PAKISTAN Law and Practice Contributed by: Abdul Muqtadir Khan, Syed Absar Rahat Rizvi, Hammad Saleem and Zair Zaman Khan, Khan & Arshad
ered to hold a trial, weigh the merits, or substitute its own view for that of the arbitrators. On invalidity of the arbitration agreement, “incapacity” in Article V(1)(a) refers to the capacity of the parties to enter into the contract in the first place. The require - ment of an agreement in writing under Article II(2) has been read generously to accommodate modern com - mercial practice. For example, the courts have held that the phrase “exchange of letters or telegrams” extends to email and other modern means of com - munication, and communications exchanged through an automated information system were held to consti - tute an agreement in writing, read with the Electronic Transactions Ordinance, 2002. An objection that a party had no proper notice or was otherwise unable to present its case engages the prin - ciple of audi alteram partem and the right to a fair trial under Article 10A of the Constitution, but it must be borne out by the record. However, the objection was rejected where the record showed that the objector had taken every step to delay the proceedings before the tribunal and had advanced nothing on the merits of its default. Objections that the tribunal exceeded the scope of the arbitration agreement have fared no better. The courts have held that, where two agreements are economi - cally interdependent and form an indivisible whole, the arbitration clause in the parent agreement is the centre of gravity and is deemed to be anchored in the subsidiary agreement, so that disputes under the lat - ter fall within the tribunal’s jurisdiction. The court also affirmed the doctrine of kompetenz - kompetenz , under which the tribunal may rule upon its own jurisdiction. Non-arbitrability is the ground on which Pakistani practice has diverged most from the pro-enforcement trend, although its reach is narrower than it once appeared. A majority Supreme Court Judgment has held that, where allegations of fraud and corruption went to the very existence of a valid contract, the dis - pute was not one arising under the contract and, as a matter of public policy, was not referable to arbitra - tion. That remains the leading authority on arbitrability, but it was decided under the Arbitration Act, 1940, more than a decade before the 2011 Act and may
not be cited as the governing authority any longer. Recently, the Supreme Court, expressly adopting a pro-arbitration approach and by invoking Section 278 of the Companies Act, 2017, stayed proceedings concerning an allegedly fraudulent transfer of shares and referred the dispute to arbitration, albeit with the consent of the parties. Public policy, in particular, is now read restrictively. The Supreme Court has held that the exception safe - guards fundamental notions of morality and justice, was never intended to be given a wide scope of application, and should not become a back door to a review of the merits of a foreign award or to the crea - tion of grounds not available under Article V; it is an exceptional defence attracting a heightened standard of proof. Accordingly, it has been held that enforce - ment may be refused on this ground only where it would violate the most basic notions of morality and justice prevailing in Pakistan, and that neither an error of law or fact on the part of the arbitrator nor a misap - plication of Pakistani law is a public policy objection. Recently, a High Court framed the test in operational terms: an award is contrary to public policy only if it offends a constitutional mandate, is forbidden by law, or would defeat the provisions of any law; multiplicity of proceedings, the risk of conflicting decisions and futility fall outside the doctrine. ICSID Awards Similar to the foregoing, an ICSID award may not be enforced where it does not qualify for recognition under the applicable statutory framework or where enforcement is sought contrary to the obligations and limitations recognised under the ICSID Convention. 4.4 Process of Enforcing Arbitral Awards Domestic Awards For a domestic award, the award is filed in the com - petent court under the Arbitration Act, 1940. An appli - cation to file the award must be made within 90 days of service of the notice of making of the award (Arti - cle 178 of the Limitation Act, 1908). The court issues notice to the parties and provides an opportunity to raise objections, if any, against the award. If no valid objection is established, the court then pronounc - es judgment in terms of the award and draws up a
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