*Final paper topic number 1: Procedure for Enforcement of foreign arbitral award in Pakistan

(under Repa act) also discuss relevant case laws, grounds for refusel*

Introduction to the REFA Act

The Government of Pakistan introduced the REFA Act to comply with the New York Convention,
1958, for recognizing and enforcing foreign arbitration agreements and awards. This law allows
international award creditors in commercial disputes to apply for recognition and enforcement
with minimal judicial interference.

Recognition of Foreign Arbitration Agreements

The REFA Act recognizes and enforces transnational arbitration agreements. The law includes
the New York Convention, 1958, as its Schedule. To enforce a foreign arbitration clause in
commercial disputes, there must be a written agreement. This includes arbitration clauses in
contracts, signed agreements, or communication through letters or telegrams.

Court Referrals to Arbitration

If a legal dispute involves a matter covered by an arbitration agreement, the defendant can ask
the court to refer the case to arbitration. The court will stay proceedings unless the agreement is
found null, void, inoperative, or unenforceable. In Cummins vs. Cummins, the court directed the
parties to resolve their dispute through arbitration as per their agreement.

Definition of an Arbitral Award

An arbitral award refers to the decision made by an arbitrator or arbitral institution. Such awards
are enforceable if issued in countries that are part of the New York Convention or those notified
by Pakistan's Federal Government.

Enforcement of Foreign Awards

The REFA Act provides the procedure for enforcing foreign commercial awards in Pakistan. It
ensures the recognition of awards in line with international arbitration practices.

Competent Court

The provincial high courts handle the enforcement of foreign arbitral awards. These courts have
exclusive authority to resolve disputes related to such awards. If a party disputes the arbitration
agreement and starts legal proceedings, the other party can apply to the court to stay those
proceedings. The court has powers similar to a civil court and follows the procedure outlined in
the Code of Civil Procedure, 1908.

Filing of Application
To enforce a foreign arbitral award, the applicant must file an application in the provincial high
court. This application requires specific documents as per Article IV of the New York
Convention, 1958, and the high court's rules. If the award is not in the court's official language, a
certified translation must be provided. The required documents include:

A certified copy of the award

The original arbitration agreement or a certified copy

An affidavit explaining the following:

The agreement’s validity under the applicable law

The tribunal’s proper constitution as per the agreement

Compliance with the arbitration law

Binding status of the award in its country of origin

If the application lacks necessary documents, the court may return it or allow time to complete
the filing.

Enforcement of Award

The court enforces a foreign arbitral award as if it were its own judgment. It has the same
powers under the Code of Civil Procedure, 1908. Once enforced, the award is binding on the
parties involved and can be used as a defense, set-off, or in other legal proceedings. Refusal to
recognize or enforce the award is only allowed under Article V of the New York Convention.

Grounds for Refusal of Enforcement:

The High Court may refuse to recognize and enforce a foreign arbitral award only if the party
against whom it is invoked furnishes proof of one or more of the following grounds, as stipulated
in Article V of the New York Convention:

Section 7 (2)(a): Incapacity of Parties or Invalid Agreement: The parties to the arbitration
agreement were under some incapacity, or the 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.
Section 7(3)(b): Lack of Proper Notice or Inability to Present Case: 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 their case.

Section 7 (2)(c): Award Beyond Scope of Submission to Arbitration: The 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.

Section 7 (2)(d): Improper Composition of Arbitral Authority or Procedure: The composition of

Section 7 (2)(e): Award Not Yet Binding or Set Aside: 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, it was made.

Additionally, recognition and enforcement may be refused if the High Court finds that:

Section 7 (2)(f): Non-Arbitrable Subject Matter: The subject matter of the dispute is not capable
of settlement by arbitration under the law of Pakistan.

Section 7 (2)(g): Contravention of Public Policy: The recognition or enforcement of the award
would be contrary to the public policy of Pakistan.

Relevant Case Law:

Case Summary: A.M. Construction Company (Pvt.) Ltd. v. Taisei Corporation (2024 SCMR 640)

Type of Dispute:
A contractual dispute related to a construction project and the recognition and enforcement of a
foreign arbitral award.

Facts:

Parties: Taisei Corporation (a Japanese company) subcontracted construction work to A.M.

Agreement: The subcontract (dated May 19, 2007) included an arbitration clause stating that
disputes would be resolved under ICC Rules, with arbitration in Singapore.

Dispute: A conflict arose during the project, leading AMC to initiate arbitration.
Final Arbitration Award:

The arbitrator ruled in favor of Taisei Corporation.

AMC was ordered to pay PKR 158 million, along with arbitration costs.

Legal Proceedings:

1. AMC's Challenge: AMC filed a case in the Lahore Civil Court, arguing that the award could be
challenged under the Arbitration Act, 1940.

2. Taisei's Argument: Taisei claimed the award was foreign (since arbitration occurred in
Singapore) and fell under the Recognition and Enforcement (Arbitration Agreements and
Foreign Arbitral Awards) Act, 2011, meaning only the High Court had jurisdiction.

3. Lower Courts' Rulings: Both the Civil Court and Lahore High Court sided with AMC, treating
the award as domestic.

4. Supreme Court’s Decision:

Declared the award as foreign because arbitration happened in Singapore, a New York
Convention state.

Stated that the 2011 Act applies to all foreign awards from July 14, 2005, onward, making it the
relevant law.

Ruled that the Lahore Civil Court lacked jurisdiction, and only the High Court could handle the
case.

Final Decision: The Supreme Court ruled in favor of Taisei Corporation, setting aside the lower
courts' decisions.

Foreign arbitral awards cannot be treated as domestic to avoid enforcement under the RIFA Act.

…………

Case Summary: Faysal Bank Limited v. M/s. Honda Atlas Cars Pakistan Ltd. (2014 CLD 1742)

Type of Dispute:
A contractual dispute concerning the enforcement of a foreign arbitral award under the New
York Convention and the Recognition and Enforcement (Arbitration Agreements and Foreign
Arbitral Awards) Act, 2011.

Facts:

Parties: Faysal Bank Limited (a Pakistani financial institution) and Honda Atlas Cars Pakistan
Ltd. (a local automobile manufacturer).

Agreement: The parties had an agreement that included an arbitration clause, referring disputes
to arbitration under a foreign jurisdiction.

Dispute: A disagreement arose between the parties, leading to arbitration proceedings outside
Pakistan.

Final Arbitration Award: The arbitrator issued an award favoring one party, which was then
brought to Pakistan for enforcement.

Legal Proceedings:

1. Challenge to Enforcement: The losing party challenged the enforcement of the foreign arbitral
award in Pakistan.

2. Court’s Consideration: The Lahore High Court examined whether the challenge met the
criteria under Article V of the New York Convention or Section 7(2) of the 2011 Act, which
outline the limited grounds for refusing enforcement.

3. Strict Interpretation of Grounds: The Court emphasized that refusal to enforce a foreign
arbitral award should only occur in exceptional circumstances, strictly in line with the specified
grounds.

Final Decision:
The Lahore High Court ruled that the party opposing enforcement must provide substantial
proof that one of the limited grounds for refusal applies. The Court upheld the strict
interpretation of Article V and reaffirmed Pakistan’s commitment to enforcing foreign arbitral
awards under the New York Convention and the 2011 Act.

It established that refusal should only occur in exceptional circumstances where a specific
ground for non-enforcement is proven.
………..

Case Summary: The Bank of Punjab v. M/s. National Investment Trust Ltd. (PLD 2018 Lahore
431)
Type of Dispute:
A contractual dispute regarding the enforcement of a foreign arbitral award involving financial
institutions.

Facts:

Parties: The Bank of Punjab (a Pakistani financial institution) and National Investment Trust Ltd.
(a local investment company).

Agreement: The parties entered into a financial agreement that included an arbitration clause,
referring disputes to foreign arbitration.

Dispute: A conflict arose, leading to arbitration proceedings outside Pakistan.

Final Arbitration Award: The arbitrator ruled in favor of one party, and the award was brought to
Pakistan for enforcement.

Legal Proceedings:

1. Challenge to Enforcement: The losing party opposed the enforcement of the foreign arbitral
award, arguing that it should be refused under Pakistani law.

2. Court’s Consideration: The Lahore High Court analyzed whether the foreign arbitration
proceedings adhered to international standards and whether any grounds under Article V of the
New York Convention applied.

3. Public Policy and Fairness: The Court determined that the foreign arbitral award did not
violate public policy or fairness principles under Pakistani law.

Final Decision:
The Lahore High Court ruled that the foreign arbitral award was enforceable, as the arbitration
proceedings were conducted in accordance with international norms. The Court reaffirmed that
the grounds for refusing enforcement are narrow and must be strictly interpreted, ensuring
Pakistan’s adherence to the New York Convention.

It highlighted that arbitration proceedings conducted in line with international norms should not
be refused enforcement.
…………..