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
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.