Arbitration Law Concept And Scope

Arbitration is a legal process that takes place outside of the courts but still results in a final and legally binding decision. Parties involved in arbitration are opting out of the court system and submitting their case for resolution by a neutral, third-party arbitrator. The reasons for selecting arbitration vary from case to case, but it is generally faster, less expensive, and more informal than going to court. This mode of communications has the advantage of being private and confidential. The parties are free to negotiate the ground rules of arbitration within the limits set by law. This can include aspects like the number of arbitrators or whether formal rules of evidence will apply. Binding arbitration clauses can be written into most contracts, requiring that any dispute that arises in connection with the contract be resolved through binding arbitration instead of going to court. The cost of arbitration is generally shared by the parties involved. The decision an arbitrator makes is just as binding as a court judgment, and if necessary, it can be enforced by the courts.

Arbitration Law Practice in Pakistan

Pakistan is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards concluded in New York in June 1958 (also known as the New York Convention 1958). In order to implement and incorporate this convention within Pakistani law, the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011 was passed by Parliament. Arbitration (International Investment Disputes) Act, 2011 Under the force of these Acts, the Pakistani Courts have the jurisdiction to recognize and enforce Awards rendered pursuant to these Conventions as binding and to execute them within their territories in the same manner as judgments passed by Pakistani Courts.

What is Arbitration?

Arbitration is a dispute resolution process in which a neutral third party, called an arbitrator, hears evidence and/or reviews written submissions from the parties involved. The arbitrator then makes a decision based on what they have heard or seen. This decision is binding on the parties involved, and they agree to abide by it. Upon consideration of the evidence, the arbitrator makes a legally binding decision that can be enforced in the same manner as a civil court judgment. The key difference between arbitration and mediation is that arbitration is binding, meaning that you are stuck with the arbitrator's decision, while mediation is a negotiation process in which the mediator helps the parties come to a solution that they both agree on.

How does Arbitration Law Works?

Arbitration is often a more favourable option over going to court in various types of disputes because it's conducted privately between the two parties involved. This allows greater customization of how the arbitration will play out, such as limiting the number and types of witnesses or evidence presented. What's more, the parties can also agree in advance on what topics the arbitrator's ruling should cover. Consequently, arbitration can save time and money while still providing a fair resolution to the dispute. The ability to select an arbitrator with experience in the relevant subject matter is another important advantage of arbitration. In many cases, the evidence, testimony, and documents involved are complex. The arbitrator's expertise allows for a more efficient resolution of the issues, which saves time and money. Arbitration hearings are not open to the public and the decisions reached are not generally matters of public record, as they are conducted pursuant to private agreement.

What is High Low Arbitration?

In High-Low arbitration, the parties mutually establish a range for the arbitrator's award prior to the hearing. If the arbitrator's decision is between the high and low figures, that amount is the final award. However, if the award is above the pre-set maximum, it automatically moves down to the high figure agreed upon by the parties. If the arbitrator's decision is lower than the set minimum, the award will be increased to the predetermined low figure. In most instances, the parties agree not to inform the arbitrator of their High-Low agreement.

Is Arbitration Final?

Arbitration awards are final and legally binding on all parties involved in the arbitration. This means that the outcome of the arbitration cannot be appealed, except in very limited circumstances that are outlined in specific laws. An arbitration award can be confirmed by a court that has legal authority over the case. Once an arbitration award is confirmed, it has the same force as a decision made by a judge in a court of law. The rules of arbitration typically include an internal appeals procedure, but this can only be used if the parties involved specifically state in their contract that they agree to arbitrate using these rules.

Ultimate Role of Arbitration

There has been a significant improvement in the adaptation of arbitration as a technique for the resolution of international trade disputes in accordance with the escalation in international trade over the last several decades. Parties involved in a dispute must agree to use arbitration as a way to settle their trade or commercial disagreements. Arbitration, however, contains many gains over litigation, the usual method for the resolution of trade disputes. Many of the key advantages of arbitration are as follows: The main benefits of arbitration are that the processes are flexible and that arbitrators are neutral. Additionally, on the basis of procedural corporate expertise, arbitrators can be appointed to hear cases. Furthermore, international treaties may enforce the arbitration awards. Finally, since the arbitration proceedings will not be conveyed, the parties should be able to avoid the adversative publicity which usually follows litigation. The worldwide popularity of international arbitration has not gone unnoticed by institutions, leading to a possible increase in the number of arbitration centres to accommodate the demand. In response, legislatures have enacted streamlined arbitration laws and procedures, and improved national courts have been established. These actions show a general commitment to creating a favourable environment for arbitration and hold parties accountable to their obligations to resolve disputes through arbitration. Local courts typically read arbitration clauses very broadly, which means that they can protect against a wide range of disputes. This can make it more difficult for parties to challenge arbitration awards in court. Arbitration can be formal or informal. In formal arbitration, the parties may go to an established organization that specializes in arbitration proceedings. In ad hoc arbitration, the parties may make their own rules and decide which jurisdiction the arbitration will take place in. For an ad hoc arbitration, there are many different institutional arbitration organizations, as well as established rules, all over the world. These may be relevant to international franchisees established in Pakistan.

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Mr. Ahmed Burhan

Arbitration Law in Pakistan