Enforcing a Foreign Arbitral Award in Pakistan: New York Convention Route

The practical value of an arbitration clause depends entirely on whether the award can be turned into money. For a foreign award in Pakistan the framework is comparatively favourable, but the process is document-driven and unforgiving of gaps - most difficulties arise from paperwork that was never assembled properly at the seat.

The legal framework

Keep the two regimes distinct. A domestic award made in Pakistan runs under the 1940 Act; a foreign award runs under the 2011 Act and the Convention. They have different procedures, different forums and different grounds of challenge, and applying the wrong one is a costly false start.

What you must produce

This is where most applications succeed or fail, and the work should be done at the seat before you ever look at Pakistan.

1. The original award or a duly authenticated copy.
2. The original arbitration agreement or a certified copy.
3. Certified translations where the documents are not in English.
4. Evidence the award is binding and, where relevant, not set aside at the seat.
5. Proof of the parties' identities and standing.
6. Details of the debtor's assets in Pakistan, for the enforcement stage.

Obtain the authenticated award and certified agreement while you are still at the seat, with any apostille or legalisation the receiving court will want. Going back to a foreign tribunal or institution two years later for properly certified copies is slow, sometimes expensive, and occasionally impossible if the institution has archived the file.

The process in Pakistan

1. Identify the correct High Court - generally where the assets or the debtor are.
2. File the application for recognition and enforcement with the documents above.
3. Notice to the other side, who may resist on Convention grounds.
4. Hearing on recognition.
5. Order recognising the award, which is then enforceable as a decree.
6. Execution proceedings against the debtor's assets.

Note the two distinct stages. Recognition establishes that the award is enforceable in Pakistan; execution is the separate exercise of actually extracting value from assets. Winning the first without planning the second is common and unproductive.

Grounds for resisting enforcement

The Convention grounds are deliberately narrow, and the burden is generally on the party resisting.

• Incapacity of a party or invalidity of the arbitration agreement.
• Lack of proper notice of the appointment or proceedings, or inability to present a case.
• The award exceeds the scope of the submission to arbitration.
• Improper composition of the tribunal or procedure contrary to the agreement.
• The award is not yet binding, or has been set aside or suspended at the seat.
• Subject matter not arbitrable under Pakistani law.
• Contrary to public policy of Pakistan.

Note what is not on this list: that the tribunal got the facts or the law wrong. Enforcement is not an appeal, and a debtor arguing the merits is arguing something the court is not there to decide. Expect public policy to be the ground most often invoked, and be ready to meet it narrowly rather than re-arguing the case.

Finding and reaching the assets

An award is worth what you can execute against. Do this analysis before you spend on enforcement.

The last row is the recurring frustration. Assets held by a related company are not automatically available to satisfy an award against the contracting entity, and arguments to reach them are hard. Where you can, contract with the entity that actually holds assets - see contract law essentials.

Timing and interim protection

• Move promptly. Delay gives a debtor time to move or encumber assets.
• Consider interim relief to preserve assets pending recognition - take advice on what is available.
• Watch limitation, and take advice on the applicable period for enforcement.
• Expect the recognition stage to take time where it is contested.
• Budget for execution separately - it is its own proceeding.
• Monitor set-aside proceedings at the seat, which the debtor may start to slow enforcement.

A debtor's standard tactic is to commence set-aside proceedings at the seat and then ask the Pakistani court to wait. Anticipate it. Where possible, resist an adjournment or ask for security as a condition, so delay carries a cost for the party seeking it.

Getting the clause right in the first place

Almost every enforcement difficulty traces back to the arbitration clause. When drafting for a Pakistani counterparty:

1. Name the seat clearly - it determines the supervisory court and the set-aside regime.
2. Name the institution and rules, or set out an ad hoc procedure properly.
3. Specify the number of arbitrators and how they are appointed.
4. Specify the language - it affects translation cost at enforcement.
5. Check the counterparty holds assets in a Convention jurisdiction.
6. Consider requiring security or a guarantee from an entity with assets.

See drafting an arbitration clause. A clause that is silent on the seat is the single most common defect, and it creates argument at precisely the point you can least afford it.

Is enforcement worth pursuing?

An honest assessment before spending is worth more than optimism.

• Are there identifiable assets in Pakistan, and are they unencumbered?
• Is the debtor still trading, or effectively defunct?
• How strong are the resistance grounds realistically available to them?
• What will recognition and execution cost, including translation and authentication?
• How long, allowing for a contested recognition and an execution?
• Is a negotiated settlement at a discount the better commercial answer?

Recognition of an award materially strengthens a negotiating position even if you never execute. Many awards are settled after recognition rather than fought to the end of execution, and structuring the exercise with that outcome in mind is often the commercially sensible approach - see mediation.

Frequently asked questions