If You Build It, They Will Come: The Story of Institutional Arbitration In Pakistan And CIICA’s 9-Year Journey (Part 2)

Print Friendly, PDF & Email

Author: Rana Sajjad*


Is institutional arbitration a solution looking for a problem in Pakistan? This question was raised at the end of the first part of this blog post. As a perennial optimist, my short answer is: most definitely not.

Institutional arbitration has been designed and widely adopted around the world to cater to a very specific need of businesses: To resolve disputes in a neutral, credible, and efficient manner. In view of institutional arbitration’s long and impressive track record over the years in diverse business cultures and across civil and common law jurisdictions, one would assume that there would be no major roadblocks to its adoption in Pakistan either. Unless, of course, Pakistan has something unique about its business or legal culture that makes institutional arbitration or some aspect or element of it irrelevant or unsuitable. But if Pakistani businesses and government entities have been writing ad hoc arbitration clauses in their contracts and arbitrating commercial disputes on a regular basis, albeit not to their complete satisfaction, should they not be open to opting for institutional arbitration? Why would they not institutionalize the arbitration proceedings they already have experience with to ensure more streamlined and structured proceedings, an uncommon experience in a large number of ad hoc arbitration proceedings? More specifically, if you can have a dispute decided in as early as 90 days by institutional arbitration, why would you not prefer it over waiting for an award rendered upon conclusion of an ad hoc arbitration proceeding that could take 1-2 years or a court proceeding that could take 2-3 years? If they have not chosen institutional arbitration over these other methods in around nine years, does this imply that institutional arbitration is not cut out for the Pakistani legal and business culture? Or, perhaps, nine years is part of a not-so-unusual long-drawn process of an arbitration center’s life cycle. During a training workshop in the U.S., a Canadian lawyer, while citing examples of arbitration centers in Europe and the U.S., reassured me that it takes at least 5-6 years for an arbitration center to get off the ground. I thought that if centers in the developed world take that long, it would not be unusual if it takes even twice that much time (10-12 years) for a center in Pakistan to do so. Based on this estimate, nine years on, we at CIICA should be reasonably optimistic and believe that we are almost there.

The amount of time that has passed in CIICA’s institutional life cycle is not the only relevant factor though; another important consideration is what exactly is being done to make the vision of a wider adoption of institutional arbitration in Pakistan a reality. To this end, as mentioned in the first part of this blog post, CIICA has been articulating and tweaking its Unique Value Proposition (UVP) to potential users as part of our strategy to make the concept of institutional arbitration simpler and more familiar. In addition to potential users, over the years, CIICA has also engaged with both transactional and dispute resolution lawyers based in Lahore, Islamabad, and Karachi to explore the possibility of writing CIICA’s clause in their clients’ contracts. Almost invariably, we were told that institutional arbitration was an effective dispute resolution mechanism, and they would be happy to suggest it to their clients with a view to writing the CIICA clause in their contracts. In the same vein, we have engaged with in-house counsel, some of whom have been quite receptive to the idea of institutional arbitration and even written CIICA’s clause in their contracts. That is undeniably just the first step towards developing a familiarity with and ultimately trust in institutional arbitration. The holy grail would be a substantial increase in the number of such contracts that would create a critical mass of users and, in turn, help build a robust arbitration ecosystem.

The term “ecosystem” is popular among arbitration enthusiasts for explaining the lack of wider adoption in Pakistan. Specifically, the default yet rather abstract explanation is that a culture of arbitration needs to be developed, and the mindset of the potential user, the disputing party, needs to change in order to build a robust arbitration ecosystem in Pakistan. Working backwards, how do we solve the problem of Pakistan’s legal and business culture not being amenable to the resolution of disputes outside the court? And what about changing the mindset, an even tougher challenge? Presumably, Pakistani business owners and government officials are not hardwired to resolve disputes in a timely and cost-efficient manner. They are either inclined to exploit the delays endemic to the court system or have learned to live with them. If so, perhaps arbitration in Pakistan is only meant for a particular type of business or industry that is serious and sincere about resolving disputes and safeguarding its reputation and longstanding business relationships. Assuming this is the case, would making institutional arbitration the preferred choice amongst these businesses and industries help set an example for other market segments and industries to follow? Would that be the silver bullet that will enable a wider adoption of arbitration across Pakistan? Perhaps which is why this approach has also been a part of CIICA’s repertoire.

As the story of institutional arbitration in Pakistan unfolds, nine years on, CIICA continues to learn, adapt, and pivot in its quest to find the silver bullet that will help us reach the tipping point. That is when an unstoppable wave of change signifying the tipping point can be expected to transform how commercial and investment disputes are resolved in Pakistan within a robust arbitration ecosystem. With a sense of relief, we can then answer the question of whether institutional arbitration is a solution looking for a problem in Pakistan in the negative and affirm that institutional arbitration is solving a real and intractable problem that has afflicted contract enforcement and effective settlement of commercial and investment disputes over the years. In that watershed moment when CIICA’s vision is realized and its mission is accomplished, we can also finally reaffirm that “If you build it, they will come.”


This is the second of a two-part blog post. Please find the part 1 here


Rana Sajjad is a dual-qualified lawyer (licensed in New York and Pakistan). He is the Managing Partner at Triage Law, a Lahore-based commercial and arbitration law firm, and the Founder & President of the Center for International Investment and Commercial Arbitration, Pakistan’s first international arbitration center.