Arbitration law reform: status of the new arbitration bill

Pakistan's domestic arbitration law is the Arbitration Act 1940 — a statute older than the country, built around court supervision at every stage. A bill to replace it with a framework based on the UNCITRAL Model Law has been before Parliament since 2024. This alert states where the reform stands as of late June 2026, and what to do about arbitration clauses in the meantime.

What changed

A committee constituted under the Law and Justice Commission of Pakistan produced a draft modern arbitration law, and an Arbitration Bill based on it was introduced in the Senate in early 2024 and referred to the Standing Committee on Law and Justice [committee composition, introduction date and current parliamentary status — TO BE VERIFIED BY REVIEWING LAWYER]. The draft follows the Model Law's architecture: arbitral tribunals rule on their own jurisdiction, courts intervene only where the statute allows, interim measures are available from both tribunal and court, and awards are enforced as of right subject to a narrow list of grounds for setting aside mirroring the Model Law [features of the current draft — TO BE VERIFIED BY REVIEWING LAWYER].

As of this writing, the bill has not been enacted [status — TO BE VERIFIED BY REVIEWING LAWYER]. The 1940 Act continues to govern arbitrations seated in Pakistan. Foreign awards stand apart: the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011 implements the New York Convention, and enforcement of foreign awards through the High Courts under that Act has become a reasonably settled route.

What it means

The gap between the two regimes is the whole point of the reform. Under the 1940 Act, an award seated in Pakistan must be filed in court and made a rule of court before it can be executed; objections under sections 30 and 33 are routine; and the supervisory jurisdiction of the civil courts gives a determined losing party years of purchase. Under the 2011 Act, a foreign award arrives with a presumption of enforceability and a closed list of defences. The practical result, familiar to anyone who negotiates dispute clauses here, is that a Singapore- or London-seated arbitration with Pakistani enforcement is often a faster road to money than a Karachi-seated one.

The bill, if enacted in its current shape, would close much of that gap for domestic seats. But two uncertainties counsel patience. First, the text may change in committee, and commencement and transitional provisions will determine whether the new law applies to existing agreements and pending arbitrations or only to those commenced afterward [transitional provisions — TO BE VERIFIED BY REVIEWING LAWYER]. Second, a new statute is only as good as its first five years of case law; the 1940 Act's problems were made by courts as much as by its text, and the new law's discipline on judicial intervention will be tested early.

What this means for you

Do not draft today for a statute that has not been enacted. For contracts signed now, choose the seat on the law as it stands: a foreign seat in a New York Convention state, with enforcement in Pakistan under the 2011 Act, remains the most predictable structure for high-value cross-border contracts; a Pakistan seat means the 1940 Act, and the clause should be built to survive it — a named appointing authority, a fixed number of arbitrators, institutional rules rather than ad hoc procedure, and a clear governing law. Audit your existing contracts with Pakistan-seated clauses and know which disputes would land under the old Act if they crystallised this year. Where a counterparty insists on a Pakistan seat, consider a clause that adopts institutional rules with their own timetables, since these supply much of the discipline the 1940 Act lacks. Track the bill: if it passes, the transitional provisions should be reviewed against your live contracts within the month, because whether renegotiating old clauses is worth the effort depends entirely on whether the new law will reach them.