Karachi, Pakistan, November 14, 2005—The
International Finance Corporation, the private sector arm of the World
Bank Group, has signed a Memorandum of Understanding with the High Court
of Sindh to establish a pilot court-referred mediation center in Karachi,
Pakistan. The pilot centre is expected to serve as model for Pakistan.
IFC is promoting the institutionalization of mediation as an alternative
dispute resolution (ADR) mechanism for the private sector. The project’s
goals are to mitigate expensive and lengthy court procedures incurred by
the private sector, to help extricate small and medium businesses from
litigation, and to help release assets caught up in legal disputes. The
project is establishing a pilot mediation center in Karachi, a hub for
business investors and industry.
Pakistan’s commercial dispute settlement processes are generally considered
discouraging to market-based growth and to domestic and foreign investment.
Small and medium businesses commonly face five-to-10 year litigation
processes, and courts are backlogged with cases. A third of these
cases are commercial in nature, many of which go to trial. Individuals
and businesses have little alternative recourse in the event of a contract
breach, which creates a disincentive for foreign and local investors to
do business in Pakistan.
The IFC project will work with the High Court of Sindh to support the pilot
mediation center. The high court and the selected district and session
court will provide the pipeline of cases to the mediation center. At the
center, cases will be handled by trained mediators following international
The project will also help professionalize mediation through the training,
mentoring, certification, and registration of mediators, and it will campaign
to raise awareness and promote mediation among the country’s practitioners,
end users, and general public.
In August this year, IFC and the government convened a workshop in Karachi
on Institutionalizing Mediation in Pakistan. The workshop was supported
by the Ministry of Law, Justice, and Human Rights, as well as the country’s
judiciary, bar, and private sector. Participants including Chief
Justices of the Supreme Court of Pakistan and of the High Court of Sindh;
the Minister of Law, Justice, and Human Rights; and the Attorney General.
The workshop shared international experiences in ADR mediation, with guest
speakers including Lord Justice Carnwath, Lord Justice of the UK Court
of Appeal; Justice James Ogoola, Principal Judge of the High Court of Uganda;
and Justice A.M. Ahmadi, former Chief Justice of India. These senior
judges cited the positive impact of mediation on the judicial systems in
their countries, where a large percentage of commercial cases are settled
out of court through court-referred or pre-court mediation, substantially
reducing the backlog of cases in courts. For businesses, this has meant
faster resolution of disputes and the freeing up of assets and working
capital. Early resolution of disputes has also reduced the risk of
bankruptcy and business stagnation and has raised investors’ confidence
in the legal system.
Michael Essex, IFC’s Acting Director for the Middle East and North Africa,
said, “We believe that the establishment of a pilot mediation center,
the first of its kind in Pakistan, will demonstrate the effectiveness of
mediation in resolving small and medium enterprises’ commercial disputes
speedily and cost-effectively. We are excited to work with the High Court
of Sindh in this innovative project, which we hope will also help ease
the heavy case load judges currently face.”
IFC, in addition to a range of investment and advisory activities, is supporting
private sector development across the region through its technical assistance
facility, the Private Enterprise Partnership for the Middle East and North
The International Finance Corporation, the private sector arm of the World
Bank Group, promotes sustainable private sector investment in developing
and transition countries, helping to reduce poverty and improve people’s
lives. IFC finances private sector investments, mobilizes capital in the
international financial markets, helps clients improve social and environmental
sustainability, and provides technical assistance and advice to governments
and businesses. Its 178 member countries provide its share capital and
collectively determine its policies.
From its founding in 1956 through FY05, IFC has committed more than $49
billion of its own funds and arranged $24 billion in syndications for 3,319
companies in 140 developing countries. IFC’s worldwide committed portfolio
as of FY05 was $19.3 billion for its own account and $5.3 billion held
for participants in loan syndications. For more information, visit www.ifc.org.