This country-specific Q&A provides an overview of Litigation in Pakistan.
It will cover methods of resolving disputes, details of the process and the proceedings, the court and their jurisdiction, costs and appeals and opinions on future developments.
This Q&A is part of the global guide to Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/litigation-dispute-resolution/
What are the main methods of resolving commercial disputes?
Depending on the nature of the underlying dispute, there a number of methods through which commercial disputes can be resolved in Pakistan. One is through the formal court mechanism. If they adopt this route, the parties can always request the court under Section 89-A of the Civil Procedure Code, 1908 to refer the matter to alternate dispute resolution including mediation and conciliation.
Another option is to resolve a commercial dispute completely outside of the formal court structure. This is common in a number of contracts where parties have agreed ex ante to arbitrate their disputes under the Arbitration Act, 1940.
In some cases, where the counter-party is a government, or government owned entity, it might be possible to sidestep the ordinary procedure and invoke the writ jurisdiction of the High Court under Article 199 of the Constitution. It should be noted however that the High Court does not have the power to conduct a trial in its writ jurisdiction and it therefore avoids hearing cases involving factual controversies. Since this option can be used only where the public body is exceeding its statutory authority as part of a commercial transaction, it is not frequently used.
What are the main procedural rules governing commercial litigation?
The main procedural rules are contained in the Civil Procedure Code, 1908. These serve as the default rules of procedure.
However, where a case is covered by a special enactment or is to be heard by a special court constituted under a special law, it may provide for a separate procedure. For instance, commercial disputes that fall within the ambit of the Financial Institutions (Recovery of Finance) Ordinance, 2001 follow a summary procedure that differs from the default procedure for commercial litigation given in the Civil Procedure Code, 1908.
Since civil procedure is a provincial subject, there are slight differences and variations in the rules of procedure applicable across the provinces. This note is therefore limited to the broader principles and rules that are common across all four provinces.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
There are two types of courts dealing with commercial claims. On one hand are courts of general jurisdiction which have been established under the Civil Courts Ordinance 1962. This includes the Civil Court, the Additional District Court and the District Court which hear all civil claims. The High Court of each province exercises control and supervision over these subordinate courts.
On the other hand are courts of special jurisdiction that have been established under a special Act of Parliament. This includes for instance the Banking Courts established under the Financial Institutions (Recovery of Finance) Ordinance, 2001 and the Consumer Courts in Punjab established under the Punjab Consumer Protection Act, 2005.
The Supreme Court sits at the top of this pyramidal structure. Since an appeal is not available as a matter of right under Pakistani law, it must be conferred by the relevant statute. Therefore, whether an appeal is available all the way up to the Supreme Court will depend on the forum and the relevant law.
How long does it typically take from commencing proceedings to get to trial?
Regrettably, the actual practice varies significantly from the timelines stipulated under the Civil Procedure Code, 1908.
Because there is no case management system, the courts – particularly those subordinate to the High Court – have very little control over the proceedings and are unable to ensure that the timelines are strictly followed. It can therefore take much longer to get to trial than what is prescribed under law. This can take anything between 6 months to 2 years. In some cases, it may even take longer.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Yes, the hearings are held in public. There is no restriction preventing any member of the public from visiting the court premises and sitting through a hearing.
Similarly, all documents filed in court are public documents that are available to the public upon payment of a prescribed fee.
What, if any, are the relevant limitation periods?
The Limitation Act, 1908 stipulates the default limitation period concerning a number of different circumstances where the enabling law is silent. Where, however, the Civil Procedure Code, 1908, or some other special law covering a particular claim, provides a different limitation period, then the period in given in that enactment will apply.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
There is no formal pre-action conduct requirement under the Civil Procedure Code.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Commercial proceedings under the Civil Procedure Code, 1908 commence with the filing of the plaint by the petitioner. The plaint is based on a set of facts which gives rise to the cause of action upon which the claim is based.
Service is necessary as the defendant must be given an opportunity to defend himself. If however summons have been duly served and the defendant does not tender appearance, the court may proceed ex parte. Since there are different methods through which service can be effected, all of them must be exhausted before proceeding ex parte. Summons are ordinarily effected through the court even though the plaintiff is required to pay for it.
How does the court determine whether it has jurisdiction over a claim?
Three are three major lines of inquiry that a court conducts in order to determine whether it has jurisdiction. The first is determining whether it has the pecuniary jurisdiction to hear the claim. The second is whether it has the territorial jurisdiction to adjudicate upon the matter. The third, which is linked with the second, is to see whether the matter falls within the subject-matter jurisdiction of the court. Courts typically look at the place where the cause of action arose, where the defendant resides or conducts his business in determining whether they have territorial and subject-matter jurisdiction.
How does the court determine what law will apply to the claims?
Since Pakistan is based on an adversarial system, the court is assisted by the parties in determining the law that is applicable to the relevant claim. This includes statutes as well as judicial pronouncements which are binding on the subordinate courts.
In what circumstances, if any, can claims be disposed of without a full trial?
In claims covered by the Civil Procedure Code, the claim can be disposed of without a full trial where the plaint is rejected or returned by the court. A plaint can be rejected where:
- it does not disclose a cause of action
- where the claim appears to be barred by law
- where the relief claimed is undervalued and is not rectified upon being required by the court to do so
- where the applicable stamp duty has not been paid upon being required by the court to do so.
It is important to note that a rejection of the plaint does not preclude the plaintiff from filing a fresh plaint in respect of the same cause of action. Alternatively, a court can return a plaint where it has been filed in the wrong court.
What, if any, are the main types of interim remedies available?
The right to obtain injunctive relief flows from the Specific Relief Act, 1877. However, a number of interim remedies available in civil cases and commercial matters are embodied in Order XXXVIII of the Civil Procedure Code.
The court may pass any interim order to:
- prevent property in dispute from being wasted, damaged or alienated
- prevent property from being removed or disposed to defraud creditors
- restrain the defendant from committing a breach of contract
- restrain the defendant from committing any act that causes injury of any kind
- restrain the defendant from taking any adverse action
- appoint a receiver and commit property to his/her custody and management
- detain, preserve or inspect any property that is subject matter of the dispute
- authorise entry upon and into any land or building in possession of another party
- authorise the taking or possession of any samples or obtaining full information or evidence;
- deposit money in court where the subject-matter concerns money or other things capable of delivery
- direct interim sale of property that is subject to speedy and natural decay.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
A plaintiff must produce and provide a copy of the document upon which he sues that is in his/her possession or power. The document must be presented in court when the claim is first presented. The plaintiff must also provide a list of documents that he/she intends to rely on during evidence irrespective of whether those documents are in his possession/power or not. Failure to do so means that the documents not listed are inadmissible in evidence and can only be produced with the leave of the court.
In addition to the foregoing, the parties must produce all documentary evidence that the plaintiff intends to rely on and that are in his possession or power. These must be produced at the first date of hearing and this requirement applies equally to the defendant.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
The rules of disclosure of documents are also contained in the Civil Procedure Code. Parties can move an application for discovery, inspection and production of documents that are in the possession or power of the opposing party.
During evidence, the Qanoon-e-Shahadat Order, 1984 provides that a public officer cannot be compelled to disclose any communication made to him in official confidence the disclosure of which could harm the public interest. Barring a few exceptions, attorney-client communication is also privileged.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
To prove the execution of a document related to a financial transaction, two marginal witnesses must be produced. Witness statements are therefore very important in commercial litigation.
Unless the witness is giving an affidavit-in-evidence which is always made in writing, the witness gives his/her testimony orally in open court in the form of a narrative which is reduced in writing and read aloud in the presence of the judge and the witness to ensure there is no discrepancy. The witness may produce documentary evidence in his/her statement and this process is referred to as the examination-in-chief. After the examination-in-chief is complete, the opposing party has the right to cross-examine the witness in which leading questions can be asked. Depositions are also permitted in certain cases.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is permitted under the Qanoon-e-Shahadat Order, 1984. An expert can be appointed where the court has to form an opinion on some “foreign law”, “science or art” or if there is a need to identify hand-writing or finger impressions. The expert opinion is treated as a relevant fact under Pakistan’s evidence law.
The law does not delineate the nature of duties that are owed by foreign experts.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
The general principle is that final and interim decisions can be appealed. This however depends on the nature of the decision involved, the governing law and whether it is a first appeal or a second appeal. While an appeal is generally available against all final decisions, not all interim orders are appealable. Similarly, the time period within which an appeal can be filed is also dependent on a number of factors. Typically, it can vary between 20 to 90 days.
What are the rules governing enforcement of foreign judgments?
A plaintiff can obtain execution of a foreign judgment by moving an application in the District Court under section 44-A of the Civil Procedure Code. However, this option is available only if the foreign judgment is of a superior court of the United Kingdom or that of a reciprocating territory. The scope of this limitation is evident from a recent decision of the Supreme Court in PLD 2017 SC 95 where it held that a decree passed by a court of first instance of the United Arab Emirates could not be enforced in Pakistan under section 44A because it did not qualify as a superior court.
In the event that a foreign judgment does not fall within the scope of the foregoing section, a person may institute a suit under section 13 of the Civil Procedure Code which is “conclusive as to any matter” adjudicated between the parties. Resultantly, the judgment constitutes res judicata between the parties and its findings are therefore binding on the courts in Pakistan. This presumption of conclusiveness can be displaced however where:
- the court lacks jurisdiction
- the judgment does not correspond to the merits of the case
- the judgment is predicated over an incorrect view of international law, or a refusal to implement and recognise the law of Pakistan where applicable
- the proceedings are opposed to natural justice
- the judgment has been obtained by fraud.
Where this presumption has successfully been displaced, the plaintiff can file a fresh suit based on the original cause of action. In such a case, a full trial is conducted before a judgment can be pronounced. This option does not therefore involve the enforcement of a foreign judgment.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
Under section 35 of the Civil Procedure Code, the court has the power to impose costs related to a suit and its incidents, which presumably includes court costs, costs of instructing lawyers and other professionals. However, it does not expressly specify if these costs are to be borne by the losing party as this determination has been left to the discretion of the court.
Additionally, compensatory costs in respect of false and vexatious claims can be awarded under section 35-A of the Civil Procedure Code.
Both powers are exercised very rarely by the courts and parties end up paying their own costs most of the time.
What, if any, are the collective redress (e.g. class action) mechanisms?
Though there is no specific procedure outlined for class actions under Pakistani law, it is not impermissible per se as there is no upper limit for the number of people who can be joined as plaintiffs under the Civil Procedure Code. There can therefore be any number of plaintiffs provided that the right to claim the relief arises out of the same act or transaction or series of acts or transactions and which raises common questions of law or fact.
As an alternate to becoming co-plaintiffs, the Civil Procedure Code also envisages the concept of representative suits. A representative suit allows one or more persons to bring a claim on behalf of other people provided (a) they all have the same interest, (b) notice is given to persons who are being represented and (c) the permission of the court has been obtained.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
Third parties can be joined as parties to ongoing proceedings as defendants or plaintiffs under Order I, Rule 10(2) of the Civil Procedure Code. Any party to the claim may move an application requesting the court to pass an appropriate order for adding a third party. If the third-party qualifies as a necessary or proper party, the court can accept the application and add them as a party. Alternatively, the court may pass such an order on its own volition without any party having to move such an application.
Moreover, courts have the inherent power to consolidate suits under section 151 of the Civil Procedure Code particularly where they relate to the same cause of action. The underlying rationale is to avoid multiplicity of proceedings.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
The market for third-party funding barely exists in Pakistan even though there is no express provision prohibiting it. A litigant is free to enter into an independent contract for such funding and the same will be governed by contract law.
Section 35 of the Civil Procedure Code does not limit the court’s power of imposing costs to the parties only. While in theory the court’s “power to determine by whom or out of what property and to what extent such costs” are to be paid can presumably cover third-party funders, this power is rarely, if ever, exercised.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
The main advantage of litigating an international commercial dispute in Pakistan is that it is relatively cheaper to do that here than in an established jurisdiction like London, Dubai or Singapore, particularly for projects or contracts that are based in Pakistan.
The main disadvantage however is time. Litigating in a court in Pakistan can take a lot of time as compared to other jurisdictions.
What, in your opinion, is the most likely growth area for disputes for the next five years?
Alternate Dispute Resolution (ADR) is one key area where we can expect to see many changes. Both the judiciary and policymakers have tried to push litigants towards ADR. This is evident from (a) the enactment of the ADR Act 2017, (b) the various ADR centres setup during the tenure of Justice Mansoor Ali Shah during his time as the Chief Justice of the Lahore High Court, and (c) growth in the number of arbitral bodies and forums in Pakistan.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
A lot of changes have been brought at the High Court level by leveraging technology and automating a number of different procedures. We could see more of this take place in the subordinate courts if the bar extends its cooperation. Some things have been streamlined though there is still a lot of room for improvement.