First Commercial Courts
On 17th April, significant changes were promised as the Governor put pen to paper.
It’s not out of the routine for the Governor to sign on new or modified legislations, but for one recent Ordinance in particular, a glamorous ceremony was held, with modern ambience and décor used to host the occasion. The event was attended by the appearance of special guest such as the Finance Minister, members of the World Bank and the Planning and Development Department. It was a historic day because it was on that day that Pakistan’s full potential could begin to be realized, as we rose above the drudgery of our turbulent history to pave the path for the future. Readers of this piece may or may not recognize the significance of the historic event, but those in attendance did, and it is anticipated that future generations will as well, as the Governor’s signature ushers in a new segment of Commercial Courts in the country.
The term ‘access to justice’ has a restricted definition that relates to enhancing an individual’s access to the judicial system or ensuring legal representation. According to the United Nations Practitioner’s Guide, a more modern understanding is defined as an individual’s capacity to pursue justice for complaints through official or unofficial institutions of justice in conformity with human rights principles. This method focuses on the legal justice system’s flaws and limits, and argues for change through reducing procedural and formal requirements, as well as increasing people’s awareness and understanding. The Ordinance is further stressing upon this point.
The Ordinance was written after the Lahore High Court made various changes to enhance judicial procedures, including the introduction of mediation centers to boost negotiated settlements outside of the court room. Also, the High Court wanted to facilitate the adoption of court administration systems and court digitization. However, such reforms showed little improvement in terms of enforcing contracts, hence why, the Planning and Development board along with the World Bank group, presented a proposal for further changes to be made.
The formation of Commercial Courts, the training of judges, and the upgrading of case management technologies and court automation were among the new planned improvements. They also wanted to expand the use of alternative dispute resolution procedures, create consistency in court decisions, and minimize the number of cases pending in order to boost investor trust in the province by assuring contract enforcement.
The new changes were introduced at the Lahore High Court in April 2020, when the Chief Justice selected three District Court judges in Lahore to hear and decide business issues solely. He further ordered the District and Sessions judges of Faisalabad, Gujranwala, Multan, and Rawalpindi to appoint judges in their districts to hear and decide commercial cases in District Courts. Judges got training through seminars to make sure that all procedures were standardized and that they fell under the Commercial Courts’ jurisdiction. Punjab was selected to act as the province that others would look up to while implementation of laws and reforms to support relevant business communities.
According to research, economies with a standalone commercial court (such as Austria and Belgium) or a commercial division within the courts (such as the United Kingdom and the United States, particularly New York) usually are more efficient and that reduces the number of cases that haven’t been attended to and also lessens the decision timeline. The writing of the Commercial Courts Ordinance began in November 2020, based on study and empirical facts. It was signed into law in April of 2021.
The Ordinance, which took effect in mid-April 2021, covers the whole province of Punjab. It covers business disputes, which are defined as any dispute, claim, or counterclaim arising out of a contractual disagreement with a claim value of more than PKR 500,000. It does not cover the sale or purchase of real estate, but it does encompass any trade or commercial transaction. Domestic corporations and firms conducting business locally are subject to the Ordinance. It also applies to business disputes with overseas firms and individuals.
Section 3 of the Ordinance establishes Commercial Courts, allowing the government to create as many Commercial Courts as it sees suitable for any territory, each with its own geographical authority and restrictions. Furthermore, with the Chief Justice’s approval, the government has the authority to appoint District or Additional District Judges in the hierarchy of the Commercial Courts.
Other elements include a timeline for suit decisions, e-filing of pleadings, and a restricted number of adjournments to ensure swift justice. A defendant must acquire leave to defend under Section 8. Section 11 stipulates that the entire lawsuit must be completed within 180 days. To make this feasible, the court must not grant superfluous adjournments — the maximum number of adjournments is two, and any additional adjournments must be subject to court-determined costs.
Section 12 gives the court broad authority to decide and impose costs against a party, and it must keep track of why it hasn’t done so. Unfortunately, no information on the grounds for awarding expenses has been supplied; however, it is anticipated that this information will be included in the Rules that will follow the Ordinance.
Section 13 requires that decrees be executed and all needed investigations be completed within 30 days. If any objection to this has been proven to be just a delaying ploy or made with mala fide purpose, fines will be levied on the person that made it. It should be underlined that cost fines and penalties are expected to be a focus of Commercial Courts, necessitating the development of extensive jurisprudence.
The Ordinance also establishes a Secretariat, whose duties include maintaining and updating information on the progress of all cases, maintaining a case-law repository both manually and digitally. Arranging trainings and continuing education for judges was also going to be done via these repositories. The Government, in collaboration with the Chief Justice, will select a Registrar to manage the Secretariat.
Under Section 15 of the Ordinance, Commercial Appellate Tribunals will be constituted for appeals, after appointing a Judge that is well qualified. That decision will be based on a collaboration with the Chief Justice. Any appeal must be decided within 120 days, according to Section 16. Only appeals containing important problems of law or public interest will be heard by the Supreme Court, which must be satisfied before granting permission to appeal.
Under Section 20, the decision of the Commercial Courts will be final and they won’t be reviewed by authorities.
At least in the authors’ opinion, the most essential element in the Ordinance is Section 17, which specifies that any lawsuit or appeal should be in line with the rules of Order IX B of the Civil Procedure Code and according to the ADR. This is the law of the land, which the court has used to expedite justice in order to remedy the legal system’s flaws using ADR, a process that has shown to be both time- and cost-effective across the world. ADR systems in the United Kingdom, the United States, Turkey, and Singapore have all shown to be effective in making justice more accessible.
It’s no secret that previous attempts to incorporate ADR into our judicial system have failed miserably and consequently, given up on.
Delegates who paid discounted course prices have continued to get training from ADRi. Through its advisory panel, consultants, and review board, it has also been effective in forming a network of ADR stakeholders. The number of legal firms that have partnered with ADRi in the aim of seeing ADR thrive in Pakistan is unparalleled. The veterans of tribunal practise, such as CLM, Axis Law, Mandviwalla & Zafar, have put their conflicting interests taside for the bigger picture.
The panel members come from a wide array of backgrounds like manufacturing, pharmaceuticals, telecom, banking etc. This brings variety and different perspectives to the panel. While everyone from the legal profession to the business sector that uses the platform to obtain mediation and evaluation services is certain that ADR is the way of the future, they are concerned about one certainty: what can be done if there is an urgent need?
People are already weary of how much time is wasted by courts during appointment and case filings. The execution of judgements takes way longer than it should, which results in billions to be stuck in a time loop and that further delays payments for damages. Every mediation has been settled out of concern that fighting the reached settlement in court will drag the case out for longer than necessary.
As a result of these issues, foreign direct investment has been unable to enter the nation, preventing the creation of employment and economic progress. In Pakistan, investors and businesspeople have little to no belief in the legal system that currently exists and therefore, hesitate in innovating and bringing their ideas to the country. There is no faith in the legal system and whether they adhere to the clauses that exist.
When our authors go abroad on an international stage, foreign representatives are rarely complimentary about Pakistani courts and their role in ADR processes. Representing the country in the International Chamber of Commerce is an experience for them, but it still isn’t great to be on the receiving end of what they get.
We may definitely hope that the new Ordinance will help to promote a better image of Pakistan, especially because Commercial Courts are compelled to determine cases within the timeframe specified by the Ordinance. It is also a special honor and privilege for us to be collaborating with the judiciary to give ADR training and prevent prior errors. Our mentors will share their real courtroom knowledge with the incoming judges. It’s said that the Judges will have full access to the framework that is setup along with negotiators and experts to help them. The Ordinance would help the court and the ADR community work together to settle the enormous backlog of cases. This is important as Pakistan wants to be reputable and doesn’t want to be looked as a nation where the powerful seem to get away with everything. Commercial Courts are obliged to send cases to alternative dispute resolution (ADR) so that they can be handled quickly. This will allow for cases that are irrelevant and not properly laid out to get scraped and anyone who ignores the ADR will be subject to hefty fines. The Ordinance also gives Commercial Courts full authority to assess costs against a party, which has always been a necessary aspect of the legal system.
After the Judgement of the Lahore High Court on the Pizza Hut case, some faith has been restored in the legal system.
The issue concerned an arbitration provision that had been challenged in civil court. The Commercial Courts had been hearing the civil matters. During the course of the case, the petitioner filed a writ petition. While deciding whether the writ could be maintained, the court also discussed basic rights in the context of ease of doing business. According to the verdict, Pakistan had a dismal score for “contract enforcement” according to the World Bank’s Ease of Doing Business initiative, but the nation has gradually improved from 156 to 108. According to the court, the Pakistani Constitution also attempted to promote a more suitable economic climate as part of people’ fundamental rights:
“Undoubtedly freedom of trade, business and commerce is a fundamental right guaranteed under Article 18 of the Constitution which states that every citizen shall have the right to enter upon any lawful profession or occupation, and to conduct any lawful trade or business. One of the basic purposes behind provision of this fundamental right is certainly to advance culture of socio-economic progress and to protect and promote business and trade activities and, at the same time, to encourage simplification of the process of establishing and carrying out new business ventures throughout the country because activities of business and trade create opportunities for the masses around and provide job options, financial stability and progress in the area.”
The constitution placed a responsibility on the shoulders of the courts to provide prompt justice to citizens and how it really isn’t fair how there are massive delays and irregularities in their cases and hearings. The constitution aims to challenge the status quo and to change how things have been operating. Commercial Court to follow Rule 10 and 11, Chapter 1-k, Volume 1 of the Lahore High Court Rules and Order mandating the following:
“All cases which have been marked as `commercial cases’ under the preceding paragraph shall be brought to a hearing as early as may be practicable. Such cases shall be given priority on the day of hearing over other cases, except part-heard cases, and shall, so far as possible be heard from day to day until they are finally decided.”
The judgement stated that the case was to be concluded within 60 days and no longer.
Hence, the new Ordinance, has changed how disagreements can be resolved in the future now. All courts, whether district level, high court or other lower-level courts, will opt for this Ordinance and this will surely have lasting benefits on the economy as a whole too.
Even though there is still a lot of work to be done for Pakistan to be recognized as a State of Justice, there is still a glimmer of hope and the fact that the Governor took this step, it’s a great sign.
The Lahore High Court, with Chief Justice Qasim Ali K, Justice Jawad H, and Justice Shahid K, along with the World Bank and the Planning Dev. Department, have all done a stellar job. There is surely more potential and promise in the future. For a better and newer Pakistan, hopefully this will attract further investors and other advocates to come in and join us to help us get to the next level. We want to be consistent in our progress and this isn’t where we stop. We owe so lot to this country for providing us with the means to contribute. The aim is to be recognized on an international level for our efforts and we believe we will get there in a few years.
The people who wrote this article are the actual founders of the ADR initiative and the first awards for National Mediation (which took place in the UK). They have taught over 50 qualified mediators through programs run under the ADR Initiative in conjunction with ADR-ODR International since November 2019, which is yet another first for Pakistan. Syed Akbar Hussain is a lawyer of the Lahore High Court and not only that, but he is also an arbitrator, negotiator and has been a mediator for several parties. He also chairs the Bar Association of the Lahore High Court (LHCBA). He is also an ADR lecturer at the University of London and a World Bank local specialist. The other, Mehak Zaraq Bari is no less. She’s a qualified lawyer and an excellent negotiator (accredited by ADR-ODR Intl). She is also the Vice Chair of the LHCBA Committee on ADR and a member of the Singapore International Mediation Institute. She has also aimed to shape the futures of future lawyers by becoming an author and lecturer for LLB and LLM programs both. The authors felt quite special about the fact that they can be a part of something revolutionary; they were able to recognize their own talents and capabilities so that the country can flourish economically.
The Lahore High court and Punjab Government are on the same page as the World-Bank on the topic of creating better opportunities for Business within the country. The Ordinance is a step in the right direction and hopefully it will help in improving economic figures and will not drive investors away from Pakistan. Contract enforcement is one of the measures of how easy it is to do business. On this worldwide measure, Pakistan is now ranked 156th out of 190 economies. Justice is slowed constantly, and hence denied as a result of barriers to pursuing justice, such as excessive fees created by lawyers’ delaying tactics and ineffective case disposition. Over two million cases are outstanding in Pakistan’s district and other lower-level courts, exerting enormous strain on the legal system and resulting in ineffective governance, and creates hurdles in the government’s aim for a better economy. If businesses aren’t protected by the State and provinces, social and economic growth will be impossible to achieve. Economies with competent judiciaries and strong contractual legal frameworks have a high degree of development, quick expansion of small businesses, and an overall business environment that encourages innovation and attracts foreign direct investment. Firms in countries with successful legal systems are larger and more efficient, since the risks they confront are lessened and their desire to invest grows.