PAKISTAN Law and Practice Contributed by: Faisal Daudpota, Daudpota International
• General rule: the courts will typically stay domestic proceedings to allow disputes to be resolved in the agreed foreign forum. Under the 2011 Arbitration Act, referring parties to arbitration is mandatory if a valid agreement exists. • The COGSA Exception: COGSA creates a critical distinction between – (a) outbound (from Pakistan): the Act applies to shipments leaving Pakistan and foreign clauses that attempt to override statutory protections in these cases may not be enforced; and (b) inbound (to Pakistan): the Act generally does not apply to incoming shipments, making the enforcement of foreign jurisdiction clauses much more likely. 7.2 Enforcement of Law and Arbitration Clauses Incorporated Into a Bill of Lading The courts in Pakistan generally recognise and enforce law and arbitration clauses of a charterparty that are incorporated into a bill of lading, provided the incor - poration is express, clear and consistent with the bill of lading terms. Pakistan, as a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbi - tral Awards (1958), has incorporated its provisions through the Recognition and Enforcement (Arbitra - tion Agreements and Foreign Arbitral Awards) Act, 2011 (the “REFA Act”). Under Section 4 of this Act, Pakistani courts are mandated to stay legal proceed - ings and refer parties to arbitration if a valid arbitration agreement exists, unless the agreement is found to be “null and void, inoperative or incapable of being performed”. 7.3 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is appli - cable in Pakistan. Pakistan ratified the convention on 14 July 2005, and it entered into force on 12 October 2005. Applicable Domestic Law The primary domestic legislation that incorporates and enforces the New York Convention in Pakistan is the Recognition and Enforcement (Arbitration Agree -
ments and Foreign Arbitral Awards) Act, 2011 (the “2011 Act”). Additionally, the Arbitration Act 1940 governs domes - tic arbitration, while the Arbitration (International Investment Disputes) Act 2011 implements the ICSID Convention. 7.4 Arrest of Vessels Subject to Foreign Arbitration or Jurisdiction Pakistani High Courts (specifically those with Admi - ralty Jurisdiction) retain the power to arrest vessels or attach assets to secure a claim, even if the underlying contract mandates foreign arbitration or jurisdiction. Legal Basis Under the Admiralty Jurisdiction Ordinance 1980, the courts can exercise in rem jurisdiction against a vessel for maritime claims, regardless of foreign ownership or where the cause of action arose. Security v Dispute While the 2011 Act requires disputes to be referred to arbitration, courts view vessel arrests as “precaution - ary measures” to secure the claim rather than a final adjudication, allowing both to co-exist. Procedure and Release To arrest a vessel (either the offending ship or a sister- ship), a claimant must file a supporting affidavit. The vessel is typically released once a Bank Guarantee or P&I Club letter of undertaking is provided. 7.5 Domestic Arbitration Institutes Pakistan does not have any exclusive, or widely rec - ognised, national maritime arbitration association. 7.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses If a lawsuit is filed in a Pakistani court despite a val - id foreign jurisdiction or arbitration agreement, the defendant has two primary remedies to halt the pro - ceedings. • Stay of proceedings (arbitration) – under Section 34 of the Arbitration Act, 1940, a defendant can request the court to stay proceedings. This must
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