Arbitration is a legal proceeding takes place outside the Court but still results in a final and legally binding decision similar to a court judgment. Parties involved in arbitration are effectively opting out of the court system and submitting their case for resolution by a neutral, third party arbitrator. The reasons for selecting arbitration vary from case to case. Arbitration is recognized world’s most effective legal system after Court proceeding. It is faster, less expensive and more informal than going to court. It also has the advantage of being private and confidential. It opted by almost every party having agreement across the border parties for trading and services.

Arbitration is a method of dispute resolution in which a neutral third party, an arbitrator, conducts hearing and / or reviews written submissions from the parties. Upon consideration of the evidence, the arbitrator makes a legally binding decision which can be enforced in the same manner as a civil court judgment.

Arbitration differs from mediation in that once you enter the arbitration process, you are bound by the arbitrator’s decision. Mediation is a negotiation process, in which the mediator helps the parties negotiate a mutually acceptable solution.

Arbitration hearings are attended by the parties involved, their attorneys, the arbitrator, and the parties’ witnesses. Each party makes an opening statement, presents evidence, questions and cross examines witnesses, and makes a closing statement. During this presentation, formal rules of evidence generally do not apply. Alternatively, arbitration can be conducted with written submissions only in appropriate cases. The arbitrator then renders his or her decision or award.


International Arbitration has become a developed phenomenon in Alternative Disputes Resolution (ADR). Although international and domestic arbitration are governed under different law regimes but a friendly domestic arbitration practice serves as a good base for international arbitration to grow in a country. Arbitration friendliness is considered to be a requirement for a country to progress in international arbitration.

In 1958, Pakistan promulgated the New York Convention on Recognition and Enforcement of Foreign Awards, 1958 (hereinafter referred as the “New York Convention”) and came to the list of initial signatories of the Convention. Pakistan promulgated Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2005.