the mediation and conciliation
under the Companies Act and SECP are as under.

[Link] Establishment of ADR Centres

Currently, an ADR Centre has been established in every district of Punjab Province through
Lahore High Court.82 The civil judges of the concerned districts were appointed in the ADR
Centres for the settlement of disputes relating to the matters mentioned in the Schedule of the
law including commercial matter and these judicial officers are submitting the ADR Report

79 Navin Merchant, Commercial Dispute Resolution, at p. 1 available at

[Link]/ijc/[Link] (Last visited March 26th,2019).
80 See Justice Sarmad Jalal Osmani, “Role of Judge in Alternate Dispute Resolution” ” National Judicial Conference,

Law and Justice Commission of Pakistan(2011).

81 Inaamul Haque & Naeem Ullah Khan, Paradigm Relating to Alternative Dispute Resolution (ADR) in Pakistan,

Interdisciplinary Journal of Contemporary Research in Business 3 Evolving 11(2012) at p.1.

82District wise detail of the ADR Centres is available at [Link] (Last visited December,

20th,2019).
regularly.83 “A panel of neutrals for each district amongst lawyers, retired Judges of superior and
subordinate judiciary, retired civil servants, social workers, ulema, jurists, technocrats and
experts of repute and integrity has to be notified by the government, after consultation with the
high court, to be appointed as mediators.84 The courts have to refer the disputes for mediation
with the consent of the parties 85 or parties may make an application to the court or an ADR
Centre for resolution of their disputes.86 The courts appoint a neutral or any other person agreed
upon by the parties in any case.87 The parties to the dispute take part in the proceedings in person
or through duly authorized representatives or attorneys.” A neutral appointed by the court or
ADR Centre to whom the matter is referred for mediation has to dispose of the matter within
thirty days.88 If the mediation is reached to settlement, the neutral records the settlement and
submits it in the court duly signed by him and the parties.89 No appeal and revision lies from the
decree or any order of the court under this law.90

[Link] Constitution of Mediation Panel under Companies Act, 2017

SECP has taken measures for the resolution of disputes, claims or controversies arising between
the companies, its management or its shareholder through accredited mediators before formal
litigation. In a move towards resolving commercial disputes through mediation, SECP has issued
Companies (Mediation and Conciliation) Regulations, 201891 in the exercise of the powers
conferred by section 512 read with section 276 of the Companies Act, 2017. SECP has
constituted a panel to be called the Mediation and Conciliation Panel consisting of individuals
having such qualifications as may be specified for mediation under the Companies Act, 2017 and
Regulations, 2018.92 The parties to commercial disputes may apply at any time with mutual
consent for referring the matter to the Mediation and Conciliation Panel. SECP appoint one or

83 Report till Feb.2019 available at [Link]

(Last visited December, 20th,2019
84 Alternative Dispute Resolution (ADR) Act, 2017, Section 4.
85 Ibid, Section 3.
86 Ibid, Section 8.
87 Ibid, Section 5.
88 Ibid, Section 9.
89 Ibid, Section 10.
90 Ibid, Section 18.
91 S.R.O.227 (I)/2018, available at [Link]

2018/?wpdmdl=30620 (Last visited December 20th,2019).

92 Latest list of the penal is available at [Link]

mediators/?wpdmdl=35240&ind=DQoNCg0KDQoNCg0KDQoNCg0KDQoNCiAgICAgICAgICAgICAxNTYyNTgzMTIwd3B
kbV9BcHByb3ZlZCBQYW5uZWwgb2YgTWVkaWF0b3JzLnBkZg (Last visited December, 20th,2019).
more individuals from the panel as mediators.93 The terms of the Mediation and Conciliation
Panel are specified between the parties.94 Under the regulations, SECP may also include ADR
Centres established in various cities on the Panel.95 If the conduct of the mediator violates the
conditions laid down in the regulations, the party may immediately bring it to the notice of the
SECP which immediately after affording an opportunity of being heard change the mediator.96
The following procedure is prescribed for mediators in the disposal of matters: 97

i. He shall proceed and dispose of the process within ninety days of the date on which
reference was referred and forward his recommendations forthwith to the SECP.
ii. He shall in consultation with the parties fix the date or time of each mediation session
and all parties have to be present there.
iii. He shall hold the mediation at the place decided by the Commission as the case may
be or such other place where the parties and the mediator or conciliator jointly agree.
iv. He may conduct joint or separate meetings with the parties.
v. Each party shall, ten days before a session, provide to the mediator a brief
memorandum setting forth the issues, and his position in respect of those issues and
all information reasonably required for the mediator to understand the issue and a
copy of such memorandum shall also be given to the opposite party or parties.
vi. Each party shall furnish to the mediator such other information as may be required by
him in connection with the issues to be resolved.
When a mediation agreement is reached between the parties, it is reduced in writing and signed
by all the parties and the mediator. After signatures, the agreement is forwarded to the SECP. In
case no agreement is reached between the parties, the mediator reports the same to the SECP in
writing.98

93 Companies Act, 2017, Section 276(1).

94 Ibid, Section 276(3).
95 Companies (Mediation and Conciliation) Regulations, 2018, Rule 4(2).
96Ibid, Rule 9.
97Ibid, Rule 10.
98 Ibid, Rule 11.