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IFC and Pakistan Promote Alternative Dispute Resolution and Mediation


Nadia Mahmud                
Phone: +(20)1 02 582 872                

Email:
nmahmud@ifc.org

Nazish Saleem

Ministry of Law, Justice& Human Rights
Phone:+(0) 300 539 9054


Islamabad, Pakistan, November 1, 2005 - The International Finance Corporation, the private sector arm of the World Bank Group, and Pakistan’s Ministry of Law, Justice, and Human Rights, have signed a Memorandum of Understanding to enhance the legal framework for alternative dispute resolution and mediation in Pakistan.

IFC is launching an alternative dispute resolution and mediation project to improve and institutionalize court-referred mediation.  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.

The Pakistani government is concerned that inefficiencies in the judicial system adversely affect investment and businesses.  H.E. Mr. Mohammad Wasi Zafar, Minister of Law, Justice and Human Rights, expressed his personal interest in and endorsement of the IFC project, saying, “It supports and complements ongoing reforms, and it puts an important focus on commercial disputes and on access to justice for small and medium businesses.”

Pakistan’s commercial dispute settlement processes are generally considered slow, inefficient, and discouraging to market-based growth and domestic and foreign investment. Small and medium businesses commonly face five-to-10 year litigation processes, and courts are backlogged with over a million cases.  A third of these cases are commercial in nature, of which 90 percent would go to trial under the current system.  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 mediation project will help the Ministry of Law, Justice, and Human Rights review and amend civil and commercial laws pertaining to alternative dispute resolution and mediation. Amendments to sections of the Code of Civil Procedure will be proposed to enhance the legislative framework for alternative dispute resolution and mediation.

The center in Karachi will support court-referred mediation and serve as model for Pakistan.  It will professionalize mediation through the training, certification and registration of mediators.  It will also enhance court procedures for referring cases to alternative dispute resolution and mediation referral and enforcing the outcomes.  The center will initiate a 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 Sindh High Court; the Minister of Law, Justice, and Human Rights; and the Attorney General.

The workshop shared international experiences in alternative dispute resolution and mediation, with overseas 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. 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 are excited to collaborate with the Ministry of Law, Justice, and Human Rights to promote mediation in Pakistan. This initiative is timely and will help institutionalize mediation. We are pleased to launch the IFC alternative dispute resolution and mediation pilot project.”

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 Africa.

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.