Covid-19, CPEC and the future of ADR in Pakistan

Authors: Tariq MahmoodArran Dowling-Hussey
In: Article Published: Thursday 02 April 2020

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Coronavirus has brought the world to an economic standstill. Throughout the world, countries have been brought to a lockdown, the financial markets have become erratic and the means of resolving disputes through the courts have become even more difficult. A large number of courts throughout the world have been shut for business or are only operating on a limited basis to deal with issues such as emergency applications. During this time of crisis, when looking at the issue of dispute resolution, it is helpful to be reminded of the benefits of Alternative Dispute Resolution (ADR).

The new world order has brought a wave of new legislation throughout different jurisdictions to attempt to deal with these difficult times. E-technologies are being used in a process of trial and error to see if court hearings can take place safely and securely from remote locations. However, ADR can be a helpful adjunct to the traditional court system whether those courts are sitting in public or virtually.

ADR can be considered to be a cost-effective way forward to resolving disputes throughout the world in these difficult times. In this article, I will examine the impact of COVID-19 on China Pakistan Economic Corridor (CPEC) and how Pakistan can benefit from ADR in order to ensure that the Silk Route is revived to bring prosperity to the South Asia region.

ADR

Alternative Dispute Resolution refers to several systematic processes used outside the traditional venue of a courtroom. ADR encompasses a range of dispute resolution methods such as adjudication, arbitration, conciliation, early neutral evaluation, expert determination and mediation. The two most common and popular types of ADR are mediation and arbitration.

Mediation is where an independent third party helps you and the company, you’re in a dispute with to reach a mutually acceptable outcome. The mediator will add formal structure to the communication you and the company have with the aim of helping you to reach a voluntary agreement. The mediator cannot impose a solution and will not act as a decision maker so as to adjudicate on legal issues between the parties.

Arbitration is where an independent third party considers the facts and takes a final binding decision, that is set out in writing, that’s legally binding on you, the company, or both. The process in many ways mirrors the path of a traditional court case but can be structured such that it is reached in a much quicker way and unlike a court hearing is held in private. The speed and lower cost of an arbitration is attractive to many users of the process along with the opportunity to ‘choose your own judge as well as the fact that the decision of an arbitrator cannot be appealed.

CPEC

CPEC is a mega project funded by Pakistan and China to open the gateway for trade routes in Central Asia. It is a framework of regional connectivity which will enhance geographical linkages through road and rail system. CPEC was inaugurated in 2015 with a $46 billion Chinese investment under its One Belt One Road (OBOR) initiative to seek connectivity for its Western region of Xinxiang to the Southern Pakistan port of Gwadar. The Chinese investment has subsequently gone up to $62 billion.

CPEC's potential impact on Pakistan has been compared to that of the Marshall Plan undertaken by the United States in post-war Europe. Industrial production in Europe increased by a third between 1948-1952 when the Marshall Plan was operational. Analysts predict that CPEC will result in the creation of upwards of 2.3 million jobs between 2015–2030, and add 2 to 2.5 percentage points to the country's annual economic growth.

The industrial cooperation between China and Pakistan, compounded with the guidance of Chinese experts, will provide an excellent opportunity for Pakistan to strengthen its industrial capacity and capability. Pakistan’s national domestic economy will benefit greatly from this development.

The public-private partnership initiatives to ensure sustainable development and timely execution of projects also need to be encouraged. In these unknown times, it is in Pakistan’s interest to leap forward and use ADR and e-technologies to resolve domestic and international disputes. The lost economic ‘opportunity cost’ of long and expensive dispute resolution processes is not beneficial to the economy.

COVID-19 has changed the world we live in, perhaps forever. It is unknown, at the time of writing, how long the ‘lockdown’ will continue for. Some businesses are closing, and the world will have to deal with challenging times to the world economy for some time to come.

The Supreme Court Judge of Pakistan, Syed Mansoor Ali Shah has greatly supported the concept of setting up ADR centres in Pakistan. Justice Syed Mansoor Ali Shah has recently been quoted that around 10,000 cases were submitted to ADR centres and 7,000 cases were resolved just in Punjab, which is unprecedented in the judicial history of Pakistan and has brought relief to businesses. He further stated that ADR system saves time and that ADR would be the future for dispute resolution. This is the best time to put this in practice.

The visionary thinking of Justice Syed Mansoor Ali Shah, who will be the Chief Justice of Pakistan in 2025, has laid the foundations of ADR within the fabric of Pakistan. He stated that the $62 billion investment under CPEC required the use of ADR to deal with any subsequent disputes.

Due to the rapid influx of Chinese investments, the numbers of disputes would also increase which would create the demand for an effective regulatory system rightly termed as ‘Alternative Dispute Resolution' focused to facilitate smooth flow of investment in Small and Medium Enterprises (SMEs).

According to Syed Mansoor Ali Shah, Pakistan presently has one Judge for every 60,000 people, which is not enough to cater for speedy and timely justice.

Conclusion

There seems to very little independent empirical data to support the benefits and use of ADR generally in Pakistan.

It will be interesting to see that in the current climate whether Pakistan will avail the benefits of ADR and become a leader in South Asia especially with its close-knit relationship with China. Pakistan has a lot at stake and with COVID-19, it needs to use ADR to resolve business disputes without having to wait substantial periods of time before the courts become fully functional in Pakistan. Pakistan is ahead of many countries around the world in terms of its implementation of 5G technology and needs to explore avenues to use e-technologies to deliver speedy justice to businesses.

DR TARIQ MAHMOOD AND ARRAN DOWLING-HUSSEY © 2020

BARRISTER

33 BEDFORD ROW

A version of the above article was published by the International The News

Dr Tariq Mahmood is a Barrister, Arbitrator and Mediator based at 33 Bedford Row Chambers in London where he is the head of the Arbitration & Alternative Dispute Resolution group. He is also a registered Advocate of the Lahore High Court and also the Azad Jammu & Kashmir High Court. t.mahmood@33bedfordrow.co.uk.

Arran Dowling-Hussey is a Barrister, Arbitrator, Adjudicator and Mediator working from London’s 33 Bedford Row Chambers and the Law Library, Dublin, Republic of Ireland. adhussey@33bedfordrow.co.uk

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.