THE ARBITRATION BILL, 2009

Table of Contents
PART I
INTRODUCTORY
1. Short title, extent and commencement
PART II
ARBITRATION
CHAPTER - I
General Provisions
2. Definitions
3. Receipt of written communications
4. Waiver of right to object
5. Extent of Court or judicial intervention
6. Administrative assistance for arbitration
CHAPTER - II
Arbitration Agreement
7. Definition and form of arbitration agreement
8. Power to refer parties to arbitration
9. Interim measures by Court
CHAPTER - III
Composition of Arbitral Tribunal
10. Number of arbitrators
11. Appointment of arbitrators
12. Grounds for challenge
13. Challenge procedure
14. Failure or impossibility to act
15. Appointment of arbitrator by substitution on termination of mandate
CHAPTER - IV
Jurisdiction of Arbitral Tribunals
16. Competence of arbitral tribunal to rule on its jurisdiction
17. Power of arbitral tribunal to order interim measures
CHAPTER - V
Conduct of Arbitral Proceedings
18. Equal treatment of parties
19. Determination of rules of procedure
20. Place of arbitration
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21. Commencement of arbitral proceedings
22. Language
23. Statements of claim and defence
24. Hearings and written proceedings
25. Default of a party
26. Expert appointment by arbitral tribunal
27. Court assistance in taking evidence
CHAPTER - VI
Making of Arbitral Award and Termination of Proceedings
28. Rules applicable to substance of dispute
29. Decision making by panel of arbitrators
30. Settlement
31. Form and contents of arbitral award
32. Termination of proceedings
33. Correction and interpretation of arbitral award or additional award
CHAPTER - VII
Recourse against Arbitral Award
34. Application for setting aside arbitral award
CHAPTER - VIII
Finality and Enforcement of Arbitral Awards
35. Finality of arbitral awards.
36. Enforcement of arbitral awards
CHAPTER - IX
Appeals
37. Appealable orders
CHAPTER - X
Miscellaneous
38. Small Claims and Minor Offences Court not to have jurisdiction over
arbitration save arbitration in suits before it
39. Procedure, powers and jurisdiction of Court
40. Deposits
41. Arbitration agreement not to be discharged by death of party thereto
42. Provisions in case of insolvency
43. Lien on arbitral award and deposits as to costs
44. Limitations
PART III
RECOGNITION AND ENFORCEMENT OF CERTAIN
FOREIGN AWARDS, ETC.
CHAPTER - I
Arbitral Awards under the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards Done at New York
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45. Definitions
46. Jurisdiction of Court
47. Enforcement of arbitration agreements
48. Furnishing of documents
49. Enforcement of foreign arbitral awards
50. Unenforceable foreign arbitral awards
51. Inconsistency
52. Power to make rules
53. Savings
54. Federal Government to amend the First Schedule
CHAPTER - II
Arbitration under the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States
55. Definitions
56. Registration of awards
57. Effect of registration
58. Binding on the Federal Government
59. Federal Government contribution to expenses under the Convention
60. Exclusion of other provisions
61. Certain provisions of Convention to have force of law
62. Power to make rules
63. Federal Government to amend the Second Schedule
PART IV
CONCILIATION
64. Definition, application and scope
65. Application of certain laws barred
66. Commencement of conciliation proceedings
67. Number of conciliators
68. Appointment of conciliators
69. Administrative assistance for conciliation
70. Submission of statements to conciliator
71. Conduct of conciliation proceedings
72. Communication between conciliator and parties
73. Disclosure of information
74. Confidentiality
75. Settlement agreement
76. Effect of settlement agreement
77. Termination of conciliation proceedings
78. Resort to arbitral or judicial proceedings
79. Costs
80. Deposits
81. Role of conciliator in other proceedings
82. Admissibility of evidence in other proceedings
PART V
PAKISTAN NATIONAL ARBITRATION AND
CONCILIATION CENTRE
83. Definitions
84. Establishment of the Centre
85. Powers and functions of the Centre
86. Director General
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87. Appointment of officers and staff of the Centre
88. Fund
89. Accounts and audit
90. Annual and other reports
91. Power to make rules
PART VI
MISCELLANEOUS PROVISIONS
92. Power of the Federal Government to make rules
93. Power of High Court to make rules
94. Removal of difficulties
95. Repeal and savings
THE FIRST SCHEDULE
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards
THE SECOND SCHEDULE
Convention on the Settlement of Investment Disputes between
States and Nationals of Other States
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A
BILL
to re-enact, amend and consolidate the law relating to domestic arbitration, international
commercial arbitration, recognition and enforcement of foreign arbitral awards as well as
settlement of international investment dispute through arbitration and also to provide for
conciliatory measures and for matters ancillary or incidental thereto or therewith
WHEREAS it is necessary to re-enact and revise the law relating to domestic
arbitration keeping in view the changing international practices;
AND WHEREAS following international model law, rules and practices will help to
develop harmonious international economic relations with other business partners in
international trade and commerce;
AND WHEREAS the United Nations Commission on International Trade Law
(UNCITRAL) has adopted the UNCITRAL Model Law on International Commercial
Arbitration and Conciliation in 1985 and 2002, as well as Model Arbitration and Conciliation
Rules in 1976 and 1980, respectively;
AND WHEREAS the General Assembly of the United Nations has recommended by
its Resolutions that all countries give due consideration to the said Model Law in view of the
desirability of uniformity of the law of arbitral procedures and conciliatory measures and also
keeping in view the specific needs of international commercial arbitration and conciliation
practices;
AND WHEREAS it is also desirable to institutionalize the services relating to
arbitration and conciliation for their systematic development and regulation and to effectively
collaborate and coordinate with similar forums at international level;
AND WHEREAS it is expedient to re-enact law of arbitration and provide for
conciliation keeping in view the aforesaid Model Law and Rules thereof;
It is hereby enacted as follows :–
PART I
INTRODUCTORY
1. Short title, extent and commencement.– (1) This Act may be called the
Arbitration Act, 2009.
(2) It extends to the whole of Pakistan.
(3) It shall come into force at once.
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PART II
ARBITRATION
CHAPTER - I
General Provisions
2. Definitions.- (1) For the purposes of this Part and Part IV, unless there is
anything repugnant in the subject or context ,–
(a) “arbitration” means any arbitration whether or not administered by a
permanent arbitral institution;
(b) “arbitration agreement” means an agreement referred to in section 7;
(c) “arbitral award” includes an interim award or additional award;
(d) “arbitral tribunal” means a sole arbitrator or a panel of arbitrators;
(f) “conciliation” means conciliation as defined in Part 64;
(g) “conciliator” means a conciliator under section 68;
(h) “Court” means the principal civil court of original jurisdiction namely the
court of the District Judge having jurisdiction to decide the question forming
the subject-matter of the arbitration if the same had been the subject-matter of
a suit; and includes–
(i) a High Court, in exercise of its ordinary original civil jurisdiction;
and
(ii) the court of the Additional District Judge;
but does not include any civil court of a grade inferior to such principal civil
court;
(i) “international commercial arbitration” includes an arbitration relating to
certain disputes arising out of legal relationship, whether contractual or not,
considered as commercial under the law in force in Pakistan where at least
one of the parties is–
(i) an individual who is a national of any country, or habitually resident
in another country other than Pakistan; or
(ii) a body corporate which is incorporated outside Pakistan in any other
country; or
(iii) a company or an association of persons or a body of individuals
whose principal office or central management and control is
exercised from outside Pakistan in any other country; or
(iv) the Government of a foreign country;
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(j) “legal representative” means a person who in law represents the estate of a
deceased person, and includes a party acts in a representative character, the
person on whom the estate devolves on the death of the party so acting;
(k) “party” means a party to an arbitration agreement, or, a party agreed for
conciliation, as the case may be; and
(i) “reference” means a reference to arbitration or conciliation.
(2) This Part and Part IV shall apply where the place of arbitration or conciliation
is in Pakistan.
(3) This Part and Part IV shall not affect any other law for the time being in force
in Pakistan by virtue of which certain disputes may not be submitted to arbitration,
conciliation or for alternative dispute resolution or may be submitted to arbitration or
conciliation only according to the provisions of that law.
(4) This Part except sub-section (1) of section 40, sections 41 and 43 shall apply
to every arbitration under any other enactment for the time being in force, as if the arbitration
were pursuant to an arbitration agreement and as if that other enactment were an arbitration
agreement, except in so far as the provisions of this Part are inconsistent with that other
enactment or with any rules made thereunder.
(5) Subject to the provisions of sub-section (4), and save in so far as is otherwise
provided by any law for the time being in force or in any agreement in force between Pakistan
and any other country or countries, this Part shall apply to all arbitrations and to all
proceedings relating thereto.
(6) Where this Part or Part IV, except section 28, leaves the parties free to
determine a certain issue, such freedom shall include the right of the parties to authorize any
person including an institution, to determine that issue.
(7) An arbitral award made under this Part shall be considered as a domestic
award.
(8) Where this Part refers to the fact that the parties have agreed or that they may
agree, or, in any other way refers to an agreement of the parties, that agreement shall include
any arbitration rules referred to in that agreement.
(9) Where this Part, other than clause (a) of section 25 or clause (a) of subsection
(2) of section 32, refers to a claim, it shall also apply to a counterclaim, and where it
refers to a defence, it shall also apply to a defence to that counterclaim.
3. Receipt of written communications.– (1) Unless otherwise agreed by the
parties,–
(a) any written communication is deemed to have been received if it is delivered
to the addressee personally or at his place of business, habitual residence or
mailing address;
(b) if none of the places referred to in clause (a) can be found after making a
reasonable inquiry, a written communication is deemed to have been received
if it is sent to the addressee’s last known place of business, habitual residence
or mailing address by registered letter or by any other means which provides
a record of the attempt to deliver it; and
(c) the communication is deemed to have been received on the day it is so
delivered.
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(2) This section does not apply to written communications in respect of
proceedings of any Court or judicial authority.
4. Waiver of right to object.– A party who knows that any provision of this
Part from which the parties may derogate, or any requirement under the arbitration agreement,
has not been complied with and yet proceeds with the arbitration without stating his objection
to such non-compliance without undue delay or, if a time-limit is provided there for stating
that objection, within such period of time, shall be deemed to have waived his right to so
object.
5. Extent of Court or judicial intervention.– Notwithstanding anything
contained in any other law for the time being in force, in matters governed by this Part, no
judicial authority shall intervene except where so provided in this Part.
6. Administrative assistance for arbitration.– The parties, or the arbitral
tribunal with the consent of the parties, in order to facilitate the conduct of the arbitral
proceedings, may arrange for administrative assistance by a person or suitable institution.
CHAPTER - II
Arbitration Agreement
7. Definition and form of arbitration agreement.– (1) For the purposes of
this Part, “arbitration agreement” means a written agreement to submit to arbitration all or
certain differences or disputes, present or future, by the parties in respect of a defined legal
relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a
contract or in the form of a separate agreement.
(3) An arbitration agreement is in writing if it is contained in–
(a) a document signed by the parties; or
(b) an exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the
existence of the agreement is alleged by one party and not denied by
the another.
(4) There reference in a contract to a document containing an arbitration clause
constitutes an arbitration agreement provided that the contract is in writing and the reference
is such as to make that arbitration clause part of the contract.
(5) Notwithstanding anything contained in a contract or unless any contrary
intention appears in the subject or context, an arbitration clause shall be deemed to be the part
of all commercial contracts.
8. Power to refer parties to arbitration.– (1) A Court before which an action
is brought in a matter which is the subject of an arbitration agreement shall, if a party so
applies not later than when submitting his first statement on the substance of the dispute, refer
the parties to arbitration unless it finds that the arbitration agreement is null and void,
inoperative or incapable of being performed.
(2) The Court shall not entertain an application referred to in sub-section (1)
unless it is accompanied by the original arbitration agreement or a certified copy thereof.
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(3) Notwithstanding that an application has been made under sub-section (1) and
that the issue is pending before the Court, arbitration may be commenced or continued and an
arbitral award made.
(4) Notwithstanding anything contained in sub-sections (1), (2) or (3), where in
any suit all the parties interested agree that any dispute or matter in difference between them
in the suit shall be referred to arbitration, they may, at any time before judgment is
pronounced, apply in writing to the Court for an order of reference.
(5) Subject to sub-section (4), an arbitrator shall be appointed in such manner as
may be agreed upon between the parties, or, where parties have failed to reach on an
agreement as the Court may deem fit subject to the provisions of this Part where parties have
failed to reach an agreement, as the case may be.
(6) Where a matter or dispute is referred to arbitration under sub-section (4), save
in the manner and to the extent provided in this Part, the Court shall not deal with such matter
or dispute which is the subject-matter of the suit.
(7) Where some only of the parties to a suit apply to have the matters in
difference or dispute between them referred to arbitration in accordance with, and in the
manner provided in sub-section (4), the Court may, if it thinks fit, so refer such matters or
points of dispute to arbitration (provided that the same can be separated from the rest of the
subject-matter of the suit) in the manner provided in sub-section (4), but the suit shall
continue so far as it relates to the parties who have not joined in the said application and to
matters not contained in the said reference as if no such application had been made, and an
arbitral award made in pursuance of such a reference shall be binding only on the parties who
have joined in the application.
9. Interim measures by Court.– A party may, before or during arbitral
proceedings or at any time after the making of the arbitral award but before it is enforced in
accordance with section 36, apply to a Court–
(a) for the appointment of a guardian for a minor or person of unsound mind for
the purposes of arbitral proceedings; or
(b) for an interim measure of protection in respect of any of the following
matters, namely:–
(i) the preservation, interim custody or sale of any goods which are the
subject-matter of the arbitration agreement;
(ii) securing the amount in dispute in the arbitration;
(iii) the detention, preservation or inspection of any property or thing
which is the subject-matter of the dispute in arbitration or reference,
or as to which any question may arise therein and authorising for any
of the aforesaid purposes any person to enter upon or into any land or
building in the possession of any party to the reference, or
authorising any samples to be taken or any observation to be made,
or experiment to be tried, which may be necessary or expedient for
the purpose of obtaining full information or evidence;
(iv) interim injunction or the appointment of a receiver;
(v) such other interim measure of protection as may appear to the court
to be just and convenient,
and the Court shall have the same power for making orders as it has for the purpose of, and in
relation to, any proceedings before it.
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CHAPTER - III
Composition of Arbitral Tribunal
10. Number of arbitrators.– (1) The parties are free to determine the number
of arbitrators, provided that such number shall not be an even number.
(2) Failing the determination referred to in sub-section (1), the arbitral tribunal
shall consist of a sole arbitrator.
11. Appointment of arbitrators.– (1) Any person irrespective of his nationality
may be an arbitrator, unless otherwise agreed by the parties.
(2) The parties are free to agree on a procedure for appointing the arbitrator or
arbitrators subject to the provisions of sub-section (6).
(3) Failing such agreement referred to in sub-section (2), in an arbitration with
three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators
shall appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies and a party fails to
appoint an arbitrator within thirty days from the receipt of a request to do so from the other
party; or the two appointed arbitrators fail to agree on the third arbitrator within thirty days
from the date of their appointment, the appointment shall be made, upon request of a party, by
the Court or any person or institution designated by him.
(5) Failing any agreement referred to in sub-section (2), in an arbitration with a
sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a
request by one party from the other party to so agree the appointment shall be made, upon
request of a party, by the Court or any person or institution designated by him.
(6) Where, under an appointment procedure agreed upon by the parties,–
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fails to reach an agreement
expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to
him or it under that procedure,
a party may request the Court or any person or institution designated by him to take the
necessary measure, unless the agreement on the appointment procedure provides other means
for securing the appointment.
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or subsection
(6) to the Court or the person or institution designated by him shall be final.
(8) The Court or the person or institution designated by him, in appointing an
arbitrator, shall have due regard to any qualifications required of the arbitrator by the
agreement of the parties; and other considerations as are likely to secure the appointment of
an independent and impartial arbitrator.
(9) In the case of appointment of sole or third arbitrator in an international
commercial arbitration, the Court or the person or institution designated by him may appoint
an arbitrator of a nationality other than the nationalities of the parties where the parties belong
to different nationalities.
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(10) The High Court may make rules, as it may deem appropriate for dealing with
matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to a Court.
(11) Where more than one request has been made under sub-section (4) or subsection
(5) or sub-section (6) to different Courts or their designates, the Court or his designate
to whom the request has been first made under the relevant sub-section shall alone be
competent to decide on the request.
(12) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10)
arise in an international commercial arbitration, the reference to Court in those sub-sections
shall be construed as a reference to the “Chief Justice of Pakistan”.
(13) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10)
arise in any other arbitration, the reference to “High Court” in those sub-sections shall be
construed as a reference to the Court within whose local limits the principal civil Court
referred to in clause (e) of sub-section (1) of section 2 is situate and, where the Court itself is
the High Court referred to in that clause, to the Chief Justice of that Court.
12. Grounds for challenge.– (1) When a person is approached in connection
with his possible appointment as an arbitrator, he shall disclose in writing any circumstances
likely to give rise to justifiable doubts as to his impartiality or independence.
(2) An arbitrator, from the time of his appointment and throughout the arbitral
proceedings, shall, without delay, disclose any such circumstances to the parties referred to in
sub-section (1) unless they have already been informed of them by him.
(3) An arbitrator may be challenged only if circumstances exist that give rise to
justifiable doubts as to his independence or impartiality, or if he does not possess the
qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose
appointment he has participated, only for reasons of which he becomes aware after the
appointment has been made.
13. Challenge procedure.– (1) The parties are free to agree on a procedure for
challenging an arbitrator, subject to sub-section (3).
(2) Failing any agreement referred to in sub-section (1), a party who intends to
challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of
the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section
(3) of section 12, send a written statement of the reasons for the challenge to the arbitral
tribunal :
Provided that the challenged arbitrator withdraws from his office or the other party
agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(3) If a challenge under any procedure agreed upon by the parties or under the
procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the
arbitral proceedings and make an arbitral award.
(4) Where an arbitral award is made under sub-section (3), the party challenging
the arbitrator may make an application for setting aside such an arbitral award in accordance
with section 34.
(5) Where an arbitral award is set aside on an application made under sub-section
(4), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees
or not.
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14. Failure or impossibility to act.– (1) The mandate of an arbitrator shall
terminate if he –
(a) becomes de jure or de facto unable to perform his functions or for other
reasons fails to act without undue delay; and
(b) withdraws from his office or the parties agree to the termination of his
mandate.
(2) If a controversy remains concerning any of the grounds referred to in clause
(a) of sub-section (1), any party may apply to the Court to decide on the termination of the
mandate unless otherwise agreed by the parties.
(3) If, under this section or sub-section (2) of section 13, an arbitrator withdraws
from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not
imply acceptance of the validity of any ground referred to in this section or sub-section (3)
and sub-section (4) of section 12.
15. Appointment of arbitrator by substitution on termination of mandate.–
(1) The mandate of an arbitrator, in addition to the circumstances referred to in section 13 or
section 14, shall terminate where he withdraws from office for any reason; or where parties
revoke his mandate by an agreement.
(2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be
appointed according to the rules that were applicable to the appointment of the arbitrator
being replaced.
(3) Unless otherwise agreed by the parties,–
(a) where an arbitrator is replaced under sub-section (2), any hearings previously
held may be repeated at the discretion of the arbitral tribunal; and
(b) an order or ruling of the arbitral tribunal made prior to the replacement of an
arbitrator under this section shall not be invalid solely because there has been
a change in the composition of the arbitral tribunal.
CHAPTER - IV
Jurisdiction of Arbitral Tribunals
16. Competence of arbitral tribunal to rule on its jurisdiction.– (1) The
arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with
respect to the existence or validity of the arbitration agreement, and for that purpose,–
(a) an arbitration clause which forms part of a contract shall be treated as an
agreement independent of the other terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is null and void shall not
entail ipso jure the invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not
later than the submission of the statement of defence :
Provided that a party shall not be precluded from raising such a plea merely because
that he has appointed, or participated in the appointment of, an arbitrator :
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Provided further that a plea regarding exceeding the scope of arbitral tribunal’s
authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is
raised during the arbitral proceedings.
(3) The arbitral tribunal may, in either of the cases referred to in sub-section (2),
admit a later plea if it considers the delay justified.
(4) The arbitral tribunal shall decide on a plea referred to in sub-section (2) as a
preliminary question within thirty days; and, where the arbitral tribunal takes a decision
rejecting the plea, continue with the arbitral proceedings and make an arbitral award on the
merits :
Provided that no appeal shall lie against such decision of the arbitral tribunal.
(5) A party aggrieved by such an arbitral award may make an application for
setting aside such an arbitral award in accordance with section 34.
17. Power of arbitral tribunal to order interim measures.– Unless otherwise
agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take
any interim measure of protection as the arbitral tribunal may consider necessary in respect of
the subject-matter of the dispute :
Provided that the arbitral tribunal may require a party to provide appropriate security
in connection with an interim measure so ordered.
CHAPTER - V
Conduct of Arbitral Proceedings
18. Equal treatment of parties.– The parties shall be treated with equality and
each party shall be given a full opportunity to present his case.
19. Determination of rules of procedure.– (1) The arbitral tribunal shall not be
bound by the provisions of the Code of Civil Procedure, 1908 (V of 1908) or the Qanun-e-
Shahadat, 1984 (President’s Order No. 10 of 1984).
(2) Subject to this Part, the parties are free to agree on the procedure to be
followed by the arbitral tribunal in conducting its proceedings.
(3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may,
subject to this Part, conduct the arbitral proceedings in the manner it considers appropriate
and necessary.
(4) The power of the arbitral tribunal under sub-section (3) includes the power to
determine the admissibility, relevance, materiality and weight of any evidence.
20. Place of arbitration.– (1) The parties are free to agree on the place of
arbitration and failing any agreement, the place of arbitration shall be determined by the
arbitral tribunal having regard to the circumstances of the case, including the convenience of
the parties.
(2) Notwithstanding sub-section (1), the arbitral tribunal may, unless otherwise
agreed by the parties, meet at any place it considers appropriate for consultation among its
members, for hearing witnesses, experts or the parties, or for inspection of goods, other
property or documents.
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21. Commencement of arbitral proceedings.– Unless otherwise agreed by the
parties, the arbitral proceedings in respect of a particular dispute commence on the date on
which a request for that dispute to be referred to arbitration is received by the respondent.
22. Language.– (1) The parties are free to agree on the language or languages
to be used in the arbitral proceedings and failing such agreement, the arbitral tribunal shall
determine the language or languages to be used in the arbitral proceedings.
(2) The agreement or determination, unless otherwise specified, shall apply to
any written statement by a party, any hearing and any arbitral award, decision or other
communication by the arbitral tribunal.
(3) The arbitral tribunal may order that any documentary evidence shall be
accompanied by a translation into the language or languages agreed upon by the parties or
determined by the arbitral tribunal.
23. Statements of claim and defence.– (1) Within the period of time agreed
upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts
supporting his claim, the points at issue and the relief or remedy sought, and the respondent
shall state his defence in respect of these particulars, unless the parties have otherwise agreed
as to the required elements of those statements.
(2) The parties may submit with their statements all documents they consider to
be relevant or may add a reference to the documents or other evidence they will submit.
(3) Unless otherwise agreed by the parties, either party may amend or
supplement his claim or defence during the course of the arbitral proceedings, unless the
arbitral tribunal considers it inappropriate to allow the amendment or supplement having
regard to the delay in making it.
24. Hearings and written proceedings.– (1) Subject to any contrary
agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings for
the presentation of evidence or for oral argument, or whether the proceedings shall be
conducted on the basis of documents and other materials :
Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of
the proceedings, on a request by a party, unless the parties have agreed that no oral hearing
shall be held.
(2) The parties shall be given sufficient advance notice of any hearing and of any
meeting of the arbitral tribunal for the purposes of inspection of goods, other property or
documents.
(3) All statements, documents or other information supplied to, or applications
made to the arbitral tribunal by one party shall be communicated to the other party, and any
expert report or evidentiary document on which the arbitral tribunal may rely in making its
decision shall be communicated to the parties.
25. Default of a party.– Unless otherwise agreed by the parties, where, without
showing sufficient cause,–
(a) the claimant fails to communicate his statement of claim in accordance with
sub-section (1) of section 23, the arbitral tribunal shall terminate the
proceedings;
(b) the respondent fails to communicate his statement of defence in accordance
with sub-section (1) of section 23, the arbitral tribunal shall continue the
proceedings without treating that failure in itself as an admission of the
allegations by the claimant; or
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(c) any party fails to appear at a hearing or to produce documentary evidence, the
arbitral tribunal may continue the proceedings and make the arbitral award on
the evidence before it.
26. Expert appointed by arbitral tribunal.– (1) Unless otherwise agreed by
the parties, the arbitral tribunal may–
(a) appoint one or more experts to report to it on specific issues to be determined
by the arbitral tribunal, and
(b) require a party to give the expert any relevant information or to produce, or to
provide access to, any relevant documents, goods or other property for his
inspection.
(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral
tribunal considers it necessary, the expert shall, after delivery of his written or oral report,
participate in a hearing where the parties have the opportunity to put questions to him and to
present expert witnesses in order to testify on the points at issue :
Provided that the expert shall, on the request of a party, make available to that party
for examination all goods, other property or documents in his possession with which he was
provided in order to prepare his report, unless otherwise agreed by the parties.
27. Court assistance in taking evidence.– (1) The arbitral tribunal, or a party
with the approval of the arbitral tribunal, may apply to the Court for assistance in taking
evidence.
(2) The application made under sub-section (1) shall specify–
(a) the names and addresses of the parties and the arbitrators;
(b) the general nature of the claim and the relief sought;
(c) the evidence to be obtained, in particular,–
(i) the name and address of any person to be heard as witness or expert
witness and a statement of the subject-matter of the testimony
required;
(ii) the description of any document to be produced or property to be
inspected; or
(d) any other necessary fact for the purpose.
(3) The Court may, within its competence and according to its rules on taking
evidence, execute the request by ordering that the evidence be provided directly to the arbitral
tribunal.
(4) The Court may, while making an order under sub-section (3), issue the same
processes to witnesses as it may issue in suits tried before it.
(5) Persons failing to attend in accordance with such process, or making any
other default, or refusing to give their evidence, or guilty of any contempt to the arbitral
tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages,
penalties and punishments by order of the Court on the representation of the arbitral tribunal
as they would incur for the like offences in suits tried before the Court.
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(6) In this section the expression “processes” includes summonses and
commissions for the examination of witnesses and summonses to produce documents.
CHAPTER - VI
Making of Arbitral Award and Termination of Proceedings
28. Rules applicable to substance of dispute.– (1) Where the place of
arbitration is situate in Pakistan,–
(a) in an arbitration other than an international commercial arbitration, the
arbitral tribunal shall decide the dispute submitted to arbitration in
accordance with the law for the time being in force in Pakistan;
(b) in international commercial arbitration,–
(i) the arbitral tribunal shall decide the dispute in accordance with the
rules or law designated by the parties as applicable to the substance
of the dispute;
(ii) any designation by the parties of the law or legal system of a given
country shall be construed, unless otherwise expressed, as directly
referring to the substantive law of that country and not to its conflict
of laws or rules; or
(iii) failing any designation of the law under clause (a) by the parties, the
arbitral tribunal shall apply the law or rules it considers to be
appropriate, keeping in view all the circumstances relating to the
dispute.
(2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur,
only if the parties have expressly authorised it to do so.
(3) In all cases, the arbitral tribunal shall decide in accordance with the terms of
the contract and shall take into account the usages of the trade applicable to the transaction.
29. Decision making by panel of arbitrators.– (1) In arbitral proceedings with
more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of
all its members unless otherwise agreed by the parties :
Provided that questions of procedure may be decided by the presiding arbitrator if so
authorised by the parties or all the members of the arbitral tribunal.
30. Settlement.– (1) The arbitral tribunal may use mediation, conciliation or
other procedures at any time during the arbitral proceedings to encourage settlement if it is
not contrary to the arbitration agreement or the agreement of the parties.
(2) If, during, arbitral proceedings, the parties settle the dispute, the arbitral
tribunal shall terminate the proceedings and, if requested by the parties and not objected to by
the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.
(3) An arbitral award on agreed terms shall be made in accordance with the
provisions of section 31 and shall state that it is an arbitral award and such arbitral award has
the same status and effect as any other arbitral award on the substance and merits of the
dispute.
31. Form and contents of arbitral award.– (1) An arbitral award shall be
made in writing and shall be signed by the members of the arbitral tribunal :
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Provided that in arbitral proceedings with more than one arbitrator, the signatures of
the majority of all members of the arbitral tribunal shall be sufficient so long as the reason for
any omitted signature is stated.
(2) The arbitral award shall state the reasons upon which it is based, unless the
parties have agreed that no reasons are to be given, or the award is an arbitral award on agreed
terms under section 30.
(3) The arbitral award shall state its date and the place of arbitration as
determined in accordance with sub-section (1) of section 20 and the award shall be deemed to
have been made at that place.
(4) After the arbitral award is made, a signed copy shall be delivered to each
party, and to such Court if matter was referred by a Court.
(5) The arbitral tribunal may, at any time during the arbitral proceedings, make
an interim arbitral award on any matter with respect to which it may make a final arbitral
award.
(6) Unless otherwise agreed by the parties, where and in so far as an arbitral
award is for the payment of money, the arbitral tribunal may include in the sum for which the
award is made interest, at such rate as it deems reasonable, on the whole or any part of the
money, for the whole or any part of the period between the date on which the cause of action
arose and the date on which the award is made.
(7) Unless the arbitral award otherwise directs, a sum directed to be paid by an
arbitral award shall carry interest at the per annum rate prevailing during such period for such
bank loans and notified or declared by the State Bank of Pakistan from the date of the award
to the date of payment.
(8) Unless otherwise agreed by the parties, the costs of the arbitration shall be
fixed by the arbitral tribunal; and the arbitral tribunal shall also specify–
(a) the party entitled to costs,
(b) the party who shall pay the costs,
(c) the amount of costs or method of determining that amount, and
(d) the manner in which the costs shall be paid.
Explanation.– For the purpose of this sub-section, “costs” means reasonable costs
relating to the fees and expenses of the arbitrators and witnesses, legal fees and expenses, any
administrative expenses or fees of the institution supervising the arbitration, and any other
expenses incurred in connection with the arbitral proceedings and the arbitral award.
(9) Notwithstanding anything contained in sub-section (8), the Court may
determine the cost of arbitration where the matter is referred by the Court or as prescribed by
the Centre.
32. Termination of proceedings.– (1) The arbitral proceedings shall be
terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section
(2).
(2) The arbitral tribunal shall issue an order for the termination of the arbitral
proceedings where–
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(a) the claimant withdraws his claim, unless the respondent objects to the order
and the arbitral tribunal recognises a legitimate interest on his part in
obtaining a final settlement of the dispute,
(b) the parties agree on the termination of the proceedings, or
(c) the arbitral tribunal finds that the continuation of the proceedings has for any
other reason become unnecessary or impossible.
(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the
arbitral tribunal shall terminate with the termination of the arbitral proceedings.
33. Correction and interpretation of arbitral award or additional award.–
(1) Within thirty days from the date of receipt of the arbitral award including an additional
award, unless another period of time has been agreed upon by the parties–
(a) a party, with notice to the other party, may request the arbitral tribunal to
correct any errors in computation, any clerical or typographical errors or any
other errors of a similar nature occurring in the award;
(b) if so agreed by the parties, a party, with notice to the other party, may request
the arbitral tribunal to give an interpretation of a specific point or part of the
award.
(2) If the arbitral tribunal considers the request made under sub-section (1) to be
justified, it shall make the correction or give the interpretation within thirty days from the
receipt of the request and the interpretation shall form part of the arbitral award and such
interpretation shall be final for the purpose and on the point.
(3) The arbitral tribunal may correct any error of the type referred to in clause (a)
of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award.
(4) Unless otherwise agreed by the parties, a party with notice to the other party,
may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to
make an additional arbitral award as to claims presented in the arbitral proceedings but
omitted from the arbitral award.
(5) If the arbitral tribunal considers the request made under sub-section (4) to be
justified, it shall make the additional arbitral award within sixty days from the receipt of such
request.
(6) The arbitral tribunal may extend, if necessary, the period of time within
which it shall make a correction, give an interpretation or make an additional arbitral award
under sub-section (2) or sub-section (5).
(7) Section 31 shall apply to a correction or interpretation of the arbitral award or
to an additional arbitral award made under this section.
CHAPTER - VII
Recourse against Arbitral Award
34. Application for setting aside arbitral award.– (1) Recourse to a Court
against an arbitral award may be made only by an application for setting aside such award in
accordance with sub-section (2) and sub-section (3) unless the matter is referred by a Court
for arbitration.
(2) An arbitral award may be set aside by the Court only if–
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(a) the party making the application furnishes proof that–
(i) a party to the arbitration agreement was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon, under the
law for the time being in force; or
(iii) the party making the application was not given proper notice of the
appointment of an arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not
falling within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to
arbitration :
Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted, only that
part of the arbitral award which contains decisions on matters not
submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was
not in accordance with the agreement of the parties, unless such
agreement was in conflict with a provision of this Part from which
the parties cannot derogate, or, failing such agreement, was not in
accordance with this Part; or
(b) the Court finds that–
(i) the subject-matter of the dispute is not capable of settlement by
arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of Pakistan.
Explanation.– Without prejudice to the generality of expression public policy it also
includes an arbitral award the making of which was induced or affected by fraud,
misrepresentation or corruption and in violation of confidentiality.
(3) An application for setting aside may not be made after three months have
elapsed from the date on which the party making that application had received the arbitral
award or, if a request had been made under section 33, from the date on which that request
had been disposed of by the arbitral tribunal :
Provided that if the Court is satisfied that the applicant was prevented by sufficient
cause from making the application within the said period of three months it may entertain the
application within a further period of thirty days, but not thereafter in any case.
(4) On receipt of an application under sub-section (1), the Court may, where it is
appropriate and it is so requested by a party, adjourn the proceedings for a period of time
determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral
proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the
grounds for setting aside the arbitral award.
CHAPTER - VIII
Finality and Enforcement of Arbitral Awards
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35. Finality of arbitral awards.– (1) Subject to this Part an arbitral award shall
be final and binding on the parties and persons claiming under them respectively.
(2) Notwithstanding anything contained in sub-section (1), where the reference
was made by the Court and the arbitral award is submitted to such Court, the Court shall, after
the time for making an application to set aside the award has expired under section 34, or such
application having been made, after refusing it, proceed to pronounce judgment according to
the arbitral award, and upon the judgment so pronounced a decree shall follow for
enforcement under section 36, and no appeal shall lie from such decree except on the ground
that it is in excess of, or not otherwise in accordance with, the arbitral award.
36. Enforcement of arbitral awards.– Where the time for making an
application to set aside the arbitral award under section 34 has expired, or such application
having been made, it has been refused, the award shall be enforced under the Code of Civil
Procedure, 1908 ( V of 1908), in the same manner as if it were a decree of the Court.
CHAPTER - IX
Appeals
37. Appealable orders.– (1) An appeal shall lie from the following orders (and
from no others) to the Court authorised by law to hear appeals from original decrees of the
Court passing the order, namely:–
(a) granting or refusing to grant any interim measure under section 9;
(b) setting aside or refusing to set aside an arbitral award under section 34;
(c) against an order of the arbitral tribunal accepting the plea referred to in subsection
(2) of section 16; or
(d) again an order of the arbitral tribunal for granting or refusing to grant an
interim measure under section 17.
(2) No second appeal shall lie from an order passed in appeal under this section,
but nothing in this section shall affect or take away any right to appeal to the Supreme Court.
CHAPTER - X
Miscellaneous
38. Small Claims and Minor Offences Court not to have jurisdiction over
arbitration save arbitration in suits before it.– A Small Claims and Minor Offences Court
shall have no jurisdiction over any arbitration proceedings or over any application arising
thereout save on application made under sub-section (4) of section 8.
39. Procedure, powers and jurisdiction of Court.– (1) Notwithstanding
anything contained elsewhere in this Part or in any other law for the time being in force,
where with respect to an arbitration agreement any application under this Part has been made
in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all
subsequent applications arising out of that agreement and the arbitral proceedings shall be
made in that Court and in no other Court.
(2) Subject to the provisions of this Act and of rules made thereunder–
(a) the provisions of the Code of Civil Procedure, 1908 (V of 1908), shall apply
to all proceedings before the Court, and to all appeals, under this Act; and
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(b) the Court shall have, for the purpose of, and in relation to, arbitration
proceedings, the same power of making orders in respect of any of the
matters mentioned in different provisions of this Act as it has for the purpose
of, and in relation to, any proceedings before the Court:
Provided that nothing in clause (b) shall be taken to prejudice any power which may
be vested in an arbitral tribunal for making orders with respect to any of such matters relating
to arbitration.
40. Deposits.– (1) The arbitral tribunal may fix the amount of the deposit or
supplementary deposit, as the case may be, as an advance for the costs referred to in subsection
(8) of section 31, which it expects will be incurred in respect of the claim submitted to
it :
Provided that where, apart from the claim, a counterclaim has been submitted to the
arbitral tribunal, it may fix separate amount of deposit for such claim and counterclaim.
(2) The deposit referred to in sub-section (1) shall be payable in equal shares by
the parties :
Provided that where one party fails to pay his share of the deposit, the other party
may pay that share:
Provided further that where the other party also does not pay the aforesaid share in
respect of the claim or the counterclaim, the arbitral tribunal may suspend or terminate the
arbitral proceedings in respect of such claim or counterclaim, as the case may be.
(3) Upon termination of the arbitral proceedings, the arbitral tribunal shall render
an accounting to the parties of the deposits received and shall return any unexpended balance
to the party or parties, as the case may be, or also to such Court if the matter is referred by a
Court.
41. Arbitration agreement not to be discharged by death of party thereto.–
(1) An arbitration agreement shall not be discharged by the death of any party thereto either
as respects the deceased or as respects any other party, but shall in such event be enforceable
by or against the legal representative of the deceased.
(2) The mandate of an arbitrator shall not be terminated by the death of any party
by whom he was appointed.
(3) Nothing in this section shall affect the operation of any law by virtue of
which any right of action is extinguished by the death of a person.
42. Provisions in case of insolvency.– (1) Where it is provided by a term in a
contract to which an insolvent is a party that any dispute arising thereout or in connection
therewith shall be submitted to arbitration, the said term shall, if the receiver adopts the
contract, be enforceable by or against him so far as it relates to any such dispute.
(2) Where a person who has been adjudged an insolvent had, before the
commencement of the insolvency proceedings, become a party to an arbitration agreement,
and any matter to which the agreement applies is required to be determined in connection
with, or for the purposes of, the insolvency proceedings, then, if the case is one to which subsection
(1) does not apply, any other party or the receiver may apply to the Court or judicial
authority having jurisdiction in the insolvency proceedings for an order directing that the
matter in question shall be submitted to arbitration in accordance with the arbitration
agreement, and the Court or judicial authority may, if it is of opinion that, having regard to all
the circumstances of the case, the matter ought to be determined by arbitration, make an order
accordingly.
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(3) In this section the expression “receiver” includes an Official Assignee.
43. Lien on arbitral award and deposits as to costs.– (1) Subject to the
provisions of sub-section (2) and to any provision to the contrary in the arbitration agreement,
the arbitral tribunal shall have a lien on the arbitral award for any unpaid costs of the
arbitration.
(2) If in any case an arbitral tribunal refuses to deliver its award except on
payment of the costs demanded by it, the Court may, on an application in this behalf, order
that the arbitral tribunal shall deliver the arbitral award to the applicant on payment into Court
by the applicant of the costs demanded, and shall, after such inquiry, if any, as it thinks fit,
further order that out of the money so paid into Court there shall be paid to the arbitral
tribunal by way of costs such sum as the Court may consider reasonable and that the balance
of the money, if any, shall be refunded to the applicant.
(3) An application under sub-section (2) may be made by any party unless the
fees demanded have been fixed by written agreement between him and the arbitral tribunal,
and the arbitral tribunal shall be entitled to appear and be heard on any such application.
(4) The Court may make such orders as it thinks fit respecting the costs of the
arbitration where any question arises respecting such costs and the arbitral award contains no
sufficient provision concerning them.
44. Limitations.– (1) The Limitation Act, 1908 (IX of 1908), shall apply
to arbitrations as it applies to proceedings in a court.
(2) For the purposes of this section and the Limitation Act, 1908 (IX of 1908), an
arbitration shall be deemed to have commenced on the date referred in section 21.
(3) Where an arbitration agreement to submit future disputes to arbitration
provides that any claim to which the agreement applies shall be barred unless some step to
commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute
arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of
the case undue hardship would otherwise be caused, and notwithstanding that the time so
fixed has expired, may on such terms, if any, as the justice of the case may require, extend the
time for such period as it thinks proper.
(4) Where the Court orders that an arbitral award be set aside, the period between
the commencement of the arbitration and the date of the order of the Court shall be excluded
in computing the time prescribed by the Limitation Act, 1908 (IX of 1908), for the
commencement of the proceedings (including arbitration) with respect to the dispute so
submitted.
PART III
RECOGNITION AND ENFORCEMENT OF CERTAIN
FOREIGN AWARDS, ETC.
CHAPTER - I
Arbitral Awards under the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards done at New York
45. Definitions.– For the purposes of this Chapter, unless there is anything
repugnant in the subject or context,–
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(a) “Contracting State” means a State which is a Party to the Convention;
(b) “Convention” means the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, done at New York on the 10th June,
1958, as set forth in the First Schedule to this Act;
(c) “Court” means a High Court and such other superior court in Pakistan as may
be notified by the Federal Government in the official Gazette; and
(d) “foreign arbitral award” means an arbitral award made in a Contracting State
and such other State as may be notified by the Federal Government, in the
official Gazette.
46. Jurisdiction of Court.– (1) Notwithstanding anything contained in any
other law for the time being in force, the Court shall exercise exclusive jurisdiction to
adjudicate and settle matters related to or arising from or under this Chapter.
(2) An application to stay legal proceedings pursuant to the provisions of Article
II of the Convention may be filed in the Court, in which the legal proceedings are pending.
(3) In exercise of its jurisdiction, the Court shall,–
(a) follow the procedure, as nearly as my be provided in the Code of Civil
Procedure, 1908 (V of 1908); and
(b) have all the powers vested in a civil court under the Code of Civil Procedure,
1908 (V of 1908).
47. Enforcement of arbitration agreements.– (1) A party to an arbitration
agreement against whom legal proceedings have been brought in respect of a matter which is
covered by the arbitration agreement may, upon notice to the other party to the proceedings,
apply to the court in which the proceedings have been brought to stay the proceedings in so
far as they concern that matter.
(2) On an application under sub-section (1), the court shall refer the parties to
arbitration, unless it finds that the arbitration agreement is null and void, inoperative or
incapable of being preformed.
48. Furnishing of documents.– The party applying for recognition and
enforcement of foreign arbitral award under this Chapter shall, at the time of the application,
furnish documents to the Court in accordance with Article IV of the Convention.
49. Enforcement of foreign arbitral award.– (1) Unless the Court pursuant to
section 51, refuses the application seeking recognition and enforcement of a foreign arbitral
award, the Court shall recognise and enforce the award in the same manner as a judgment or
order of a court in Pakistan.
(2) A foreign arbitral award which is enforceable under this Chatper, shall be
treated as binding for all purposes on the persons as between whom it was made, and may
accordingly be relied on by any of those persons by way of defence, set off or otherwise in
any legal proceedings in Pakistan.
50. Unenforceable foreign arbitral awards.– The recognition and enforcement
of a foreign arbitral awards shall not be refused except in accordance with Article V of the
Convention.
51. Inconsistency.– In the event of any inconsistency between this Chapter, any
other law, or any judgment of any court and the Convention, the Convention shall prevail to
the extent of the inconsistency.
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52. Power to make rules.– The Federal Government may, by notification in the
official Gazette, make rules to carry out the purposes of this Chapter.
53. Savings.– Notwithstanding the repeal of the Arbitration (Protocol and
Convention) Act, 1937 (VI of 1937), or the Recognition and Enforcement (Arbitration
Agreements and Foreign Arbitral Awards) Ordinance, 2007 (LVIII of 2007), hereinafter in
this section referred as “the Act” or “the Ordinance” respectively, the Act or the Ordinance
shall continue to have effect in relation to foreign arbitral awards made,–
(a) before the date of commencement of this Act; and
(b) within the meaning of section 2 of the Act which are not foreign arbitral
awards within the meaning of section 2 of the Ordinance and section 46 of
this Act.
54. Federal Government to amend the First Schedule.– The Federal
Government may, by notification in the official Gazette, amend the First Schedule in
conformity with any amendments to the provisions of the Convention set out therein which
may hereafter be duly made and adopted from time to time.
CHAPTER - II
Arbitration under the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States
55. Definitions.– For the purposes of this Chapter, unless there is anything
repugnant in the subject or context,–
(a) “award” includes any decision interpreting, reversing or annulling an award,
being a decision pursuant to the Convention, and any decision as to costs
which under the Convention is to form part of the award;
(b) “Centre” means the International Centre for Settlement of Investment
Disputes established by the Convention; and
(c) “Convention” means the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States incorporated in the
Second Schedule to this Act.
56. Registration of awards.– (1) An award shall be deemed to have been
rendered pursuant to the Convention on the date on which certified copies of the award were
dispatched to the parties.
(2) Any person seeking recognition or enforcement of an award rendered
pursuant to the Convention shall be entitled to have the award registered in the High Court
subject to proof of any matters that may be prescribed and to the other provisions of this
Chapter.
(3) In addition to the pecuniary obligations imposed by the award, the award
shall be registered for the reasonable costs of and incidental to registration.
(4) If at the date of the application for registration the pecuniary obligations
imposed by the award have been partly satisfied, the award shall be registered only in respect
of the balance, and accordingly if those obligations have been wholly satisfied, the award
shall not be registered.
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57. Effect of registration.– Subject to the provisions of this Chapter, an award
registered under section 57 shall, as respects the pecuniary obligations which it imposes, be of
the same force and effect for the purposes of execution as if it had been a judgment of the
High Court given when the award was rendered pursuant to the Convention and entered on
the date of registration under this Act, and, so far as it relates to such pecuniary obligations:–
(a) proceedings may be taken on the award;
(b) the sum for which the award is registered shall carry interest; and
(c) the High Court shall have the same control over the execution of the award,
as if the award had been a judgment of the High Court.
58. Binding on the Federal Government.– Sections 57 and 58 shall bind the
Federal Government but not so as to make an award enforceable against the Federal
Government in a manner in which a judgment would not be enforceable against the Federal
Government.
59. Federal Government contribution to expenses under the Convention.–
Any sums required to meet any obligations of the Federal Government arising out of Article
17 of the Convention (which obliges the Contracting States to meet any deficit of the Centre)
shall be charged on and paid out of the Federal Consolidated Fund.
60. Exclusion of other provisions of the Act.– The provisions of this Act
except this Chapter, shall not apply to proceedings pursuant to the Convention.
61. Certain provisions of Convention to have force of law.– (1)
Notwithstanding anything to the contrary in any law, the provisions of Articles 18, 19, 20,
21(a), Article 22 as it applies to Article 21(a), 23(1) and 24 shall have the force of law.
(2) Nothing in Article 24(1) of the Convention shall be construed as–
(a) entitling the Centre to import into Pakistan goods free of any customs duty
without restriction on their subsequent sale therein;
(b) conferring on the Centre any exemption from taxes or duties which form part
of the price of goods sold; or
(c) conferring on the Centre any exemption from taxes or duties which are in fact
no more than charges for services rendered.
(3) For the purposes of Article 20 and Article 21(a) of the Convention as given
the force of law by this section, a statement to the effect that the Centre has waived an
immunity in the circumstances specified in the statement, being a statement certified by the
Secretary-General of the Centre, or by the person acting as Secretary-General, shall be
conclusive evidence of such waiver.
62. Power to make rules.– The Federal Government may make rules,–
(a) to prescribe the procedure for applying for registration of an award under this
Chapter, and to require the applicant to give prior notice of his intention to
register to other parties;
(b) to prescribe matters to be proved on the application and the manner of proof,
and in particular to require the applicant to furnish a copy of the award
certified pursuant to the Convention;
(c) to provide for the service of notice of registration of the award by the
applicant on other parties;
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(d) to provide for the stay of execution whether provisionally or otherwise of any
award registered under this Chapter in accordance with the provisions of the
Convention; and
(e) on any other matter which may be necessary to carry out the purposes of this
Chapter of the Act.
63. Federal Government to amend the Second Schedule.– The Federal
Government may, by notification in the official Gazette, amend the Second Schedule in
conformity with any amendments to the provisions of the Convention set out therein which
may hereafter be duly made and adopted from time to time.
PART IV
CONCILIATION
64. Application and scope of conciliation.– (1) Save as otherwise provided by
any law for the time being in force and unless the parties have otherwise agreed, this Chapter
shall apply to conciliation of disputes arising out of legal relationship, whether contractual or
not and to all proceedings relating thereto.
Explanation.– For the purposes of this Chapter, “conciliation” means a process,
whether referred to by the expression conciliation, mediation, a traditional method of dispute
settlement by amicable intervention of a third person, or an expression of similar import,
whereby parties request a third person or persons (the conciliator) to assist them in their
attempt to reach an amicable settlement of their dispute arising out of or relating to a
contractual or other legal relationship and the conciliator does not have the authority to
impose upon the parties a solution to the dispute.
(2) This Chapter shall not apply where by virtue of any law for the time being in
force certain disputes may not be submitted to conciliation.
65. Application of certain laws barred.– The provisions of the Code of Civil
Procedure, 1908 (V of 1908) or the Qanun-e-Shahadat, 1984 (President’s Order No. 10 of
1984), shall not apply on conciliation proceedings.
66. Commencement of conciliation proceedings.– (1) The party initiating
conciliation shall send to the other party a written invitation to conciliate under this Chapter,
briefly identifying the subject of the dispute.
(2) Conciliation proceedings shall commence when the other party accepts in
writing the invitation to conciliate.
(3) If the other party rejects the invitation, there will be no conciliation
proceedings.
(4) If the party initiating conciliation does not receive a reply within thirty days
from the date on which he sends the invitation, or within such other period of time as
specified in the invitation, he may elect to treat this as a rejection of the invitation to
conciliate and if he so elects, he shall inform in writing the other party accordingly.
67. Number of conciliators.– (1) There shall be one conciliator unless the
parties agree that there shall be two or three conciliators.
(2) Where there is more than one conciliator, they ought, as a general rule, to act
jointly.
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68. Appointment of conciliators.– (1) Subject to sub-section (2),–
(a) in conciliation proceedings with one conciliator, the parties may agree on the
name of a sole conciliator;
(b) in conciliation proceedings with two conciliators, each party may appoint one
conciliator; and
(c) in conciliation proceedings with three conciliators, each party may appoint
one conciliator and the parties may agree on the name of the third conciliator
who shall act as the presiding conciliator.
(2) Parties may enlist the assistance of a suitable institution or person in
connection with the appointment of conciliators, and in particular,–
(a) a party may request such an institution or person to recommend the names of
suitable individuals to act as conciliator; or
(b) the parties may agree that the appointment of one or more conciliators be
made directly by such an institution or person :
Provided that in recommending or appointing individuals to act as conciliator, the
institution or person shall have regard to such considerations as are likely to secure the
appointment of an independent and impartial conciliator and, with respect to a sole or third
conciliator, shall take into account the advisability of appointing conciliators of a nationality
other than the nationalities of the parties.
(3) When a person is approached in connection with his possible appointment as
conciliator, he shall disclose circumstances likely to give rise to justifiable doubts as to his
impartiality or independence unless the parties already have knowledge of such fact.
69. Administrative assistance for conciliation.– In order to facilitate the
conduct of the conciliation proceedings, the parties, or the conciliator with the consent of the
parties, may arrange for administrative assistance by a suitable institution or person.
70. Submission of statements to conciliator.– (1) Upon his appointment, the
conciliator may request each party to submit a brief written statement describing the general
nature of the dispute and the points at issue.
(2) The conciliator shall send a copy of statement under sub-section (1) to each
party.
(3) The conciliator may request each party to submit a further written statement
of his position and the facts and grounds in support thereof, supplemented by any document
and other evidence that such party deems appropriate on receipt of copy of statement under
sub-section (2) and such statement, documents and other evidence shall also be provided to
the parties for their comments or reply.
(4) The conciliator may request a party to submit such additional information as
he may deem appropriate at any stage of the conciliation proceedings.
Explanation.– Where there are more than one conciliator, the presiding conciliator
shall coordinate between the other conciliators and the parties for provision of statements,
documents and other evidence.
71. Conduct of conciliation proceedings.– (1) The conciliator shall assist the
parties to reach an amicable settlement of their dispute in an independent and impartial
manner.
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(2) Subject to any agreement between the parties on the manner in which the
conciliation proceedings are to be conducted, the conciliator may conduct the conciliation
proceedings in such a manner as the conciliator considers appropriate, taking into account the
circumstances of the case, any wishes that the parties may express and the need for a speedy
settlement of the dispute.
(3) Among other things, the rights and obligations of the parties relating to the
dispute, the conciliator shall follow the principles of objectivity, equity and justice while
giving due consideration to the usages of the trade concerned and the prevailing
circumstances including any previous business practices between the parties.
(4) The conciliator may, at any stage of the conciliation proceedings, make
proposals for a settlement of the dispute and such proposals need not be in writing and need
not be accompanied by a statement of the reasons therefor.
(5) Each party may, on his own initiative or at the invitation of the conciliator,
submit to the conciliator suggestions for the settlement of the dispute.
(6) The parties shall in good faith cooperate with the conciliator and, in
particular, shall endeavour to comply with requests by the conciliator to submit written
materials, provide evidence and attend meetings.
72. Communication between conciliator and parties.– (1) The conciliator
may invite the parties to meet him or may communicate with them orally or in writing.
(2) The conciliator may meet or communicate with the parties together or with
each of them separately.
(3) Subject to convenience of the parties and unless otherwise agreed between
the parties, the meeting with the conciliator shall be held at such place as may be determined
by the conciliator, after consultation with the parties, having regard to the circumstances of
the conciliation proceedings.
73. Disclosure of information.– When the conciliator receives information
concerning the dispute from a party, he shall disclose the substance of that information to the
other party in order that the other party may have the opportunity to present any explanation
which he considers appropriate :
Provided that when a party gives any information to the conciliator subject to a
specific condition that it be kept confidential, the conciliator shall not disclose that
information to the other party to the conciliation.
74. Confidentiality.– (1) Notwithstanding anything contained in any other law
for the time being in force, the conciliator and the parties shall keep confidential all matters
and information relating to the conciliation proceedings.
(2) Confidentiality shall extend also to the settlement agreement except where its
disclosure is necessary for purposes of implementation and enforcement.
75. Settlement agreement.– (1) During the conciliation proceedings, when it
appears to the conciliator that there exist elements of a settlement which may be acceptable to
the parties, he shall formulate the terms of a possible settlement and submit them to the
parties for their observations and after receiving their observations, the conciliator may
reformulate the terms of a possible settlement in the light of such observations.
(2) If the parties reach agreement on a settlement of the dispute, they may draw
up and sign a written settlement agreement.
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(3) Subject to sub-section (2), the conciliator may draw up, or assist the parties in
drawing up, the settlement agreement if so requested by the parties.
(4) When the parties sign the settlement agreement, it shall be final and binding
on the parties and persons claiming under them respectively and the conciliator shall
authenticate the settlement agreement and furnish a copy thereof to each of the parties.
76. Effect of settlement agreement.– The settlement agreement shall have the
same effect to the parties as if it is an arbitral award on agreed terms on the substance of the
dispute rendered by an arbitral tribunal under section 30.
77. Termination of conciliation proceedings.– The conciliation proceedings
shall be terminated–
(a) by the conclusion and signing of the settlement agreement by the parties, on
the date of the agreement; or
(b) by a declaration in writing of the conciliator, after consultation with the
parties, to the effect that further efforts at conciliation are no longer justified,
on the date of the declaration; or
(c) by a declaration in writing of the parties addressed to the conciliator to the
effect that the conciliation proceedings are terminated, on the date of the
declaration; or
(d) by a declaration in writing of a party to the other party and the conciliator, if
appointed, to the effect that the conciliation proceedings are terminated, on
the date of the declaration.
78. Resort to arbitral or judicial proceedings.– The parties shall not initiate,
during the conciliation proceedings, any arbitral or judicial proceedings in respect of a dispute
that is the subject-matter of the conciliation proceedings except that a party may initiate
arbitral or judicial proceedings where, in his opinion, such proceedings are necessary for
preserving his rights.
79. Costs.– (1) Notwithstanding the costs prescribed by the Centre or as agreed
between the parties, upon termination of the conciliation proceedings, the conciliator shall fix
the costs of the conciliation and give written notice thereof to the parties.
(2) For the purpose of sub-section (1), “costs” means reasonable costs relating
to–
(a) the fee and expenses of the conciliator and witnesses requested by the
conciliator with the consent of the parties;
(b) any expert advice requested by the conciliator with the consent of the parties;
(c) any assistance provided pursuant to clause (b) of sub-section (2) of section 69
and section 70;
(d) any other expenses incurred in connection with the conciliation proceedings
and the settlement agreement.
(3) The costs shall be borne equally by the parties unless the settlement
agreement provides for a different apportionment :
Provided that all other expenses incurred by a party shall be borne by that party.
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80. Deposits.– (1) Subject to sub-section (2) of section 80, the conciliator may
direct each party to deposit an equal amount as an advance for the costs which he expects will
be incurred.
(2) During the course of the conciliation proceedings, the conciliator may direct
supplementary deposits in an equal amount from each party.
(3) If the required deposits under sub-sections (1) and (2) are not paid in full by
both parties within thirty days, the conciliator may suspend the proceedings or may make a
written declaration of termination of the proceedings to the parties, effective on the date of
that declaration.
(4) Upon termination of the conciliation proceedings, the conciliator shall render
an accounting to the parties of the deposits received and shall return any unexpended balance
to the parties.
81. Role of conciliator in other proceedings.– Unless otherwise agreed by the
parties, the conciliator shall not, act as an arbitrator or as a representative or counsel of a party
in any arbitral or judicial proceedings in respect of a dispute that is the subject of the
conciliation proceedings; or be presented by the parties as a witness in any arbitral or judicial
proceedings in respect of another dispute that has arisen from the same contract or legal
relationship or any related contract or legal relationship.
82. Admissibility of evidence in other proceedings.– The parties shall not rely
on or introduce as evidence in arbitral or judicial proceedings, whether or not such
proceedings relate to the dispute that is the subject of the conciliation proceedings,–
(a) an invitation by a party to engage in conciliation proceedings or the fact that a
party was willing to participate in such proceedings;
(b) views expressed or suggestions made by the other party in respect of a
possible settlement of the dispute in conciliation;
(c) statements or admissions made by the other party in the course of the
conciliation proceedings;
(d) proposals made by the conciliator;
(e) the fact that the other party had indicated his willingness to accept a proposal
for settlement made by the conciliator; or
(f) a document prepared solely for purposes of the conciliation proceedings.
PART V
PAKISTAN NATIONAL ARBITRATION AND
CONCILIATION CENTRE
83. Definitions.– Nothing contained in Act and unless there is anything
repugnant in the subject or context of this Chapter,–
(a) “arbitrator” means an arbitrator registered and affiliated with the Centre;
(b) “Centre” means the Pakistan National Arbitration and Conciliation Centre
established under section 84;
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(c) “conciliator” means a conciliator registered and affiliated with the Centre;
(d) “Director General” means the Director General of the Centre;
(e) “Fund” means the Fund of the Centre under section 88; and
(f) “prescribed” means prescribed by rules.
84. Establishment of the Pakistan National Arbitration and Conciliation
Centre.– (1) There shall be established the Pakistan National Arbitration and Conciliation
Centre for institutionalizing the services relating to arbitration, conciliation and alternative
dispute resolution in the country in a systematic and regulated manner.
(2) The Centre shall be a body corporate having perpetual succession and
common seal with powers to enter into agreements, contracts, acquire and hold property, both
moveable and immovable, subject to the provisions of this Act and to sue and be sued in its
name.
(3) The head office of the Centre shall be at Islamabad and the Federal
Government may set up offices of the Centre at such places, as it may deem necessary, as and
when required.
(4) The Centre shall consist of the Director General, such other officers and
necessary supporting, as may be prescribed, by the rules.
(4) The Director General shall exercise the powers and functions of the Centre
under this Act.
(5) The Director General may delegate any of his powers to any officer
subordinate to him in writing by imposing such conditions as he deems fit and necessary.
85. Powers and functions of the Centre.– The powers and functions of the
Centre shall be to,–
(a) conduct research in the fields of arbitration, conciliation and alternative
dispute resolution methods;
(b) advise the Government of Pakistan on policy matters and modern
international trends in the fields of arbitration, conciliations and other
alternative dispute resolutions methods;
(c) coordinate, liaise or interact with other authorities, bodies or international
organizations in any study or cooperation in the fields of arbitration,
conciliation and alternative dispute resolution;
(d) enter into contracts for the supply of goods, materials and services or for the
execution of works as may be necessary for the discharge of any of its powers
and functions;
(e) determine qualifications, experience and other ancillary matters for
arbitrators, conciliators or other persons providing services relating
alternative dispute resolution in their areas of expertise except for persons
enrolled as an advocate with any Bar Council in Pakistan who shall be
entitled to act as arbitrator or conciliator or for alternative dispute resolution
in fields of their expertise or interest;
(f) accredit, certify, register, prepare lists of arbitrators, conciliators and persons
providing services for alternative dispute resolution and regulate their
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conduct of business as such and fees for their registration or other matters
relating to their conduct of performance and discipline;
(g) make rules and provide suitable penalties like imposition of fines, suspension
and cancellation of registration of persons or institutions registered or
affiliated with the Centre for providing arbitration, conciliation or alternative
dispute resolution services, their appointment, registration or affiliation
procedures, appeal procedure for any disciplinary action taken under such
rules as prescribed;
(h) prescribe fees for arbitrators, conciliators or persons providing services for
alternative dispute resolution;
(i) establish and provide infrastructural facilities for arbitration, conciliation and
alternative dispute resolution purposes on reasonable cost to the arbitral
tribunals, arbitrators, conciliators or persons providing alternative dispute
resolution services or other parties related thereto;
(j) launch awareness campaigns in masses about the use, application and
advantages of alternative dispute resolutions methods including arbitration
and conciliation;
(k) develop working manuals, reference materials and procedures to assist the
arbitral tribunals, arbitrators, conciliators or to persons providing services
relating alternative dispute resolution and to educate the general public;
(l) adopt or make rules for the purposes of arbitration, conciliation and
alternative dispute resolution or any matter mentioned in this Part or Act is
specifically authorized; and
(m) perform and carry out any other act, thing or function relating to arbitration,
conciliation or alternative dispute resolution or matters ancillary thereto or
thereunder the Act.
86. Director General.– (1) There shall be a Director General, having
reasonable experience in arbitration, conciliation or in alternative dispute resolution
methodologies and qualifications in the fields of law, business or international trade, of the
Centre who shall be appointed by the Federal Government on such other terms and conditions
as may be prescribed.
(2) The Director General shall be the Chief Executive of the Centre and shall
discharge such duties and perform such functions as are assigned to him by or under the Act
or by the Federal Government and the Centre.
(3) The Director General shall hold office for a period of three years extendable
for another term of three years keeping in view his meritorious services for the advancement
of the purposes of the Centre and its functions under the Act.
(4) The Federal Government shall prescribe other terms and conditions relating
to the appointment, service and office of the Director General.
87. Appointment of officers and staff of the Centre.– (1) The Director
General may appoint such officers, experts, consultants and members of his staff as it may
consider necessary for the efficient performance of its functions on such terms and conditions
as may be prescribed under the rules made with the prior approval of the Federal Government.
(2) The Director General, officers, experts, consultants and members of staff of
the Centre when acting or purporting to act under any of the provisions of this Act or rules
33
made thereunder shall be deemed to be public servants within the meaning of section 21 of
the Pakistan Penal Code (Act XLV of 1860).
88. Fund.– (1) There shall be established a non-lapsable fund to be known as
Pakistan National Arbitration and Conciliation Centre Fund which shall vest in the Centre
and shall be utilized by the Centre to meet charges and expenditure in connection with its
functions and operations under this Act including payment of salaries and other remuneration
payable to the Director General, officers, experts, consultants and other staff members of the
Centre.
(2) The Fund shall consist of –
(a) funds provided by the Federal Government for payment of salaries,
establishing infrastructure and running the day to day business of the Centre;
(b) loans or grants by the Federal Government, any other Government, local
authority or organization as well as from any other source recognized and
allowed by the Federal Government;
(c) foreign aid, grants and loans negotiated and raised, or otherwise obtained, by
the Centre;
(d) fees for registration of persons to serve individually or as panels of
arbitrators, conciliators or persons providing alternative dispute resolution
services or amounts generated from provision of infrastructural facilities for
conciliation, arbitration or alternative dispute resolution;
(e) amounts received from fines, penalties or from other charges of the Centre;
(f) income from moveable or immovable property; and
(g) all other sums received by the Centre from different sources.
(3) The Fund shall be kept in one or more accounts maintained by the Centre in
any currency in any schedule bank in Pakistan and shall be operated by the Director General
in accordance with the directions of the Federal Government.
89. Accounts and audit.– (1) The Centre shall prepare its budget in respect of
each financial year and submit for the approval of Federal Government on such date as may
be prescribed for the purpose, in accordance with the prescribed procedure and shall maintain
complete and accurate books of accounts of its actual expenses and receipts.
(2) The accounts of the Centre shall be maintained in the manner prescribed by
the Controller General of Accounts.
(3) The Auditor-General of Pakistan shall conduct audit of the accounts of the
Centre.
(4) A copy of the audit report shall be sent to the Federal Government, alongwith
the comments of the Director General.
(5) The Federal Government may issue directions to the Director General for the
rectification of any item objected to by the Auditor-General of Pakistan and the Director
General shall comply with such directions.
90. Annual and other reports.– (1) Within three months of the conclusion of
each calendar year, the Director General shall submit an annual report to the Federal
Government in respect of activities of the Centre including the status of its programmes,
34
projects and future plans formulated in furtherance of its aims and objects and purposes of
this Part.
(2) In addition to the annual report, the Director General shall, from time to time,
if necessary, prepare such special reports relating to any special activity of the Centre and
submit it to the Federal Government or the Federal Government may direct for preparation of
a special report about any particular subject under the Act.
91. Power to make rules.– (1) The Director General, with the previous
approval of the Federal Government, may make or adopt with certain variation rules for
performance of different functions and powers under this Part.
(2) The rules made under sub-section (1) shall be effective after their publication
in the official Gazette.
(3) The contravention of rules made under sub-section (1) shall be punishable
with a penalty of fine, suspension or cancellation of registration or affiliation, etc., as the case
may be, as prescribed by the rules, if relating to conduct and discipline of the persons or
institutions registered, certified or affiliated to provide services as arbitrators, arbitral tribunal,
conciliators, individually or as a panel, or for alternative dispute resolution purposes.
(4) No penalty shall be imposed under the rules on any person or institution
without giving an opportunity of being heard.
PART VI
MISCELLANEOUS PROVISIONS
92. Power of the Federal Government to make rules.– (1) The Federal
Government may, by notification in the official Gazette, make rules for carrying out the
purposes of this Act except where such power shall be exercised by the High Court or any
other person or authority.
93. Power of High Court to make rules.– The High Court may make rules
consistent with this Act as to all proceedings before the Court under this Act as provided
under different provisions of this Act.
94. Removal of difficulties.– (1) In case any difficulty arises in giving effect to
provisions of this Act, the Federal Government may, for the purpose of removing such
difficulty, make such order as it considers expedient and any such order shall be deemed to
be, and given effect to, as a part of the provisions of this Act :
Provided that no such power shall be exercised after the expiry of three years from
the commencement of this Act.
95. Repeal and savings.– (1) The Arbitration Act, 1940 (X of 1940), the
Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards)
Ordinance, 2007 (LVIII of 2007), and the Arbitration (International Investment Disputes)
Ordinance, 2007 (XXXVIII of 2007), are hereby repealed.
(2) Notwithstanding such repeal,–
(a) the provisions of the said enactments shall apply in relation to arbitral
proceedings which commenced before this Act came into force or any arbitral
award made or its enforcement proceedings initiated unless otherwise agreed
by the parties but this Act shall apply in relation to arbitral proceedings which
commenced on or after this Act comes into force; and
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(b) all rules made and actions taken under the said enactments shall, to the extent
to which they are not repugnant to this Act, be deemed respectively to have
been made or taken under this Act and shall continue in force until altered or
rescinded by rules made or actions taken under this Act.
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THE FIRST SCHEDULE
[See section 46]
CONVENTION ON THE RECOGNITION
AND
ENFORCEMENT OF FOREIGN ARBITRAL AWARDS
ARTICLE I
1. This Convention shall apply to the recognition and enforcement of arbitral
awards made in the territory of a State other than the State where the recognition and
enforcement of such awards are sought, and arising out of differences between persons,
whether physical or legal. It shall also apply to arbitral awards not considered as domestic
awards in the State where their recognition and enforcement are sought.
2. The term “arbitral awards” shall include not only awards made by arbitrators
appointed for each case but also those made by permanent arbitral bodies to which the parties
have submitted.
3. When signing, ratifying or acceding to this Convention, or notifying
extension under article X hereof, any State may on the basis of reciprocity declare that it will
apply the Convention to the recognition and enforcement of awards made only in the territory
of another Contracting State. It may also declare that it will apply the Convention only to
differences arising out of legal relationships, whether contractual or not, which are considered
as commercial under the national law of the State making such declaration.
ARTICLE II
1. Each Contracting State shall recognise an agreement in writing under which
the parties undertake to submit to arbitration all or any differences which have arisen or which
may arise between them in respect of defined legal relationship, whether contractual or not,
concerning a subject-matter capable of settlement by arbitration.
2. The term “agreement in writing” shall include all arbitral clauses in a contract
or an arbitration agreement, signed by the parties or contained in an exchange of letters or
telegrams.
3. The Court of a Contracting State, when seized of an action in a matter in
respect of which the parties have made an agreement within the meaning of this article, shall,
at the request of one of the parties, refer the parties to arbitration, unless it finds that the said
agreement is null and void, inoperative and incapable of being performed.
ARTICLE III
Each Contracting State shall recognize arbitral awards as binding and enforce them in
accordance with the rules of procedure of the territory where the award is relied upon, under
the conditions laid down in the following articles. There shall not be imposed substantially
more onerous conditions or higher fees or charges on the recognition or enforcement of
37
arbitral awards to which this Convention applies than are imposed on the recognition or
enforcement of domestic arbitral awards.
ARTICLE IV
1. To obtain the recognition and enforcement mentioned in the preceding
article, the party applying for recognition and enforcement shall, at the time of the
application, supply–
(a) the duly authenticated original award or a duly certified copy thereof;
(b) the original agreement referred to in article II or a duly certified copy thereof.
2. If the said award or agreement is not made in an official language of the
country in which the award is relied upon, the party applying for recognition and enforcement
of the award shall produce a translation of these documents into such language. The
translation shall be certified by an official or sworn translator or by a diplomatic or consular
agent.
ARTICLE V
1. Recognition and enforcement of the award may be refused, at the request of
the party against whom it is invoked, only if that party furnishes to the competent authority
where the recognition and enforcement is sought, proof that–
(a) the parties to the agreement referred to in article II were, under the law
applicable to them, under some incapacity, or the said agreement is not valid
under the law to which the parties have subjected it or, failing any indication
thereon, under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of
the appointment of the arbitrator or of the arbitration proceedings or was
otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by or not falling within
the terms of the submission to arbitration, or it contains decisions on matters
beyond the scope of the submission to arbitration; provided that, if the
decisions on matters submitted to arbitration can be separated from those not
so submitted, that part of the award which contains decisions on matters
submitted to arbitration may be recognised and enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or, failing such agreement, was
not in accordance with the law of the country where the arbitration took
place; or
(e) the award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law
of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the
competent authority in the country where recognition and enforcement is sought finds that–
(a) the subject-matter of the difference is not capable of settlement by arbitration
under the law of that country; or
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(b) the recognition or enforcement of the award would be contrary to the public
policy of that country.
ARTICLE VI
If an application for the setting aside or suspension of the award has been made to a
competent authority referred to in article V(1)(e), the authority before which the award is
sought to be relied upon may, if it considers it proper, adjourn the decision on the
enforcement of the award and may also, on the application of the party claiming enforcement
of the award, order the other party to give suitable security.
ARTICLE VII
1. The provisions of the present Convention shall not affect the validity of
multilateral or bilateral agreements concerning the recognition and enforcement of arbitral
awards entered into by the Contracting States nor deprive any interested party of any right he
may have to avail himself of an arbitral award in the manner and to the extent allowed by the
law or the treaties of the country where such award is sought to be relied upon.
2. The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva
Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect
between Contracting States on their becoming bound and to the extent that they become
bound by this Convention.
ARTICLE VIII
1. This Convention shall be open until 31st December, 1958 for signature on
behalf of any Member of the United Nations and also on behalf of any other State which is or
hereafter becomes member of any specialized agency of the United Nations, or which is or
hereafter becomes a party to the Statute of the International Court of Justice, or any other
State to which an invitation has been addressed by the General Assembly of the United
Nations.
2. This Convention shall be ratified and the instrument of ratification shall be
deposited with the Secretary-General of the United Nations.
ARTICLE IX
1. This Convention shall be open for accession to all States referred to in article
VIII.
2. Accession shall be effected by the deposit of an instrument of accession with
the Secretary-General of the United Nations.
ARTICLE X
1. Any State may, at the time of signature, ratification or accession, declare that
this Convention shall extend to all or any of the territories for the international relations of
which it is responsible. Such a declaration shall take effect when the Convention enters into
force for the State concerned.
39
2. At any time thereafter any such extension shall be made by notification
addressed to the Secretary-General of the United Nations and shall take effect as from the
ninetieth day after the day of receipt by the Secretary-General of the United Nations of this
notification, or as from the date of entry into force of the Convention for the State concerned,
whichever is the later.
3. With respect to those territories to which this Convention is not extended at
the time of signature, ratification or accession, each State concerned shall consider the
possibility of taking the necessary steps in order to extend the application of this Convention
to such territories, subject, where necessary for constitutional reasons, to the consent of the
Governments of such territories.
ARTICLE XI
In the case of a federal or non-unitary State, the following provisions shall apply–
(a) with respect of those articles of this Convention that come within the
legislative jurisdiction of the federal authority, the obligations of the federal
Government shall to this extent be the same as those of Contracting States
which are not federal States;
(b) with respect to those articles of this Convention that come within the
legislative jurisdiction of constituent States or provinces which are not, under
the constitutional system of the federation, bound to take legislative action,
the federal Government shall bring such articles with a favourable
recommendation to the notice of the appropriate authorities of constituent
States or provinces at the earliest possible moment;
(c) a federal State Party to this Convention shall, at the request of any other
Contracting State transmitted through the Secretary-General of the United
Nations, supply a statement of the law and practice of the federation and its
constituent units in regard to any particular provision of this Convention,
showing the extent to which effect has been given to that provision by
legislative or other action.
ARTICLE XII
1. This Convention shall come into force on the ninetieth day following the date
of deposit of the third instrument of ratification or accession.
2. For each State ratifying or acceding to this Convention after the deposit of the
third instrument of ratification or accession, this Convention shall enter into force on the
ninetieth day after deposit by such State of its instrument of ratification or accession.
ARTICLE XIII
1. Any Contracting State may denounce this Convention by a written
notification to the Secretary-General of the United Nations. Denunciation shall take effect one
year after the date of receipt of the notification by the Secretary-General.
2. Any State which has made a declaration or notification under article X may,
at any time thereafter, by notification to the Secretary-General of the United Nations, declare
that this Convention shall cease to extend to the territory concerned one year after the date of
the receipt of the notification by the Secretary-General.
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3. This Convention shall continue to be applicable to arbitral awards in respect
of which recognition or enforcement proceedings have been instituted before the denunciation
takes effect.
ARTICLE XIV
A Contracting State shall not be entitled to avail itself of the present Convention
against other Contracting States except to the extent that it is itself bound to apply the
Convention.
ARTICLE XV
The Secretary-General of the United Nations shall notify the States contemplated in
Article VIII of the following:
(a) signatures and ratifications in accordance with Article VIII;
(b) accessions in accordance with Article IX;
(c) declarations and notifications under Articles I, X and XI;
(d) the date upon which this Convention enters into force in accordance with
Article XII;
(e) denunciations and notifications in accordance with Article XIII.
ARTICLE XVI
1. This Convention, of which the Chinese, English, French, Russian and
Spanish texts shall be equally authentic, shall be deposited in the archives of the United
Nations.
2. The Secretary-General of the United Nations shall transmit a certified copy of
this Convention to the States contemplated in Article XIII.
41
THE SECOND SCHEDULE
[See section 56]
CONVENTION
ON THE
SETTLEMENT OF INVESTMENT DISPUTES
BETWEEN
STATES AND NATIONALS OF OTHER STATES
PREAMBLE
The Contracting States
CONSIDERING the need for international cooperation for economic development,
and the role of private international investment therein;
BEARING IN MIND the possibility that from time to time disputes may arise in
connection with such investment between Contracting States and nationals of other
Contracting States;
RECOGNISING that while such disputes would usually be subject to national legal
processes, international methods of settlement may be appropriate in certain cases;
ATTACHING PARTICULAR IMPORTANCE to the availability of facilities for
international conciliation or arbitration to which Contracting States and nationals of other
Contracting States may submit such disputes if they so desire;
DESIRING to establish such facilities under the auspices of the International Bank
for Reconstruction and Development;
RECOGNIZING that mutual consent by the parties to submit such disputes to
conciliation or to arbitration through such facilities constitutes a binding agreement which
requires in particular that due consideration be given to any recommendation of conciliators,
and that any arbitral award be complied with; and
DECLARING that no Contracting State shall by the mere fact of its ratification,
acceptance or approval of this Convention and without its consent be deemed to be under any
obligation to submit any particular dispute to conciliation or arbitration;
HAVE AGREED as follows:–
CHAPTER I
INTERNATIONAL CENTRE FOR
SETTLEMENT OF INVESTMENT DISPUTES
SECTION 1 .– ESTABLISHMENT AND ORGANIZATION
ARTICLE 1
(1) There is hereby established the International Centre for Settlement of
Investment Disputes (hereinafter called the Centre).
42
(2) The purpose of the Centre shall be to provide facilities for conciliation and
arbitration of investment disputes between Contracting States and nationals of other
Contracting States in accordance with the provisions of this Convention.
ARTICLE 2
The seat of the Centre shall be at the principal office for the International Bank for
Reconstruction and Development (hereinafter called the Bank). The seat may be moved to
another place by decision of the Administrative Council adopted by a majority of two-thirds
of its members.
ARTICLE 3
The Centre shall have an Administrative Council and a Secretariat and shall maintain
a Panel of Conciliators and a Panel of Arbitrators.
SECTION 2.– THE ADMINISTRATIVE COUNCIL
ARTICLE 4
(1) The Administrative Council shall be composed of one representative of each
Contracting State. An alternate may act as representative in case of his principal’s absence
from a meeting or inability to act.
(2) In the absence of a contrary designation, each governor and alternate of the
Bank appointed by a Contracting State shall be ex-officio its representative and its alternate
respectively.
ARTICLE 5
The President of the Bank shall be ex-officio Chairman of the Administrative Council
(hereinafter called the Chairman) but shall have no vote. During his absence or inability to act
and during any vacancy in the office of President of the Bank, the person for the time being
acting as President shall act as Chairman of the Administrative Council.
ARTICLE 6
(1) Without prejudice to the powers and functions vested in it by other provisions
of this Convention, the Administrative Council shall:–
(a) adopt the administrative and financial regulations of the Centre;
(b) adopt the rules of procedure for the institution of conciliation and arbitration
proceedings;
(c) adopt the rules of procedure for conciliation and arbitration proceedings
(hereinafter called the Conciliation Rules and the Arbitration Rules);
(d) approve arrangements with the Bank for the use of the Bank’s administrative
facilities and services;
(e) determine the conditions of service of the Secretary-General and of any
Deputy Secretary-General;
(f) adopt the annual budget of revenues and expenditures of the Centre;
43
(g) approve the annual report on the operation of the Centre.
The decisions referred to in sub-paragraphs (a), (b), (c) and (f) above shall be adopted by a
majority of two-thirds of the members of the Administrative Council.
(2) The Administrative Council may appoint such committees as it considers
necessary.
(3) The Administrative Council shall also exercise such other powers and
perform such other functions as it shall determine to be necessary for the implementation of
the provisions of the Convention.
ARTICAL 7
(1) The Administrative Council shall hold an annual meeting and such other
meetings as may be determined by the Council, or convened by the Chairman, or convened by
the Secretary-General at the request of not less than five members of the Council.
(2) Each member of the Administrative Council shall have one vote and, except
as otherwise herein provided, all matters before the Council shall be decided by a majority of
the votes cast.
(3) A quorum for any meeting of the Administrative Council shall be a majority
of its members.
(4) The Administrative Council may establish, by a majority of two-thirds of its
members, a procedure whereby the Chairman may seek a vote of the Council without
convening a meeting of the Council. The vote shall be considered valid only if the majority of
the members of the Council cast their votes within the time limit fixed by the said procedure.
ARTICLE 8
Members of the Administrative Council and the Chairman shall serve without
remuneration from the Centre.
SECTION 3.– THE SECRETARIAT
ARTICLE 9
The Secretariat shall consist of a Secretary-General, one or more Deputy Secretaries-
General and staff.
ARTICLE 10
(1) The Secretary-General and any Deputy Secretary-General shall be elected by
the Administrative Council by a majority of two-thirds of its members upon the nomination of
the Chairman for a term of service not exceeding six years and shall be eligible for reelection.
After consulting the members of the Administrative Council, the Chairman shall
propose one or more candidates for each such office.
(2) The offices of Secretary-General and Deputy Secretary-General shall be
incompatible with the exercise of any political function. Neither the Secretary-General nor
any Deputy Secretary-General may hold any other employment or engage in any other
occupation except with the approval of the Administrative Council.
(3) During the Secretary-General’s absence or inability to act, and during any
vacancy of the office of Secretary-General, the Deputy Secretary-General shall act as
44
Secretary-General. If there shall be more than one Deputy Secretary-General, the
Administrative Council shall determine in advance the order in which they shall act as
Secretary-General.
ARTICLE 11
The Secretary-General shall be the legal representative and the principal officer of the
Centre and shall be responsible for its administration, including the appointment of staff in
accordance with the provisions of this Convention and the rules adopted by the
Administrative Council. He shall perform the function of registrar and shall have the power to
authenticate arbitral awards rendered pursuant to this Convention, and to certify copies
thereof.
SECTION 4.– THE PANELS
ARTICLE 12
The Panel of Conciliators and the Panel of Arbitrators shall each consist of qualified
persons, designated as hereinafter provided, who are willing to serve thereon.
ARTICLE 13
(1) Each Contracting State may designate to each Panel four persons who may
but need not be its nationals.
(2) The Chairman may designate ten persons to each Panel. The persons so
designated to a Panel shall each have a different nationality.
ARTICLE 14
(1) Persons designated to serve on the Panels shall be persons of high moral
character and recognized competence in the fields of law, commerce, industry or finance, who
may be relied upon to exercise independent judgment. Competence in the field of law shall be
of particular importance in the case of persons on the Panel or Arbitrators.
(2) The Chairman, in designating persons to serve on the Panels, shall in addition
pay due regard to the importance of assuring representation on the Panels of the principal
legal systems of the world and of the main forms of economic activity.
ARTICLE 15
(1) Panel members shall serve for renewable periods of six years.
(2) In case of death or resignation of a member of a Panel, the authority which
designated the member shall have the right to designate another person to serve for the
remainder of that member’s term.
(3) Panel members shall continue in office until their successors have been
designated.
ARTICLE 16
(1) A person may serve on both Panels.
(2) If a person shall have been designated to serve on the same Panel by more
than one Contracting State, or by one or more Contracting States and the Chairman, he shall
45
be deemed to have been designated by the authority which first designated him or, if one such
authority is the State or which he is a national, by that State.
(3) All designations shall be notified to the Secretary-General and shall take
effect from the date on which the notification is received.
SECTION 5.– FINANCING THE CENTRE
ARTICLE 17
If the expenditure of the Centre cannot be met out of charges for the use of its
facilities, or out of other receipts, the excess shall be borne by Contracting States which are
members of the Bank in proportion to their respective subscriptions to the capital stock of the
Bank, and by Contracting States which are not members of the Bank in accordance with rules
adopted by the Administrative Council.
SECTION 6.– STATUS, IMMUNITIES AND PRIVILEGES
ARTICLE 18
The Centre shall have full international legal personality. The legal capacity of the
Centre shall include the capacity:
(a) to contract;
(b) to acquire and dispose of movable and immovable property;
(c) to institute legal proceedings.
ARTICLE 19
To enable the Centre to fulfil its functions, it shall enjoy in the territories of each
Contracting State the immunities and privileges set forth in this Section.
ARTICLE 20
The Centre, its property and assets shall enjoy immunity from all legal process,
except when the Centre waives this immunity.
ARTICLE 21
The Chairman, the members of the Administrative Council, persons acting as
conciliators or arbitrators or members of a Committee appointed pursuant to paragraph (3) of
Article 52, and the officers and employees of the Secretariat.
(a) shall enjoy immunity from legal process with respect to acts performed by
them in the exercise of their functions, except when the Centre waives this
immunity;
(b) not being local nationals, shall enjoy the same immunities from immigration
restrictions, alien registration requirements and national service obligations,
the same facilities as regards exchange restrictions and the same treatment in
respect of travelling facilities as are accorded by Contracting States to the
representatives, officials and employees of comparable rank of other
Contracting States.
46
ARTICLE 22
The provisions of Article 21 shall apply to persons appearing in proceedings under
this Convention as parties, agents, counsel, advocates, witnesses or experts; provided,
however, that sub-paragraph (b) thereof shall apply only in connection with their travel to and
from, and their stay at, the place where the proceedings are held.
ARTICLE 23
(1) The archives of the Centre shall be inviolable, wherever they may be.
(2) With regard to its official communications, the Centre shall be accorded by
each Contracting State treatment not less favorable than that accorded to other international
organizations.
ARTICLE 24
(1) The Centre, its assets, property and income, and its operations and
transactions authorized by this Convention shall be exempt from all taxation and customs
duties. The Centre shall also be exempt from liability for the collection or payment of any
taxes or customs duties.
(2) Except in the case of local nationals, no tax shall be levied on or in respect of
expense allowances paid by the Centre to the Chairman or members of the Administrative
Council, or on or in respect of salaries, expense allowances or other emoluments paid by the
Centre to officials or employees of the Secretariat.
(3) No tax shall be levied on or in respect of fees or expense allowances received
by persons acting as conciliators, or arbitrators, or members of a Committee appointed
pursuant to paragraph (3) of Article 52, in proceedings under this Convention, if the sole
jurisdictional basis for such tax is the location of the Centre or the place where such
proceedings are conducted or the place where such fees or allowances are paid.
CHAPTER II
JURISDICTION OF THE CENTRE
ARTICLE 25
(1) The jurisdiction of the Centre shall extend to any legal dispute arising directly
out of an investment, between a Contracting State (or any constituent sub-division or agency
of a Contracting State designated to the Centre by that State) and a national of another
Contracting State, which the parties to the dispute consent in writing to submit to the Centre.
When the parties have given their consent, no party may withdraw its consent unilaterally.
(2) “National of another Contracting State” means:
(a) any natural person who had the nationality of a Contracting State other than
the State party to the dispute on the date on which the parties consented to
submit such dispute to conciliation or arbitration as well as on the date on
which the request was registered pursuant to paragraph (3) of Article 28 or
paragraph (3) of Article 36, but does not include any person who on either
date also had the nationality of the Contracting State party to the dispute; and
(b) any juridical person which had the nationality of a Contracting State other
than the State party to the dispute on the date on which the parties consented
to submit such dispute to conciliation or arbitration and any juridical person
which had the nationality of the Contracting State party to the dispute on that
47
date and which, because of foreign control, the parties have agreed should be
treated as a national of another Contracting State for the purposes of this
Convention.
(3) Consent by a constituent sub-division or agency of a Contracting State shall
require the approval of that State unless that State notifies the Centre that no such approval is
required.
(4) Any Contracting State may, at the time of ratification, acceptance or approval
of this Convention or at any time thereafter, notify the Centre of the class or classes of
disputes which it would or would not consider submitting to the jurisdiction of the Centre.
The Secretary-General shall forthwith transmit such notification to all Contracting States.
Such notification shall not constitute the consent required by paragraph (1).
ARTICLE 26
Consent of the parties to arbitration under this Convention shall, unless otherwise
stated, be deemed consent to such arbitration to the exclusion of any other remedy. A
Contracting State may require the exhaustion of local administrative or judicial remedies as a
condition of its consent to arbitration under this Convention.
ARTICLE 27
(1) No Contracting State shall give diplomatic protection, or bring an
international claim, in respect of a dispute which one of its nationals and another Contracting
State shall have consented to submit or shall have submitted to arbitration under this
Convention, unless such other Contracting State shall have failed to abide by and comply with
the award rendered in such dispute.
(2) Diplomatic protection, for the purposes of paragraph (1), shall not include
informal diplomatic exchanges for the sole purpose of facilitating a settlement of the dispute.
CHAPTER III
CONCILIATION
SECTION 1.– REQUEST FOR CONCILIATION
ARTICLE 28
(1) Any Contracting State or any national of a Contracting State wishing to
institute conciliation proceedings shall address a request to that effect in writing to the
Secretary-General who shall send a copy of the request to the other party.
(2) The request shall contain information concerning the issues in dispute, the
identity of the parties and their consent to conciliation in accordance with the rules of
procedure for the institution of conciliation and arbitration proceedings.
(3) The Secretary-General shall register the request unless he finds, on the basis
of the information contained in the request, that the dispute is manifestly outside the
jurisdiction of the Centre. He shall forthwith notify the parties of registration or refusal to
register.
SECTION 2.– CONSTITUTION PF THE CONCILIATION COMMISSION
ARTICLE 29
48
(1) The Conciliation Commission (hereinafter called the Commission) shall be
constituted as soon as possible after registration of a request pursuant to Article 28.
(2) (a) The Commission shall consist of a sole conciliator or any uneven number of
conciliators appointed as the parties shall agree.
(b) Where the parties do not agree upon the number of conciliators and the
method of their appointment, the Commission shall consist of three conciliators, one
conciliator appointed by each party and the third, who shall be the president of the
Commission, appointed by agreement of the parties.
ARTICLE 30
If the Commission shall not have been constituted within 90 days after notice of
registration of the request has been dispatched by the Secretary-General in accordance with
paragraph (3) of Article 28, or such other period as the parties may agree, the Chairman shall,
at the request of either party and after consulting both parties as far as possible, appoint the
conciliator or conciliators not yet appointed.
ARTICLE 31
(1) Conciliators may be appointed from outside the Panel of Conciliators, except
in the case of appointments by the Chairman pursuant to Article 30.
(2) Conciliators appointed from outside the Panel of Conciliators shall possess
the qualities stated in paragraph (1) of Article 14.
SECTION 3.– CONCILIATION PROCEEDINGS
ARTICLE 32
(1) The Commission shall be the judge of its own competence.
(2) Any objection by a party to the dispute that the dispute is not within the
jurisdiction of the Centre, or for other reasons is not within the competence of the
Commission, shall be considered by the Commission which shall determine whether to deal
with it as a preliminary question or to join it to the merits of the dispute.
ARTICLE 33
Any conciliation proceeding shall be conducted in accordance with the provisions of
this Section and, except as parties otherwise agree, in accordance with the Conciliation Rules
in effect on the date on which the parties consented to conciliation. If any question of
procedure arises which is not covered by this Section or the Conciliation Rules or any rules
agreed by the parties, the Commission shall decide the question.
ARTICLE 34
(1) It shall be the duty of the Commission to clarify the issues in dispute between
the parties and to endeavor to bring about agreement between them upon mutually acceptable
terms. To that end, the Commission may at any stage of the proceedings and from time to
time recommend terms of settlement to the parties. The parties shall cooperate in good faith
with the Commission in order to enable the Commission to carry out its functions, and shall
give their most serious consideration to its recommendations.
(2) If the parties reach agreement, the Commission shall draw up a report noting
the issues in dispute and recording that the parties have reached agreement. If, at any stage of
49
the proceedings, it appears to the Commission that there is no likelihood of agreement
between the parties, it shall close the proceedings and shall draw up a report noting the
submission of the dispute and recording the failure of the parties to reach agreement. If one
party fails to appear or participate in the proceedings, the Commission shall close the
proceedings and shall draw up a report noting that party’s failure to appear or participate.
ARTICLE 35
Except as the parties to the dispute shall otherwise agree, neither party to a
conciliation proceeding shall be entitled in any other proceeding, whether before arbitrators or
in a court of law or otherwise, to invoke or rely on any views expressed or statements or
admissions or offers of settlement made by the other party in the conciliation proceedings, or
the report or any recommendations made by the Commission.
CHAPTER IV
ARBITRATION
SECTION 1.– REQUEST FOR ARBITRATION
ARTICLE 36
(1) Any Contracting State or any national of a Contracting State wishing to
institute arbitration proceedings shall address a request to that effect in writing to the
Secretary-General who shall send a copy of the request to the other party.
(2) The request shall contain information concerning the issues in dispute, the
identity of the parties and their consent to arbitration in accordance with the rules of
procedure for the institution of conciliation and arbitration proceedings.
(3) The Secretary-General shall register the request unless he finds, on the basis
of the information contained in the request, that the dispute is manifestly outside the
jurisdiction of the Centre. He shall forthwith notify the parties of registration or refusal to
register.
SECTION 2.– CONSTITUTION OF THE TRIBUNAL
ARTICLE 37
(1) The Arbitral Tribunal (hereinafter called the Tribunal) shall be constituted as
soon as possible after registration of a request pursuant to Article 36.
2 (a) The Tribunal shall consist of a sole arbitrator or any uneven number of
arbitrators appointed as the parties shall agree.
(b) Where the parties do not agree upon the number of arbitrators and the method
of their appointment, the Tribunal shall consist of three arbitrators, one arbitrator appointed
by each party and the third, who shall be the president of the Tribunal, appointed by
agreement of the parties.
ARTICLE 38
If the Tribunal shall not have been constituted within 90 days after notice of
registration of the request has been dispatched by the Secretary-General in accordance with
paragraph (3) of Article 36, or such other period as the parties may agree, the Chairman shall,
at the request of either party and after consulting both parties as far as possible, appoint the
arbitrator or arbitrators not yet appointed. Arbitrators appointed by the Chairman pursuant to
50
this Article shall not be nationals of the Contracting State party to the dispute or of the
Contracting State whose national is a party to the dispute.
ARTICLE 39
The majority of the arbitrators shall be nationals of States other than the Contracting
State party to the dispute and the Contracting State whose national is a party to the dispute;
provided, however, that the foregoing provisions of this Article shall not apply if the sole
arbitrator or each individual member of the Tribunal has been appointed by agreement of the
parties.
ARTICLE 40
(1) Arbitrators may be appointed from outside the Panel of Arbitrators, except in
the case of appointments by the Chairman pursuant to Article 38.
(2) Arbitrators appointed from outside the Panel of Arbitrators shall possess the
qualities stated in paragraph (1) of Article 14.
SECTION 3.– POWERS AND FUNCTIONS OF THE TRIBUNAL
ARTICLE 41
(1) The Tribunal shall be the judge of its own competence.
(2) Any objection by a party to the dispute that that dispute is not within the
jurisdiction of the Centre, or for other reasons is not within the competence of the Tribunal,
shall be considered by the Tribunal which shall determine whether to deal with it as a
preliminary question or to join it to the merits of the dispute.
ARTICLE 42
(1) The Tribunal shall decide a dispute in accordance with such rules of law as
may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the
law of the Contracting State party to the dispute (including its rules on the conflict of laws)
and such rules of international law as may be applicable.
(2) The Tribunal may not bring in a finding of non liquet on the ground of
silence or obscurity of the law.
(3) The provisions of paragraphs (1) and (2) shall not prejudice the power of the
Tribunal to decide a dispute ex aequo et bono if the parties so agree.
ARTICLE 43
(1) Except as the parties otherwise agree, the Tribunal may, if it deems it
necessary at any stage of the proceedings;
(a) call upon the parties to produce documents or other evidence; and
(b) visit the scene connected with the dispute, and conduct such inquiries there as
it may deem appropriate.
ARTICLE 44
Any arbitration proceeding shall be conducted in accordance with the provisions of
this Section and, except as the parties otherwise agree, in accordance with the Arbitration
51
Rules in effect on the date on which the parties consented to arbitration. If any question of
procedure arises which is not covered by this Section or the Arbitration Rules or any rules
agreed by the parties, the Tribunal shall decide the question.
ARTICLE 45
(1) Failure of a party to appear or to present his case shall not be deemed an
admission of the other party’s assertions.
(2) If a party fails to appear or to present his case at any stage of the proceedings
the other party may request the Tribunal to deal with the questions submitted to it and to
render an award. Before rendering an award, the Tribunal shall notify, and grant a period of
grace to, the party failing to appear or to present its case, unless it is satisfied that that party
does not intend to do so.
ARTICLE 46
Except as the parties otherwise agree, the Tribunal shall, if requested by a party,
determine any incidental or additional claims or counter-claims arising directly out of the
subject-matter of the dispute provided that they are within the scope of the consent of the
parties and are otherwise within the jurisdiction of the Centre.
ARTICLE 47
Except as the parties otherwise agree, the Tribunal may, if it considers that the
circumstances so require, recommend any provisional measures which should be taken to
preserve the respective rights of either party.
SECTION 4.– THE AWARD
ARTICLE 48
(1) The Tribunal shall decide questions by a majority of the votes of all its
members.
(2) The award of the Tribunal shall be in writing and shall be signed by the
members of the Tribunal who voted for it.
(3) The award shall deal with every question submitted to the Tribunal, and shall
state the reasons upon which it is based.
(4) Any member of the Tribunal may attach his individual opinion to the award,
whether he dissents from the majority or not, or a statement of his dissent.
(5) The Centre shall not publish the award without the consent of the parties.
ARTICLE 49
(1) The Secretary-General shall promptly dispatch certified copies of the award
to the parties. The award shall be deemed to have been rendered on the date on which the
certified copies were dispatched.
(2) The Tribunal upon the request of a party made within 45 days after the date
on which the award was rendered may after notice to the other party decide any question
which it had omitted to decide in the award, and shall rectify any clerical, arithmetical or
similar error in the award. Its decision shall become part of the award and shall be notified to
the parties in the same manner as the award. The periods of time provided for under
52
paragraph (2) of Article 51 and paragraph (2) of Article 52 shall run from the date on which
the decision was rendered.
SECTION 5.– INTERPRETATION, REVISION
AND
ANNULMENT OF THE AWARD
ARTICLE 50
(1) If any dispute shall arise between the parties as to the meaning or scope of an
award, either party may request interpretation of the award by an application in writing
addressed to the Secretary-General.
(2) The request shall, if possible, be submitted to the Tribunal which rendered the
award. If this shall not be possible, a new Tribunal shall be constituted in accordance with
Section 2 of this Chapter. The Tribunal may, if it considers that the circumstances so require,
stay enforcement of the award pending its decision.
ARTICLE 51
(1) Either party may request annulment of the award by an application in writing
addressed to the Secretary-General on the ground of discovery of some fact of such a nature
as decisively to affect the award, provided that when the award was rendered that fact was
unknown to the Tribunal and to the applicant and that the applicant’s ignorance of that fact
was not due to negligence.
(2) The application shall be made within 90 days after the discovery of such fact
and in any event within three years after the date on which the award was rendered.
(3) The request shall, if possible, be submitted to the Tribunal which rendered the
award. If this shall not be possible, a new Tribunal shall be constituted in accordance with
Section 2 of this Chapter.
(4) The Tribunal may, if it considers that the circumstances so require, stay
enforcement of the award pending its decision. If the applicant requests a stay of enforcement
of the award in his application, enforcement shall be stayed provisionally until the Tribunal
rules on such request.
ARTICLE 52
(1) Either party may request annulment of the award by an application in writing
addressed to the Secretary-General on one or more of the following grounds:–
(a) that the Tribunal was not properly constituted;
(b) that the Tribunal has manifestly exceeded its powers;
(c) that there was corruption on the part of a member of the Tribunal;
(d) that there has been a serious departure from a fundamental rule of procedure;
or
(e) that the award has failed to state the reasons on which it is based.
(2) The application shall be made within 120 days after the date on which the
award was rendered except that when annulment is requested on the ground of corruption
53
such application shall be made within 120 days after discovery of the corruption and in any
event within three years after the date on which the award was rendered.
(3) On receipt of the request the Chairman shall forthwith appoint from the Panel
of Arbitrators an ad hoc Committee of three persons. None of the members of the Committee
shall have been a member of the Tribunal which rendered the award, shall be of the same
nationality as any such member, shall be a national of the State party to the dispute or of the
State whose national is a party to the dispute, shall have been designated to the Panel of
Arbitrators by either of those States, or shall have acted as a conciliator in the same dispute.
The Committee shall have the authority to annul the award or any part thereof on any of the
grounds set forth in paragraph (1).
(4) The provisions of Articles 41, 45, 48, 49, 53 and 54, and of Chapters VI and
VII shall apply mutatis mutandis to proceedings before the Committee.
(5) The Committee may, if it considers that the circumstances so require, stay
enforcement of the award pending its decision. If the applicant requests a stay of enforcement
of the award in his application, enforcement shall be stayed provisionally until the Committee
rules on such request.
(6) If the award is annulled the dispute shall, at the request of either party, be
submitted to a new Tribunal constituted in accordance with Section 2 of this Chapter.
SECTION 6.– RECOGNITION AND ENFORCEMENT OF THE AWARD
ARTICLE 53
(1) The award shall be binding on the parties and shall not be subject to any
appeal or to any other remedy except those provided for in this Convention. Each party shall
abide by and comply with the terms of the award except to the extent that enforcement shall
have been stayed pursuant to the relevant provisions of this Convention.
(2) For the purposes of this Section, “award” shall include any decision
interpreting, revising or annulling such award pursuant to Articles 50, 51 or 52.
ARTICLE 54
(1) Each Contracting State shall recognize an award rendered pursuant to this
Convention as binding and enforce the pecuniary obligations imposed by that award within its
territories as if it were a final judgment of a court in that State. A Contracting State with a
federal constitution may enforce such an award in or through its federal courts and may
provide that such courts shall treat the award as if it were a final judgment of the courts of a
constituent state.
(2) A party seeking recognition or enforcement in the territories of a Contracting
State shall furnish to a competent court or other authority which such State shall have
designated for this purpose a copy of the award certified by the Secretary-General. Each
Contracting State shall notify the Secretary-General of the designation of the competent court
or other authority for this purpose and of any subsequent change in such designation.
(3) Execution of the award shall be governed by the laws concerning the
execution of judgments in force in the State in whose territories such execution is sought.
ARTICLE 55
Nothing in Article 54 shall be construed as derogating from the law in force in any
Contracting State relating to immunity of that State or of any foreign State from execution.
54
CHAPTER V
REPLACEMENT AND DISQUALIFICATION
OF
CONCILIATORS AND ARBITRATORS
ARTICLE 56
(1) After a Commission or a Tribunal has been constituted and proceedings have
begun, its composition shall remain unchanged; provided, however, that if a conciliator or an
arbitrator should die, become incapacitated, or resign, the resulting vacancy shall be filled in
accordance with the provisions of Section 2 of Chapter III or Section 2 of Chapter IV.
(2) A member of a Commission or Tribunal shall continue to serve in that
capacity notwithstanding that he shall have ceased to be a member of the Panel.
(3) If a conciliator or arbitrator appointed by a party shall have resigned without
the consent of the Commission or Tribunal of which he was a member, the Chairman shall
appoint a person from the appropriate Panel to fill the resulting vacancy.
ARTICLE 57
A party may propose to a Commission or Tribunal the disqualification of any of its
members on account of any fact indicating a manifest lack of the qualities required by
paragraph (1) of Article 14. A party to arbitration proceedings may, in addition, propose the
disqualification of an arbitrator on the ground that he was ineligible for appointment to the
Tribunal under Section 2 of Chapter IV.
ARTICLE 58
The decision on any proposal to disqualify a conciliator or arbitrator shall be taken by
the other members of the Commission or Tribunal as the case may be, provided that where
those members are equally divided, or in the case of a proposal to disqualify a sole conciliator
or arbitrator, or a majority of the conciliators or arbitrators, the Chairman shall take that
decision. If it is decided that the proposal well-founded the conciliator or arbitrator to whom
the decision relates shall be replaced in accordance with the provisions of Section 2 of
Chapter III or Section 2 of Chapter IV.
CHAPTER VI
COST OF PROCEEDINGS
ARTICLE 59
The charges payable by the parties for the use of the facilities of the Centre shall be
determined by the Secretary-General in accordance with the regulations adopted by the
Administrative Council.
ARTICLE 60
(1) Each Commission and each Tribunal shall determine the fees and expenses of
its members within limits established from time to time by the Administrative Council and
after consultation with the Secretary-General.
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(2) Nothing in paragraph (1) of this Article shall preclude the parties from
agreeing in advance with the Commission or Tribunal concerned upon the fees and expenses
of its members.
ARTICLE 61
(1) In the case of conciliation proceedings the fees and expenses of members of
the Commission as well as the charges for the use of the facilities of the Centre, shall be borne
equally by the parties. Each party shall bear any other expenses it incurs in connection with
the proceedings.
(2) In the case of arbitration proceedings the Tribunal shall, except as the parties
otherwise agree, assess the expenses incurred by the parties in connection with the
proceedings, and shall decide how and by whom those expenses, the fees and expenses of the
members of the Tribunal and the charges for the use of the facilities of the Centre shall be
paid. Such decision shall form part of the award.
CHAPTER VII
PLACE OF PROCEEDINGS
ARTICLE 62
Conciliation and arbitration proceedings shall be held at the seat of the Centre except
as hereinafter provided.
ARTICLE 63
Conciliation and arbitration proceedings may be held, if the parties so agree,
(a) at the seat of the Permanent Court of Arbitration or of any other appropriate
institution, whether private or public, with which the Centre may make
arrangements for that purpose; or
(b) at any other place approved by the Commission or Tribunal after consultation
with the Secretary-General.
CHAPTER VIII
DISPUTES BETWEEN CONTRACTING STATES
ARTICLE 64
Any dispute arising between Contracting States concerning the interpretation or
application of this Convention which is not settled by negotiation shall be referred to the
International Court of Justice by the application of any party to such dispute, unless the States
concerned agree to another method of settlement.
CHAPTER IX
AMENDMENT
ARTICLE 65
Any Contracting State may propose amendment of this Convention. The text of a
proposed amendment shall be communicated to the Secretary-General not less than 90 days
prior to the meeting of the Administrative Council at which such amendment is to be
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considered and shall forthwith be transmitted by him to all the members of the Administrative
Council.
ARTICLE 66
(1) If the Administrative Council shall so decide by a majority of two-thirds of
its members, the proposed amendment shall be circulated to all Contracting States for
ratification, acceptance or approval. Each amendment shall enter into force 30 days after
dispatch by the depository of the Convention of a notification to Contracting States that all
Contracting States have ratified, accepted or approved the amendment.
(2) No amendment shall affect the rights and obligations under this Convention
of any Contracting State or of any of its constituent sub-divisions or agencies, or of any
national of such State arising out of consent to the jurisdiction of the Centre given before the
date of entry into force of the amendment.
CHAPTER X
FINAL PROVISIONS
ARTICLE 67
This Convention shall be open for signature on behalf of States members of the Bank.
It shall also be open for signature on behalf of any other State which is a party to the Statute
of the International Court of Justice and which the Administrative Council, by a vote of twothirds
of its members, shall have invited to sign the Convention.
ARTICLE 68
(1) This Convention shall be subject to ratification, acceptance or approval by the
signatory States in accordance with their respective constitutional procedures.
(2) This Convention shall enter into force 30 days after the date of deposit of the
twentieth instrument of ratification, acceptance or approval. It shall enter into force for each
State which subsequently deposits its instrument of ratification, acceptance or approval 30
days after the date of such deposit.
ARTICLE 69
Each Contracting State shall take such legislative or other measures as may be
necessary for making the provisions of this Convention effective in its territories.
ARTICLE 70
This Convention shall apply to all territories for whose international relations a
Contracting State is responsible, except those which are excluded by such State by written
notice to the depository of this Convention either at the time of ratification, acceptance or
approval or subsequently.
ARTICLE 71
Any Contracting State may denounce this Convention by written notice to the
depositary of this Convention. The denunciation shall take effect six months after receipt of
such notice.
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ARTICLE 72
Notice by Contracting State pursuant to Articles 70 or 71 shall not affect the rights or
obligations under this Convention of that State or of any of its constituent sub-divisions or
agencies or of any national of that State arising out of consent to the jurisdiction of the Centre
given by one of them before such notice was received by the depositary.
ARTICLE 73
Instruments of ratification, acceptance or approval of this Convention and of
amendments thereto shall be deposited with the Bank which shall act as the depositary of this
Convention. The depositary shall transmit certified copies of this Convention to States
members of the Bank and to any other State invited to sign the Convention.
ARTICLE 74
The depositary shall register this Convention with the Secretariat of the United
Nations in accordance with Article 102 of the Charter of the United Nations and the
Regulations thereunder adopted by the General Assembly.
ARTICLE 75
The depositary shall notify all signatory States of the following:–
(a) signatures in accordance with Article 67;
(b) deposits of instruments of ratification, acceptance and approval in accordance
with Article 73;
(c) the date on which this Convention enters into force in accordance with
Article 68;
(d) exclusions from territorial application pursuant to Article 70;
(e) the date on which any amendment of this Convention enters into force in
accordance with Article 66; and
(f) denunciations in accordance with Article 71.
DONE at Washington, in the English, French and Spanish languages, all three texts
being equally authentic, in a single copy which shall remain deposited in the archives of the
International Bank for Reconstruction and Development, which has indicated by its signature
below its agreement to fulfil the functions with which it is charged under this Convention.
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STATEMENT OF OBJECTS AND REASONS
The United Nations Commission on International Trade Law (UNCITRAL) has
adopted the UNCITRAL Model Law on International Commercial Arbitration and
Conciliation in 1985 and 2002, as well as Model Arbitration and Conciliation Rules in 1976
and 1980, respectively. The General Assembly of the United Nations has recommended by its
Resolutions that all countries give due consideration to the said Model Law in view of the
desirability of uniformity of the law of arbitral procedures and conciliatory measures and also
keeping in view the specific needs of international commercial arbitration and conciliation
practices. The draft law is based on Model Law prepared by UNCITRAL and adopted by the
United Nations and has been recommended by the Resolutions of the United Nations General
Assembly for compliance and adoption by the Members States to create uniformity and
harmony in domestic and international trade and trade law for dispute settlement by
Arbitration and Conciliation. The draft law is a consolidated law comprising Arbitration,
Conciliation, recognition and enforcement of foreign Arbitral Awards as well as Arbitration
under the Convention on the Settlement of Investment Disputes between States and Nationals
of Other States. It is a futuristic draft law catering the legal requirements for business,
industry, international trade and ordinary litigants as well.
2. The Bill is designed to achieve the aforesaid objects.
DR. ZAHEER UDDIN BABAR AWAN
MINISTER-IN-CHARGE