Litigation 2019 Second Edition

Last Updated December 05, 2019

Pakistan

Law and Practice

Author



Mohsin Tayebaly & Co. (MTC) is a law firm operating in Pakistan which specialises in advising financial institutions, companies, private individuals, the state and regulatory bodies on their most complex legal issues. The firm provides consistent high-quality advice that combines technical expertise with an understanding of the legal and commercial environment in which its clients operate. Having been in place for over 50 years, MTC now provides a combination of legal expertise in the fields of corporate, commercial, financial and civil law in Pakistan. The firm has offices in Karachi and Lahore and presently consists of over 40 lawyers (including nine partners), which, by comparison to the size of other law firms in Pakistan, is considered a large sized firm.

The legal system existing in the Islamic Republic of Pakistan (“Pakistan”) is based upon the legal system of British India. Following partition of the Indian subcontinent in 1947, the common law system continued in Pakistan. As it stands today, the legal system in Pakistan is governed through the Constitution of the Islamic Republic of Pakistan, 1973 (“1973 Constitution”). The 1973 Constitution incorporates therein the elements of Islamic Law (Shari'a). 

The legal system in Pakistan follows an adversarial model. A dispute between parties is adjudicated by a judge. A judge is required to weigh the submissions and evidence produced by the parties and applies the law that is in field to the facts and circumstances of a particular case.

The legal process in Pakistan commences by institution of a matter before the appropriate forum (ie, court, tribunal, etc) in written form. The party against whom a matter is instituted is given an opportunity to submit a written response. Once written submissions are made by all parties, the matter is heard by a judge. At the hearing, all parties are provided an opportunity to make oral submissions either in person or through a legal counsel. Based on the oral and written submissions, the judge passes an appropriate judgment, applying the relevant laws. 

The hierarchy of judiciary of Pakistan comprises of two classes: the superior judiciary and the subordinate judiciary. The superior judiciary consists of the Supreme Court of Pakistan, the Federal Shariat Court and the High Courts. The lower judiciary includes civil and criminal district courts, special courts and tribunals. The Supreme Court rests at the top of the judicial hierarchy and is the final forum for deciding legal and constitutional disputes.

The Supreme Court of Pakistan also has a number of de jure powers which are outlined in the Constitution including the suo moto power to try matters pertaining to human rights. The doctrine of Stare Decisis is fully applicable to the country’s court system and the decisions of superior courts are binding on judges and judicial forums lower to them in hierarchy.

Each province has a separate High Court; namely the High Court of Sindh, Peshawar High Court (for the province of Khyber Pakhtunkhwa), Lahore High Court (for the province of Punjab) and Baluchistan High Court. The Islamabad Capital territory has a separate High Court. The High Court is an appellate court for all civil and criminal matters. Further, a party can approach the High Court directly in writ jurisdiction, which is governed by the Constitution.

The High Court of Sindh exercises original civil jurisdiction since pre-partition era, however, the same is limited to matters which are valued over 15 million Pakistani Rupees (pecuniary jurisdiction last revised in 2011). Subsequent to the enactment of the Islamabad High Court Act, 2010, matters could be instituted before the Islamabad High Court in its original civil jurisdiction as well.  Further, the High Courts of Sindh and Baluchistan exercise original admiralty jurisdiction.

The civil and criminal courts rest at the bottom of the hierarchy. The procedure of the civil justice system is governed by the Code of Civil Procedure, 1908 (CPC). The civil courts are established by the respective province under different laws titled as the Civil Courts Ordinance 1962, which recognised the following main classes of civil courts:

  • the court of District Judge;
  • the court of Additional District Judge; and
  • the court of Civil Judge.

All civil courts are subordinate to the High Court and subject to the general superintendence and control of the High Court.

The criminal procedure is regulated by the Code of Criminal Procedure, 1898 whereas the law relating to crime and its punishments are laid down in the Pakistan Penal Code 1860. The main criminal courts include:

  • the Court of Session; and
  • the Court of Magistrate.

There are also many special courts, tribunals and boards created through different laws that specifically govern that area of law, which includes:

  • Banking Court - a specialist court that deals with cases when a person or a financial institution defaults on a fulfilment of any obligation with regards to finance under the Financial Institution Ordinance, 2001.
  • Family Court - having exclusive jurisdiction over matters pertaining to dissolution of marriages, dower, maintenance, the restitution of conjugal rights, custody of children, guardianship, etc.
  • Juvenile Court - relates to the crimes committed by children who have not attained the age of eighteen years. It is governed under the Juvenile Justice System Act, 2018, which provides criminal justice and social reintegration for juvenile offenders.
  • Customs Court - it deals with matters relating to the levying and collection of custom duties, fee and service charges, import controls, taxation on imports, etc.
  • National Accountability Bureau Court - it deals with matters pertaining to corruption and corrupt practices.
  • Anti-Terrorism Court - pertaining to terrorism cases.
  • Federal Services Tribunal - constituted under Service Tribunal Act, 1973 to adjudicate upon matters relating to the terms and conditions of services of civil servants.
  • Intellectual Property Tribunal- dealing with proceedings concerning infringement of intellectual property matters such as trademarks, copyrights, etc.
  • Appellate Tribunal Inland Revenue – The Tribunal was established pursuant to amendments in the Finance Ordinance, 2009 and is responsible for hearing appeals relating to sales tax, income tax and federal excise tax.
  • Foreign Exchange Appellate Board – established pursuant to Foreign Exchange Regulation Act, 1947, and it regulates matters pertaining to payments, dealings in foreign exchange and securities and the import and export of currency and bullion.
  • Customs Tribunals – deals with appeals pertaining to income tax, sales tax, federal excise and customs duties matters.
  • Insurance Tribunal – matters governed under the Insurance Ordinance, 2000.
  • Competition Appellate Tribunal – appellate jurisdiction in matters governed under the Competition Act, 2010.

More recently, the Chief Justice of Pakistan announced the setting up of model courts in every district of the country to conduct daily trials in order to reduce the massive backlog of cases. The model courts commenced operations from March 2019. Initially, pending trials pertaining to offences of murder and cases relating to narcotics have been assigned to these model courts.

Apart from the aforementioned courts and tribunals, Pakistan also has quasi-judicial forums for redressal of grievances and complaints relating to maladministration in public departments. In the recent past, specialised ombudsman offices have been established, which deal with matters pertaining to banking, tax, insurance and protection against harassment of women at workplaces.

Court proceedings in Pakistan are generally open to the public and media. High profile cases including issues pertaining to public importance, human rights, etc, are regularly covered and reported by the media. However, where there is a possibility of compromising national security and interest, open-court hearings are restricted.

Right of Access to Information Act, 2017, provides that final orders or decisions of a court, tribunal, etc, are part of public record; hence, accessible to public.

The right of audience before the courts in Pakistan is regulated under the Legal Practitioners and Bar Councils Act, 1973 (“1973 Act”).

A person who has obtained a qualifying law degree in Pakistan, or from universities recognised by the Pakistan Bar Council, may apply for enrolment as an advocate of the subordinate courts. The eligibility of a being enrolled as an advocate of a subordinate courts is as follows:

  • a bachelor’s degree in law from a university recognised by the Higher Education Commission of Pakistan and Pakistan Bar Council; and
  • obtaining a minimum of 50% marks in the Law Graduate Assessment Test by the Pakistan Bar Council.

Once a person is enrolled as an advocate of the subordinate courts, they shall be entitled to appear before the High Courts after he has completed two years of practice in the subordinate courts and has worked on at least ten cases before the subordinate courts.

In order to be enrolled as an Advocate of the Supreme Court, the said individual should have a standing for a period of at least seven years as an Advocate of the High Court and they must have at least ten judgements reported in recognised law journals. 

Pursuant to Section 55(r) of the 1973 Act, the Pakistan Bar Council may prescribe rules regulating the conditions under which nationals of any foreign country may be admitted as advocates, and the foreign qualifications that may be recognised for purposes of such admission.

Litigation funding is not prohibited nor restricted in Pakistan expressly by any legislation or regulations. However, there is no private entity or organisation that provides litigation funding.

In addition, the Law and Justice Commission of Pakistan has established district legal empowerment committees who are allocated funds to provide free legal aid to deserving litigants who do not have sufficient means to pursue their matters before courts of law. Further, the Pakistan Bar Council has framed Pakistan Bar Council Free Legal Aid Rules, 1999 for providing free legal aid to indigent litigants. A list of legal practitioners is maintained, and they are appointed on a case by case basis and paid appropriate fees for their professional services from the funds generated through allocation by the Pakistan Bar Council. 

Since there is no express restriction on litigation funding, there is no demarcation line between the types of suits eligible for litigation funding.

Since there is no express restriction on litigation funding, third-party funding may be obtained by the plaintiff or defendant.

Since there is no express restriction on litigation funding, there is no threshold or cap on the amount of funding.

Since there is no express restriction on litigation funding, the funders are at a liberty to select the types of costs they will fund.

Contingent fee agreements are not allowed in Pakistan and have been specifically prohibited under the Canons of Professional Conduct and Etiquettes of Advocates Rules, approved and adopted by the Pakistan Bar Council.

Since there is no express restriction on litigation funding, it cannot be stated with certainty whether any time limit exists for a party to obtain third-party funding.

There is no legislation or generic rules specifically governing and regulating pre-action conduct.

However, some statutes specifically require the service of a notice prior to institution of a suit. Such requirements are provided, inter alia, under the Defamation Ordinance, 2002, Cantonments Act, 1924 and Co-operatives Societies Act, 1925. Under the aforesaid pieces of legislature, if a notice is not served to the opposing party, the suit is liable for dismissal in limine.

In Pakistan, the computation of limitation period for instituting a suit is governed by the Limitation Act, 1908 (“1908 Act”). However, statutes governing specific areas of law may provide a different period of limitation.

The 1908 Act provides different periods of limitation for varying claims. Further, the 1908 Act also provides the time period from which the limitation period begins. For example, a suit for specific performance of a contract is to be instituted within three years of refusal to perform the contract. A perusal of the scheme of the 1908 Act shows that the limitation period generally begins when a “cause of action” accrues to the plaintiff.

The CPC provides that a suit may be instituted against a defendant in a court whose jurisdiction the cause of action arises and/or where the defendant resides, or where the defendant carries on business.

The document in the form of which a civil suit is filed before the court is called a plaint. The CPC enumerates the particulars to be included in the plaint. The plaint shall contain a concise statement of the material facts leading to the claim.

Subsequent to the filing of a plaint, a party may amend the plaint after seeking permission from the court. For such purposes, an application is required to be filed under Order VI Rule 17 of the CPC.

Order V of the CPC prescribes the rules of service upon the defendant. A summons or notice is issued by the Court through a designated officer or courier service to the defendant, directing the same to appear before the court on a date fixed by the court. In case the notice remains unserved or the defendant is avoiding receiving the notice, or for any other reason the notice cannot be served upon the defendant, the court may adopt other ways to serve notice upon the defendant. Publication through newspaper is used as a last resort by the courts to summon the defendant. Costs of the service are paid by the plaintiff. In situations where the defendant resides outside Pakistan, the notice is served upon them through post and private courier.

Additionally, some statutes provide penal consequences for failure to receive notice such as the National Accountability Ordinance, 1999.

If a defendant fails to response to a lawsuit, the suit proceeds against the defendant ex parte.

There is no bar in Pakistan against instituting a representative, collective or class action suit. However, where a plaintiff sues in a representative character, the plaintiff must show that he has an actual existing interest in the subject-matter and he has taken the steps (if any) necessary to enable him to institute a suit as provided under the CPC.

Further, a public interest litigation can also be brought as a group or class action. The courts in Pakistan are not reluctant in entertaining such litigation and usually dispense away with the traditional rule of locus standi.

There is no mandatory requirement under the law to provide the client with cost estimates. However, as a matter of practice, cost estimates are provided at the outset.

Upon institution of a suit, a party may file an interlocutory application at any stage. Such applications are commonly filed by the plaintiff along with the plaint. Apart from the plaintiff, a defendant is at a liberty to file interim applications as and when needed. As such, before trial or substantive hearing of a claim, it is possible to file interim applications.

The following are the examples of interim applications:

  • permanent or mandatory injunction;
  • appointment of receiver;
  • appointment of commissioner, for the recording of evidence;
  • attachment of property;
  • application for discovery of documents; and
  • application for inspection of property.

The CPC provides that any party may, at any stage of a suit, apply to the court for such judgment or order where admissions of fact have been made based upon the pleadings and submissions of the parties, which may cover some or all of the issues in the suit. Further, as a matter of practice, the courts usually pass a preliminary decree in suits for administration of the estate of a deceased in respect of properties over which legal heirs are not under at dispute. 

The Superior Courts of Pakistan have developed the principle that an incompetent suit must be buried at its inception. If, however, the courts fail to take notice of any such legal defect, the defendant party may move an application for rejection of plaint under Order VII, Rule 11 of the CPC. Such application can be moved at any stage of the suit.

In addition to the applications specified in 4.2 Early Judgment Applications, where a suit has been instituted before a forum that does not have jurisdiction over the matter, the plaint shall, at any stage, be returned to be presented before the court in which the suit ought to have been instituted. 

Any interested party may join a lawsuit by filing an intervenor application under Order I, Rule 10 of the CPC. In terms of this provision, the party must show before the court that it is a necessary and proper party to the proceedings, and that its presence before the court is necessary for the adjudication of all the disputes that form the subject matter of the lawsuit.

Allowing any party to be joined or substituted as a party to the lawsuit is within the discretionary powers of the courts and dependent on the peculiar facts and circumstances of the case.

In matters before the Supreme Court of Pakistan, an application of a similar nature is made under Orders XV Rule 6 of the Supreme Court Rules, 1980. 

A defendant can file an application, at any stage of the proceedings, under Order XXV of the CPC for an order that the plaintiff must pay a sum of money as security for the defendant’s costs. The court may order payment of such security, within a specified time, if it appears that the plaintiff(s) are residing out of Pakistan and that the plaintiff(s) do not possess any sufficient immovable property within Pakistan other than the suit property.

A similar order may also be passed in cases where the Plaintiff is a woman and the court is satisfied that she does not possess any sufficient immovable property within Pakistan.

The are no rules in place for courts to specifically deal with the costs of interim applications. However, the same may be granted by the courts in exercise of their inherent powers and discretion in order to meet the ends of justice and aid in this regard is to be taken from Section 35 of the CPC, which deals with costs of suits generally.

There is no specific timeframe during which an application must be decided. The courts may, however, allow a party’s application for urgent hearing provided that it can satisfy the court that the circumstances of the case are such that they demand the case to be dealt with as an urgent motion. 

Discovery is permissible in civil cases and the CPC under Order XI ("Discovery and Inspection") lays down an exhaustive mechanism relating to discoveries. In any suit, the Plaintiff or the Defendant by leave of the court may deliver interrogatories (ie, discovery of facts through a questionnaire) in writing for the examination of the opposing party. Interrogatories must be answered through an affidavit to be filed within ten days. Any objection to any interrogatory on the ground that the same is scandalous or irrelevant or that the matters inquired into are not relevant must be taken under the affidavit in answer. Besides, discovery through interrogatories, a party may apply to the court for an order directing any other party to the suit to make discovery of the documents which are or have been in their possession, relating to any matter which is the subject of the suit.

The court may at any time during the pendency of the suit order the production of such documents. In addition to the provisions of CPC, where a party seeks to rely upon documents which are in possession of the opposing party, recourse may be had to provisions of the Qanun–e–Shahadat Order, 1984 (the “1984 Order”) requiring the opposing party to produce the said documents before the Court. In adjusting the costs of the suit, where the court is of the opinion that the interrogatories have been exhibited unreasonably or at improper length, the costs occasioned by the said interrogatories and the answers thereto shall be paid by the party at fault.

The CPC provides that interrogatories can only be administered to the parties to a suit and not to strangers. They may be administered to a party on the same side also, provided there is some issue between such parties. It may be noted that restrictions relating to obtaining discovery from third parties are not applicable to the Supreme Court which has been conferred special powers by the Constitution of Pakistan (under Article 187) which empowers the apex court to issue such directions as may be necessary for doing complete justice in any case or any matter pending before it including an order for the purposes of securing the attendance of any person or the discovery or production of any document.

The court allows discovery of documents or discovery of facts through interrogatories when the court is of the opinion that the same is necessary for fair disposal of the suit or for saving costs. Courts are required to maintain their impartiality and neutrality when exercising such powers and cannot allow a party to go on a fishing expedition or fill lacunas in the case. Where any party to a suit fails to comply with any order of the court to answer interrogatories or for discovery or inspection of documents the court is empowered to impose penalty for refusal to comply with such order.

If such party is the plaintiff and continues to not comply with the order, the court is empowered to dismiss the suit for want of prosecution. Similarly, if the non–compliance is on part of the defendant, their defence shall be struck of and they shall be placed in a position as if they had never defended the case. A party to a suit is required to produce all documents upon which it intends to rely in support of its claim.

The law of Pakistan provides mechanisms for discovery of facts and documents as highlighted in 5.1 Discovery and Civil Cases, 5.2 Discovery and Third Parties and 5.3 Discovery in This Jurisdiction. In addition, after the framing of issues in a suit the matter proceeds for recording of evidence and each party is required to file a list of witnesses and a list of documents on which its claim is based. The parties then are required to produce the original documents and the witnesses are required to appear in witness box and such witness(es) are cross examined by the counsel of the opposing party. The courts are also empowered to orally examine any party requiring it to answer any material questions relating to the suit at any stage of hearing or any subsequent stage. All the aforementioned collectively forms part of the evidence in a suit.

Attorney client privilege enjoys a pivotal role in Pakistan’s legal system and no authority is permitted to enquire from an advocate about any matter or information acquired by him during the course of his professional engagement with a client. In this regard, Article 9 of the 1984 Order provides that no advocate shall at any time be permitted, unless with his client’s express consent, to disclose any communication made to him in the course of his professional engagement. Further, Article 12 of the 1984 Order provides that no person can be compelled to disclose to the court, tribunal or other authority exercising judicial or quasi–judicial powers, any confidential information which has taken place between him and his legal professional advisors. 

The superior courts of country have held that the entire legal system would collapse if advocates were compelled to disclose any fact which formed part of the privileged communication. It is pertinent to note that communications made to an advocate by their client for the furtherance of any illegal purpose, or any fact observed by any advocate, in the course of their employment as such, which shows that a crime or fraud has been committed since the commencement of the advocate’s employment, are not protected by virtue of the provisions of the 1984 Order. An in-house counsel is not recognised as a practicing advocate in terms of the Legal practitioners and Bar Councils Act, 1973, and the client attorney privilege is not applicable to in-house counsels.

A party upon receiving notice from a court is bound to produce every document in its possession which is relevant or material to the suit unless it is privileged (such as the client attorney privilege discussed in 5.5 Legal Privilege). A party can, however, waive its privilege and produce documents for which exemption could be claimed. The state is not exempted from discovery proceedings nor is a foreign state. A party may, however, refuse production of a document before the court which will be injurious to public interest or where the party is in possession of such document as an agent of someone who is not a party to the suit. In addition, the Constitution of Pakistan provides protection against self – incriminatory and no person can be compelled to produce any document that is self – incriminatory or require any party to be a witness against himself.

In Pakistan, the governing law for the grant of injunctive relief is the Specific Relief Act, 1877. The procedure followed by the court is provided under sections 94 and Order XXXIX Rules 1 and 2 of the CPC.

In order for grant of an injunction, the courts must be satisfied that the following ingredients are present:

  • prima facie case or right;
  • balance of convenience; and
  • irreparable loss or injury.

The said requirements are not listed under any statute but have been developed through caselaw. Further, the Supreme of Pakistan recently held that in suits pertaining to tax and customs matters, an injunction shall only be granted if the plaintiff deposits a minimum of 50% of the disputed amount with the relevant agency.

The types of injunctions granted by court may vary depending upon the nature and circumstances of the case and can be temporary, permanent, perpetual, mandatory, etc. As such, the courts have a wide discretion to either restrain or direct a party to take a certain action. Further, the courts have the power to grant a freezing injunction.

The law relating to anti-suit injunction is underdeveloped in Pakistan. However, the Sindh High Court in a recent judgment has recognised an anti-suit injunction essentially being an equitable relief that can be granted by the courts in Pakistan. However, at the same time, it recognises that the jurisdiction to grant such an injunction would be exercised with considerable caution, where the clearest case of oppression is made out.

An ad-interim order for an injunctive relief can be obtained immediately upon filing of a lawsuit for which permission can be obtained the on same day, during court hours.

In exceptional situations, the injunctive relief can be obtained from a judge on non-working days or outside courts hours provided that the circumstances of the case so warrant. 

An injunctive relief can be obtained on ex parte basis. Usually, injunctive ad interim orders are obtained ex parte. In passing ex parte orders, the courts are mindful that the ingredients/requirements of granting injunctive relief are met and the party, that is seeking the relief, shall suffer an irreparable loss should the injunction be refused.   

A defendant may file an application before the court under Section 95 of the CPC and the Court may grant compensation not exceeding ten thousand rupees if it is satisfied that the injunction was obtained on insufficient grounds. The defendant may also file suit for damages.   

The courts in Pakistan have the power to grant Mareva Injunction and can exercise power in respect of assets over which the court has jurisdiction. There is no reported case where worldwide assets of a respondent have been frozen.

An injunctive relief is an action in personam. As such, injunctive relief is only effective against the parties in a lawsuit.

If a party fails to comply with an injunction, an application for contempt of court can be filed against that party for violation of an injunctive court order under the Contempt of Court Ordinance, 2003, Order XXXIX Rule 2(3) of CPC and Article 204 of the Constitution.

In terms of powers of the court, the court may direct the disobedient party to restore the position as it existed at the time of the passing of the injunctive order or it may impose fines or order imprisonment.   

Civil trials in Pakistan commence through filing of written pleadings which are then responded to by the Respondents through filing of a written statement. On the basis thereof, the judge frames issues and parties are thereafter directed to lead evidence. At the evidence stage, original documents are produced before the court or a commissioner appointed by court to record evidence of the parties and the parties or their counsel cross examine the witness of the opposing party. Expert examination is not involved in every matter, however, where the court feels the need or on an application by any of the parties, an expert such as a handwriting expert can be appointed. Once the evidence is completed, oral arguments are made before the judge who passes a written judgment.        

Interlocutory applications are usually filed at the time of the institution of the lawsuit and are mandatorily required to be accompanied with an affidavit from the applicant. The applications are decided on the basis of relevant law being applied to the facts as mentioned under the affidavit. The applications are decided prior to recording of evidence in the matter. 

Jury trials have been abolished in Pakistan both in civil and criminal matters.

The law of evidence in Pakistan was initially governed by the Evidence Act, 1872, until it was repealed by the 1984 Order. The 1984 Order is a considerable reproduction of the repealed Evidence Act, barring a few exceptions. The 1984 Order is the conspectus of rules and practices according to which all courts record evidence for trials and hearings. This order, in conjunction with the CPC assists the governance of evidence and related rules in Pakistan.

As per Articles 59 to 65 of the 1984 Order, when there is a specific issue in question expert testimony is permitted at trial, including but not limited to the following:

  • a matter of:
    1. art; or
    2. science; or
    3. foreign law; or
  • the identity of:
    1. handwriting; or
    2. finger impressions; or
  • the usage and tenets of an individual; or
  • the relationship between one party and another,

then a witness possessing specific knowledge regarding the issue in question is known as an expert witness. The courts, either on an application from the parties to the proceedings, or at their own discretion, will hear the testimony of the expert witness. However, the submissions in the expert testimony or guidance are not considered to be conclusive proof and reliance on the same is at the sole discretion of the courts.

Court hearings are open to the public as well as the media. Only in exceptional matters, relating to national security or other sensitive matters, a request can be made to the court, or the court on its own motion restricts open court hearings. Courts in Pakistan do not maintain transcripts of hearings except for transcripts of examination and cross examination of a witness during evidence stage.

The CPC in terms of Order X "Examination of parties by the Court" provides the mechanism for and empowers the court at stage of hearing or any subsequent stage to orally examine any party to answer any material questions relating to the suit. In most cases, the judgment is reserved and announced at a later date. In some situations, where the judge has reached a certain conclusion, they may decree or dismiss a suit through a short order at the hearing in open court and a detailed judgment follows at a later date.

Courts in Pakistan are over-burdened and there exists a major backlog of cases. The CPC although provides timelines such as a maximum period of 30 days for filing of a written statement by the defendant (in terms of Order VIII Rule 1 of the CPC), however, such timelines are rarely adhered to in practice. No timeframe, therefore, can be provided with reasonable certainty and from commencement of claim to completion of trial and a judgment thereupon takes several years usually ranging from four to eight years.

Parties are at liberty to compromise a suit, with or without the permission of the court. In order for a compromise to carry the sanctity of court, an application has to be filed before the court. The application is required to be signed by all the parties, their counsels and must be accompanied with individual affidavits of all the parties. Order XXIII of the CPC deals with withdrawal and adjustments of suits. If a suit is pending before any court, an application may be moved either under Order XXIII Rule 1 to withdraw a suit or to abandon a part of its claim unconditionally, or under Order XXIII Rule 3 for a consent decree.

Even though not a requirement under the CPC, the courts tend to take a stricter approach when the latter is filed, and the attorneys representing the litigant parties are required to be present along with their lawyers on the date that an application under Order XXIII Rule 3 is fixed for hearing. Such steps are taken to avoid any kind of fraudulent activity which can take place at the time of filing such applications. It is only when the judge is satisfied that the terms of the compromise application are reasonable, and the settlement agreement is lawful, that such applications are permitted and a consent decree is passed thereupon.

In order to keep the terms of a settlement confidential from public, the parties can enter into an agreement amongst themselves and unconditionally withdraw the suit from the court which practice is regularly adopted by litigants who wish to keep the terms of the settlement confidential. If, however, the parties wish to obtain an order from the court based on the settlement arrived at between the parties, the contents of such compromise are required to be produced in writing and form part of the compromise application submitted before the court. The court, based on such contents, decrees the suit, and the contents of the compromise are reproduced under such decree. Right of Access to Information Act, 2017 provides that final orders or decisions of a court, tribunal, etc, are part of public record and hence, accessible to public.

In terms of the law developed in Pakistan relating to settlements, a consent decree obtained through court on the basis of a compromise between the parties is, in principle, akin to a contract. Any breach thereof would give rise to a fresh cause of action enforceable through filing of a fresh suit. In practice, however, execution and contempt proceedings arising out of consent decrees are entertained by Courts especially where the consent decree carries any added directions passed by the trial Court at the time of allowing the compromise application.

In order to have a settlement agreement set aside, the party must represent before the Court that the settlement was obtained through fraud or misrepresentation. If the settlement agreement is made part of a court decree, the party can file an application under Section 12 (2) of the CPC challenging the validity of the decree on the plea of fraud, misrepresentation or want of jurisdiction.

The form of relief or award that can be granted by the courts depends on the nature of the case and the relief sought. The Courts, however, are not precluded from granting relief not specifically claimed and can grant any award which it thinks just and appropriate in the circumstances of a particular case. The court grant reliefs that are available to it either through statute or an equitable relief including but not limited to declaratory award relating to title or ownership of property, etc, award for possession, damages, etc. Further, Section 151 of the CPC empowers the court to make any orders as may be necessary for the ends of justice.

Judicial precedents categorise damages as either "general" or "special". General damages are such as the law presumes to be natural and probable cause of defendant’s action. No specific rules governing the law on damages exist in Pakistan. Determination of general damages for mental torture, agony, defamation, injury to reputation, etc, are to be assessed following "rule of thumb" and such exercise falls within the discretionary jurisdiction of the court. The court exercises the said discretion in light of the evidence led qua the extent of damages suffered by a party. A person claiming special damages has to prove each item of loss with reference to the evidence brought on record. Courts can grant compensatory or exemplary damages in exceptional cases.

Where a decree is for the payment of money, Section 34 of the CPC provides that the court is empowered to order interest at such rate as it deems reasonable to the principal sum adjudged, from the date of the suit to the date of the decree. In addition, the court may order further interest from the date of the decree till the date of payment. The provisions of the CPC are only applicable where the parties have not agreed for the provision of interest under the agreement subsisting between the parties. There are no statutory limits to the award of pre- and/or post-judgment interest and law on the subject matter is guided purely on the basis of judicial precedents and usually the prevailing bank interest rate is applied. 

The successful litigant, having obtained a decree (on the basis of a judgment) from the court, can file for execution of the award through filing of an execution application. The CPC, in Order XXI, "Execution of Decrees and Orders" provides an exhaustive mechanism for the enforcement of a decree and stipulates the powers available to a court for the satisfaction of a decree which include, inter alia, attachment, sale and auction of the assets of the judgment debtor.

The law relating to judgments of a foreign country is governed by Sections 13 and 44 – A of the CPC. A decree of any of the superior courts of the United Kingdom or any other reciprocating territory is executed as if it had been passed by the domestic courts. Following the principle of "judicial comity", courts in Pakistan respect and give effect to judicial decisions of other countries. A foreign judgment is conclusive in respect of any matters adjudicated thereunder except where it falls under the exceptions contained in Section 13 which provides that a foreign judgment shall not be enforceable where:

  • it has not been pronounced by a court of competent jurisdiction;
  • it has not been given on the merits of the case;
  • it appears on the face of the proceedings to be found on an incorrect view of international law or a refusal to recognise the law of Pakistan in cases in which such law is applicable;
  • the proceedings in which the judgment was obtained are opposed to natural justice;
  • it has been obtained by fraud; and
  • it sustains a claim founded on a breach of any law in force in Pakistan. 

All judgments passed by a civil court are appealable in the respective superior courts depending on which court of first instance has passed the order or the judgment. The remedies of appeal, review and revisions and their scope is distinct and clearly laid out under different provisions of the CPC. The Law Reforms Ordinance, 1972, relates to appeals arising out judgments of the High Courts and provides that an appeal shall lie to a bench of two or more judges of the High Court against a decree or order passed by a single judge of that Court. The procedure in respect of appeals before the Supreme Court is governed by the Supreme Court Rules, 1980.

Scope of review is limited and can only be allowed if there is an error apparent on the face of the judgment. A party opting for review is not allowed to adjudicate the same facts which have already been decided. Review could only be entertained when new and important grounds were advanced which were not brought on record at the time of hearing. Scope of review in criminal matters is narrow in comparison to civil matters. Similarly, scope or revision is also limited and can be exercised where the subordinate court exercised jurisdiction not vested in it or failed to exercise jurisdiction vested in it. In addition, a revision may be filed where the subordinate court has committed material irregularity. A revision against an order of a civil court can be filed either before the district judge or the High Court.

Various statutes provide for varying forums and levels of appeal in respect of the area of law covered under the said statute. Not all statutes provide for an appeal leading all the way up to the Supreme Court, such as, the Sindh Rented Premises Ordinance, 1978, does not provide for a second appeal before the High Court.

When a judgment is announced, the aggrieved party may assail such order or judgment before the higher courts in appeal, revision or may file a review application in the same court. In most cases, the remedies available are creation of the relevant statute on the subject. The CPC provides general rules regarding review, revision and appeal and are applicable in most cases where the relevant statute is silent on the subject. In Appeals before the Supreme Court, jurisdiction of the court can be invoked against the orders of High Court in civil cases by filing:

  • Civil Petition for leave to appeal under Article 185 (3) of the Constitution within 60 days from date of order/judgment of High Court.
  • Civil Appeal otherwise provided in any other statute within the time as provided under that law or statute.

In criminal matter, the jurisdiction of the Supreme Court can be invoked against orders of the High Court by filing

  • Criminal Petition for leave to appeal under Article 185(3) of the Constitution within 30 days from date of order or judgment of the High Court.
  • Criminal Appeal under Article 185 (2) (a) (b) and (c) of the Constitution within 30 days from date of the judgment of High Court.
  • Criminal Appeal under Section 19 of the Contempt of Court Ordinance, 2003 and Section 476 of the Criminal Procedure Code, 1898 within 30 days from date of the judgment of High Court.
  • Jail Petition for leave to appeal under Rule 3, Order XXIII of the Supreme Court Rules, 1980, within 30 days from date of the judgment of High Court.

Appeals before the Supreme Court are filed in the form of Leave to Appeal petition. An appeal to the Supreme Court from a judgment, decree, order or sentence of a court or tribunal shall only be admitted if the Supreme Court is satisfied that the case involves a substantial question of law and in only such cases grants leave to appeal.

Every appeal shall be preferred in the form of a memorandum signed by the Appellant. The memorandum shall be accompanied by a certified copy of the decree appealed from and of the judgment on which it is founded. The limitation for preferring an appeal varies. In terms of the provisions of the Limitation Act all appeals from a subordinate court to a High Court must be filed within 90 days from the date of the judgment. If the appeal lies before a district judge from a civil court subordinate to it, the limitation period is 30 days. For intra–court appeals before a division bench of the High Court the limitation period specified in 20 days.

A petition for leave to appeal before the Supreme Court against a judgment of the High Court must be filed within 60 days from the date of judgment. Period consumed by the copying agency while preparing certified copy and delivering the same to the party is to be excluded from the period of limitation. Further, where an appeal is time barred, a party may file an application for condonation of delay along with the appeal stating out the reasons for failure to file an appeal within the prescribed limitation. Such application is, however, allowed in exceptional circumstances and the party seeking condonation must present strong convincing grounds reflecting its inability to file the appeal within time.

The CPC provides that, in a first appeal, the court may carry out a detailed assessment of both questions of fact and law to decide the matter. Whilst the court can examine the evidence recorded at the stage of the suit, it generally does not allow the appellant to produce fresh evidence refuting its earlier position

In appeals from appellate decrees or a second appeal under the CPC, the superior court only entertain grounds where the appellant can show that:

  • the judgment is contrary to law;
  • it has failed to determine a material issue of law; and
  • it has a substantial error or defect in following the procedure provided by the CPC.

Similarly, the Supreme Court will only entertain an appeal to a judgement in three instances:

  • if the dispute of the amount of the subject matter in the subordinate court or the subordinate appellate court is 50,000 upwards and that the court passing the judgement from which the appeal is preferred had varied or set aside the judgment of the court below it;
  • if the judgement involves a question with respect to property and the court passing the judgement from which the appeal is preferred had varied or set aside the judgment of the court below it; and
  • if it is evident from the findings of the High Court, in the judgment, that the matter involves a decision on a substantial question of law in respect of the interpretation of the Constitution.

The courts are empowered to impose any condition as it deems fit in the circumstances of the case in order to secure the ends of justice and protect the rights of the parties. In appeals against money decree, the courts usually require the Appellant to deposit the decretal amount with the court.

The court exercising Appellate jurisdiction is conferred with several powers in order to reach a just and proper decision based on the relevant law and the facts of the case. The Court can remand the matter where it comes to the conclusion that the trial court had:

  • omitted to frame or try an issue;
  • determined any question of fact essential to the rights of the parties to the suit; or
  • identified where evidence on record was insufficient to pronounce judgement.

The appellate court can set aside the judgment and decide the case finally. In some cases, the appellate court can frame additional issues and remand the matter to the trial court to give a finding and decision on the additional issues. In exception circumstances (as listed under Order XLI Rule 27 of the CPC), the appellate court may allow a party to produce additional evidence at the appellate stage and decide an appeal on the basis thereof.

In practice, the claimant pays the court fees (in the form of stamp duty) and other court fees, whereas, attorneys’ fees are borne by the respective parties. Actual costs are awardable by the court in order to secure expenses undergone by the successful litigant in assertion of his claim before the court. Where costs awarded are not sufficient, the court has the discretion to award costs by way of compensation to the successful litigant.

Special costs can also be awarded by courts in exercise of its inherent powers. Section 35 – A (2) provides the maximum prescribed limit for compensatory costs which is PKR25,000. However, through judicial precedents, it has been held that High Courts can award compensatory costs in excess of the prescribed limit.

Costs that can be awarded by the courts are actual costs (under Section 35 of the CPC) and compensatory costs (under Section 35 – A). The court is not bound to award costs in all cases and must give reasons for awarding costs if it so chooses to. In order to enable a court to award compensatory costs, the following conditions have to be fulfilled:

  • the claim or defence should be false or vexatious to the knowledge of the party asserting it;
  • objection to such claim or defence should have been taken at the earliest possible opportunity; and/or
  • such claim or defence should have been disallowed, withdrawn or abandoned, wholly or in part.

In practice, mostly only meagre costs are awarded (if any) and in almost all cases a litigant party will be unable to recover all costs spent towards litigation.

In terms of Section 35 (3) of the CPC, the court may give interest on costs at any rate not exceeding 6% per annum. Such interest shall be added to the costs and shall be recoverable as such.

The most common amongst the various alternative dispute resolution (ADR) mechanisms in Pakistan is arbitration. Mechanisms relating to mediation and conciliation have not been codified under Pakistani laws and the lack of detailed procedures (prior to, during or after the chosen ADR option) is the primary obstacle in attracting parties to consider these two mechanisms.

In most commercial contracts, parties opt to include an arbitration clause which serves as an anti–suit injunction for any claim brought before the courts. ADR, including mediation, is attracting increasing attention among state and non-state actors in Pakistan, as there is a perception that the formal legal system alone cannot provide adequate justice to individual citizens.

The law relating to ADR is in its development stage in Pakistan. The Parliament enacted the Alternative Dispute Resolution Act, 2017 (“ADR Act”) applicable to the Islamabad Capital Territory. As per the ADR Act, the court on the first date of appearance of all parties must refer every matter for ADR except where the case falls under the exceptions as listed thereunder. Further, Section 134-A of the Income Tax Ordinance, 2001 provides for making recourse to ADR and any person may apply to the Federal Board of Revenue (FBR) for resolution of any disputes whether pending litigation before a court, tribunal or otherwise except where criminal proceedings have been initiated.

Similarly, the Federal Excise Act, 2005 and the Customs Act, 1969 provide similar provisions under Sections 38 and 195-C respectively. The Family Laws Ordinance, 1961 provides for establishment of an arbitration council to take all necessary steps to bring about reconciliation between the parties. In addition, by Section 89–A of the CPC, the court may, where it considers necessary, adopt, with the consent of the parties, alternate dispute resolution methods including mediation and conciliation. Such recourse, however, is sparingly resorted to by courts.

Pakistan’s first mediation centre was established in 2007 by the name of Karachi Centre for Dispute Resolution (KCDR) with the support and assistance of the High Court of Sindh and the World Bank. Similarly, Lahore Chamber of Commerce also established a meditation centre in Lahore. More recently, in 2017, the Chief Justice of the Lahore High Court ordered the setting up of ADR centres which has yielded fruitful results in resolving matters. The Sindh Judicial Academy has initiated a meditation facility in collaboration with ADR Centre Rome, Italy. Such institutions presently operating in the country have resolved numerous disputes and have trained hundreds of individuals. Mediation programs have shown to save the parties time and money, improve satisfaction with the courts’ services and reduce future disputes and offences.

The arbitration law pertaining to domestic arbitration in Pakistan is governed by the Arbitration Act, 1940. In respect of foreign arbitral awards, its recognition and enforcement are governed by the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (“REA 2011”) which is a ratification of the New York Convention, 1958. Both the statues fail to provide any detailed mechanism in which an arbitrator is required to conduct the arbitration proceedings. However, it is clearly provided that the court may remove an arbitrator or umpire who has misconducted themselves. Where an award has been rendered, the award can be set aside on the ground that the arbitrator had misconducted themselves or the proceedings.

As held by the superior courts of Pakistan, the following subject matters may not be referred to arbitration:

  • determining whether or not:
    1. a person should be declared insolvent;
    2. conjugal rights should be restored; and
  • issues pertaining to:
    1. public rights;
    2. probate proceedings;
    3. alleged criminality.

Additionally, where serious allegations of fraud have been made against a party or the arbitration agreements, the courts may refuse to refer such matters to arbitration. Further, the courts have also held that an arbitrator cannot under any circumstances be bestowed with powers as are exercised by a magistrate and an arbitrator can only exercise jurisdiction in respect of civil matters.

As per the First Schedule to the Arbitration Act 1940, it is implied in any arbitration agreement that the arbitral award is binding. However, an award may be challenged on the following grounds as are mentioned under Sections 30 and 33 of the Arbitration Act which provide that an award can be set aside where:

  • an arbitrator or umpire has misconducted himself or the proceedings. Courts have held that misconduct can be of two types, legal misconduct and moral misconduct;
  • an award has been made after the issue of an order by the court superseding the arbitration;
  • an award has been improperly procured or is otherwise invalid; and
  • any party to an arbitration agreement may challenge the existence or validity of an arbitration agreement or award shall apply to the court and the court shall decide the question on the basis of affidavits.

The Superior Courts of Pakistan have repeatedly held that a challenge to an arbitration award is not an appeal before the court and the arbitration will not merely be set aside if, in view of the judge, a different conclusion can be arrived at. Thus, the courts usually only interfere with an award if an error is wholly apparent.

For enforcement of a domestic arbitral award, upon announcement of an award by the arbitrator, either party seeking enforcement of the award may request the arbitrator to file the award (along with depositions and documents which may have been taken and provided before the arbitrator) with the court. Upon filing the award, the court issues notices to the parties seeking any objections thereto. Upon receipt of all the objections or no objections, the court may proceed to remit, modify, correct or issue its judgment/decree in terms of the award. Once the decree is issued by the court, the same is enforced like any other decree of the Pakistani court of law.

In respect of foreign arbitral awards, the REA 2011, as mentioned in 13.1 Laws Regarding the Conduct of Arbitration, is the primary piece of governing legislature. REA 2011 provides that foreign judgments and awards by or between the nationals of contracting states are to be enforced without questioning the validity of the same except on the grounds explicitly provided for in the Convention.

Mohsin Tayebaly & Co.

1st Floor, Dime Centre
BC-4 Block 9
Kehkashan
Clifton
Karachi - 75600
Pakistan

+92 21 111 682 529

+92 21 358 702 40

contact@mtclaw.com.pk www.mtclaw.com.pk
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Law and Practice

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Mohsin Tayebaly & Co. (MTC) is a law firm operating in Pakistan which specialises in advising financial institutions, companies, private individuals, the state and regulatory bodies on their most complex legal issues. The firm provides consistent high-quality advice that combines technical expertise with an understanding of the legal and commercial environment in which its clients operate. Having been in place for over 50 years, MTC now provides a combination of legal expertise in the fields of corporate, commercial, financial and civil law in Pakistan. The firm has offices in Karachi and Lahore and presently consists of over 40 lawyers (including nine partners), which, by comparison to the size of other law firms in Pakistan, is considered a large sized firm.

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