The Arbitration Bill,2009

Table of Contents PART I INTRODUCTORY 1. Short title, extent and commencement PART II ARBITRATION CHAPTER - I General Provisions 2. Definitions 3. Receipt of written communications 4. Waiver of right to object 5. Extent of Court or judicial intervention 6. Administrative assistance for arbitration CHAPTER - II Arbitration Agreement 7. Definition and form of arbitration agreement 8. Power to refer parties to arbitration 9. Interim measures by Court CHAPTER - III Composition of Arbitral Tribunal 10. Number of arbitrators 11. Appointment of arbitrators 12. Grounds for challenge 13. Challenge procedure 14. Failure or impossibility to act 15. Appointment of arbitrator by substitution on termination of mandate CHAPTER - IV Jurisdiction of Arbitral Tribunals 16. Competence of arbitral tribunal to rule on its jurisdiction 17. Power of arbitral tribunal to order interim measures CHAPTER - V Conduct of Arbitral Proceedings 18. Equal treatment of parties 19. Determination of rules of procedure 20. Place of arbitration 2 21. Commencement of arbitral proceedings 22. Language 23. Statements of claim and defence 24. Hearings and written proceedings 25. Default of a party 26. Expert appointment by arbitral tribunal 27. Court assistance in taking evidence CHAPTER - VI Making of Arbitral Award and Termination of Proceedings 28. Rules applicable to substance of dispute 29. Decision making by panel of arbitrators 30. Settlement 31. Form and contents of arbitral award 32. Termination of proceedings 33. Correction and interpretation of arbitral award or additional award CHAPTER - VII Recourse against Arbitral Award 34. Application for setting aside arbitral award CHAPTER - VIII Finality and Enforcement of Arbitral Awards 35. Finality of arbitral awards. 36. Enforcement of arbitral awards CHAPTER - IX Appeals 37. Appealable orders CHAPTER - X Miscellaneous 38. Small Claims and Minor Offences Court not to have jurisdiction over arbitration save arbitration in suits before it 39. Procedure, powers and jurisdiction of Court 40. Deposits 41. Arbitration agreement not to be discharged by death of party thereto 42. Provisions in case of insolvency 43. Lien on arbitral award and deposits as to costs 44. Limitations PART III RECOGNITION AND ENFORCEMENT OF CERTAIN FOREIGN AWARDS, ETC. CHAPTER - I Arbitral Awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Done at New York 3 45. Definitions 46. Jurisdiction of Court 47. Enforcement of arbitration agreements 48. Furnishing of documents 49. Enforcement of foreign arbitral awards 50. Unenforceable foreign arbitral awards 51. Inconsistency 52. Power to make rules 53. Savings 54. Federal Government to amend the First Schedule CHAPTER - II Arbitration under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 55. Definitions 56. Registration of awards 57. Effect of registration 58. Binding on the Federal Government 59. Federal Government contribution to expenses under the Convention 60. Exclusion of other provisions 61. Certain provisions of Convention to have force of law 62. Power to make rules 63. Federal Government to amend the Second Schedule PART IV CONCILIATION 64. Definition, application and scope 65. Application of certain laws barred 66. Commencement of conciliation proceedings 67. Number of conciliators 68. Appointment of conciliators 69. Administrative assistance for conciliation 70. Submission of statements to conciliator 71. Conduct of conciliation proceedings 72. Communication between conciliator and parties 73. Disclosure of information 74. Confidentiality 75. Settlement agreement 76. Effect of settlement agreement 77. Termination of conciliation proceedings 78. Resort to arbitral or judicial proceedings 79. Costs 80. Deposits 81. Role of conciliator in other proceedings 82. Admissibility of evidence in other proceedings PART V PAKISTAN NATIONAL ARBITRATION AND CONCILIATION CENTRE 83. Definitions 84. Establishment of the Centre 85. Powers and functions of the Centre 86. Director General 4 87. Appointment of officers and staff of the Centre 88. Fund 89. Accounts and audit 90. Annual and other reports 91. Power to make rules PART VI MISCELLANEOUS PROVISIONS 92. Power of the Federal Government to make rules 93. Power of High Court to make rules 94. Removal of difficulties 95. Repeal and savings THE FIRST SCHEDULE Convention on the Recognition and Enforcement of Foreign Arbitral Awards THE SECOND SCHEDULE Convention on the Settlement of Investment Disputes between States and Nationals of Other States __________________ 5 A BILL to re-enact, amend and consolidate the law relating to domestic arbitration, international commercial arbitration, recognition and enforcement of foreign arbitral awards as well as settlement of international investment dispute through arbitration and also to provide for conciliatory measures and for matters ancillary or incidental thereto or therewith WHEREAS it is necessary to re-enact and revise the law relating to domestic arbitration keeping in view the changing international practices; AND WHEREAS following international model law, rules and practices will help to develop harmonious international economic relations with other business partners in international trade and commerce; AND WHEREAS the United Nations Commission on International Trade Law (UNCITRAL) has adopted the UNCITRAL Model Law on International Commercial Arbitration and Conciliation in 1985 and 2002, as well as Model Arbitration and Conciliation Rules in 1976 and 1980, respectively; AND WHEREAS the General Assembly of the United Nations has recommended by its Resolutions that all countries give due consideration to the said Model Law in view of the desirability of uniformity of the law of arbitral procedures and conciliatory measures and also keeping in view the specific needs of international commercial arbitration and conciliation practices; AND WHEREAS it is also desirable to institutionalize the services relating to arbitration and conciliation for their systematic development and regulation and to effectively collaborate and coordinate with similar forums at international level; AND WHEREAS it is expedient to re-enact law of arbitration and provide for conciliation keeping in view the aforesaid Model Law and Rules thereof; It is hereby enacted as follows :–PART I INTRODUCTORY 1. Short title, extent and commencement.– (1) This Act may be called the Arbitration Act, 2009. (2) It extends to the whole of Pakistan. (3) It shall come into force at once. 6 PART II ARBITRATION CHAPTER - I General Provisions 2. Definitions.- (1) For the purposes of this Part and Part IV, unless there is anything repugnant in the subject or context ,–(a) “arbitration” means any arbitration whether or not administered by a permanent arbitral institution; (b) “arbitration agreement” means an agreement referred to in section 7; (c) “arbitral award” includes an interim award or additional award; (d) “arbitral tribunal” means a sole arbitrator or a panel of arbitrators; (f) “conciliation” means conciliation as defined in Part 64; (g) “conciliator” means a conciliator under section 68; (h) “Court” means the principal civil court of original jurisdiction namely the court of the District Judge having jurisdiction to decide the question forming the subject-matter of the arbitration if the same had been the subject-matter of a suit; and includes–(i) a High Court, in exercise of its ordinary original civil jurisdiction; and (ii) the court of the Additional District Judge; but does not include any civil court of a grade inferior to such principal civil court; (i) “international commercial arbitration” includes an arbitration relating to certain disputes arising out of legal relationship, whether contractual or not, considered as commercial under the law in force in Pakistan where at least one of the parties is–(i) an individual who is a national of any country, or habitually resident in another country other than Pakistan; or (ii) a body corporate which is incorporated outside Pakistan in any other country; or (iii) a company or an association of persons or a body of individuals whose principal office or central management and control is exercised from outside Pakistan in any other country; or (iv) the Government of a foreign country; 7 (j) “legal representative” means a person who in law represents the estate of a deceased person, and includes a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting; (k) “party” means a party to an arbitration agreement, or, a party agreed for conciliation, as the case may be; and (i) “reference” means a reference to arbitration or conciliation. (2) This Part and Part IV shall apply where the place of arbitration or conciliation is in Pakistan. (3) This Part and Part IV shall not affect any other law for the time being in force in Pakistan by virtue of which certain disputes may not be submitted to arbitration, conciliation or for alternative dispute resolution or may be submitted to arbitration or conciliation only according to the provisions of that law. (4) This Part except sub-section (1) of section 40, sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder. (5) Subject to the provisions of sub-section (4), and save in so far as is otherwise provided by any law for the time being in force or in any agreement in force between Pakistan and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto. (6) Where this Part or Part IV, except section 28, leaves the parties free to determine a certain issue, such freedom shall include the right of the parties to authorize any person including an institution, to determine that issue. (7) An arbitral award made under this Part shall be considered as a domestic award. (8) Where this Part refers to the fact that the parties have agreed or that they may agree, or, in any other way refers to an agreement of the parties, that agreement shall include any arbitration rules referred to in that agreement. (9) Where this Part, other than clause (a) of section 25 or clause (a) of subsection (2) of section 32, refers to a claim, it shall also apply to a counterclaim, and where it refers to a defence, it shall also apply to a defence to that counterclaim. 3. Receipt of written communications.– (1) Unless otherwise agreed by the parties,–(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address; (b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee’s last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it; and (c) the communication is deemed to have been received on the day it is so delivered. 8 (2) This section does not apply to written communications in respect of proceedings of any Court or judicial authority. 4. Waiver of right to object.– A party who knows that any provision of this Part from which the parties may derogate, or any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time-limit is provided there for stating that objection, within such period of time, shall be deemed to have waived his right to so object. 5. Extent of Court or judicial intervention.– Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. 6. Administrative assistance for arbitration.– The parties, or the arbitral tribunal with the consent of the parties, in order to facilitate the conduct of the arbitral proceedings, may arrange for administrative assistance by a person or suitable institution. CHAPTER - II Arbitration Agreement 7. Definition and form of arbitration agreement.– (1) For the purposes of this Part, “arbitration agreement” means a written agreement to submit to arbitration all or certain differences or disputes, present or future, by the parties in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement is in writing if it is contained in–(a) a document signed by the parties; or (b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the another. (4) There reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that arbitration clause part of the contract. (5) Notwithstanding anything contained in a contract or unless any contrary intention appears in the subject or context, an arbitration clause shall be deemed to be the part of all commercial contracts. 8. Power to refer parties to arbitration.– (1) A Court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. (2) The Court shall not entertain an application referred to in sub-section (1) unless it is accompanied by the original arbitration agreement or a certified copy thereof. 9 (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the Court, arbitration may be commenced or continued and an arbitral award made. (4) Notwithstanding anything contained in sub-sections (1), (2) or (3), where in any suit all the parties interested agree that any dispute or matter in difference between them in the suit shall be referred to arbitration, they may, at any time before judgment is pronounced, apply in writing to the Court for an order of reference. (5) Subject to sub-section (4), an arbitrator shall be appointed in such manner as may be agreed upon between the parties, or, where parties have failed to reach on an agreement as the Court may deem fit subject to the provisions of this Part where parties have failed to reach an agreement, as the case may be. (6) Where a matter or dispute is referred to arbitration under sub-section (4), save in the manner and to the extent provided in this Part, the Court shall not deal with such matter or dispute which is the subject-matter of the suit. (7) Where some only of the parties to a suit apply to have the matters in difference or dispute between them referred to arbitration in accordance with, and in the manner provided in sub-section (4), the Court may, if it thinks fit, so refer such matters or points of dispute to arbitration (provided that the same can be separated from the rest of the subject-matter of the suit) in the manner provided in sub-section (4), but the suit shall continue so far as it relates to the parties who have not joined in the said application and to matters not contained in the said reference as if no such application had been made, and an arbitral award made in pursuance of such a reference shall be binding only on the parties who have joined in the application. 9. Interim measures by Court.– A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a Court–(a) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or (b) for an interim measure of protection in respect of any of the following matters, namely:–(i) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement; (ii) securing the amount in dispute in the arbitration; (iii) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration or reference, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon or into any land or building in the possession of any party to the reference, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (iv) interim injunction or the appointment of a receiver; (v) such other interim measure of protection as may appear to the court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it. 10 CHAPTER - III Composition of Arbitral Tribunal 10. Number of arbitrators.– (1) The parties are free to determine the number of arbitrators, provided that such number shall not be an even number. (2) Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of a sole arbitrator. 11. Appointment of arbitrators.– (1) Any person irrespective of his nationality may be an arbitrator, unless otherwise agreed by the parties. (2) The parties are free to agree on a procedure for appointing the arbitrator or arbitrators subject to the provisions of sub-section (6). (3) Failing such agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. (4) If the appointment procedure in sub-section (3) applies and a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Court or any person or institution designated by him. (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Court or any person or institution designated by him. (6) Where, under an appointment procedure agreed upon by the parties,–(a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fails to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Court or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or subsection (6) to the Court or the person or institution designated by him shall be final. (8) The Court or the person or institution designated by him, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties; and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. (9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Court or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. 11 (10) The High Court may make rules, as it may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to a Court. (11) Where more than one request has been made under sub-section (4) or subsection (5) or sub-section (6) to different Courts or their designates, the Court or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request. (12) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to Court in those sub-sections shall be construed as a reference to the “Chief Justice of Pakistan”. (13) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to “High Court” in those sub-sections shall be construed as a reference to the Court within whose local limits the principal civil Court referred to in clause (e) of sub-section (1) of section 2 is situate and, where the Court itself is the High Court referred to in that clause, to the Chief Justice of that Court. 12. Grounds for challenge.– (1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. (2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose any such circumstances to the parties referred to in sub-section (1) unless they have already been informed of them by him. (3) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or if he does not possess the qualifications agreed to by the parties. (4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made. 13. Challenge procedure.– (1) The parties are free to agree on a procedure for challenging an arbitrator, subject to sub-section (3). (2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal : Provided that the challenged arbitrator withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (3) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. (4) Where an arbitral award is made under sub-section (3), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34. (5) Where an arbitral award is set aside on an application made under sub-section (4), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees or not. 12 14. Failure or impossibility to act.– (1) The mandate of an arbitrator shall terminate if he –(a) becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) withdraws from his office or the parties agree to the termination of his mandate. (2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), any party may apply to the Court to decide on the termination of the mandate unless otherwise agreed by the parties. (3) If, under this section or sub-section (2) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) and sub-section (4) of section 12. 15. Appointment of arbitrator by substitution on termination of mandate.–(1) The mandate of an arbitrator, in addition to the circumstances referred to in section 13 or section 14, shall terminate where he withdraws from office for any reason; or where parties revoke his mandate by an agreement. (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3) Unless otherwise agreed by the parties,–(a) where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal; and (b) an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal. CHAPTER - IV Jurisdiction of Arbitral Tribunals 16. Competence of arbitral tribunal to rule on its jurisdiction.– (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,–(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence : Provided that a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator : 13 Provided further that a plea regarding exceeding the scope of arbitral tribunal’s authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (3) The arbitral tribunal may, in either of the cases referred to in sub-section (2), admit a later plea if it considers the delay justified. (4) The arbitral tribunal shall decide on a plea referred to in sub-section (2) as a preliminary question within thirty days; and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award on the merits : Provided that no appeal shall lie against such decision of the arbitral tribunal. (5) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34. 17. Power of arbitral tribunal to order interim measures.– Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute : Provided that the arbitral tribunal may require a party to provide appropriate security in connection with an interim measure so ordered. CHAPTER - V Conduct of Arbitral Proceedings 18. Equal treatment of parties.– The parties shall be treated with equality and each party shall be given a full opportunity to present his case. 19. Determination of rules of procedure.– (1) The arbitral tribunal shall not be bound by the provisions of the Code of Civil Procedure, 1908 (V of 1908) or the Qanun-e-Shahadat, 1984 (President’s Order No. 10 of 1984). (2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. (3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the arbitral proceedings in the manner it considers appropriate and necessary. (4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence. 20. Place of arbitration.– (1) The parties are free to agree on the place of arbitration and failing any agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (2) Notwithstanding sub-section (1), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents. 14 21. Commencement of arbitral proceedings.– Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. 22. Language.– (1) The parties are free to agree on the language or languages to be used in the arbitral proceedings and failing such agreement, the arbitral tribunal shall determine the language or languages to be used in the arbitral proceedings. (2) The agreement or determination, unless otherwise specified, shall apply to any written statement by a party, any hearing and any arbitral award, decision or other communication by the arbitral tribunal. (3) The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal. 23. Statements of claim and defence.– (1) Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements. (2) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit. (3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it. 24. Hearings and written proceedings.– (1) Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials : Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held. (2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or documents. (3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties. 25. Default of a party.– Unless otherwise agreed by the parties, where, without showing sufficient cause,–(a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings; (b) the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant; or 15 (c) any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it. 26. Expert appointed by arbitral tribunal.– (1) Unless otherwise agreed by the parties, the arbitral tribunal may–(a) appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal, and (b) require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection. (2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in a hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue : Provided that the expert shall, on the request of a party, make available to that party for examination all goods, other property or documents in his possession with which he was provided in order to prepare his report, unless otherwise agreed by the parties. 27. Court assistance in taking evidence.– (1) The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the Court for assistance in taking evidence. (2) The application made under sub-section (1) shall specify–(a) the names and addresses of the parties and the arbitrators; (b) the general nature of the claim and the relief sought; (c) the evidence to be obtained, in particular,–(i) the name and address of any person to be heard as witness or expert witness and a statement of the subject-matter of the testimony required; (ii) the description of any document to be produced or property to be inspected; or (d) any other necessary fact for the purpose. (3) The Court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the arbitral tribunal. (4) The Court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it. (5) Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the Court. 16 (6) In this section the expression “processes” includes summonses and commissions for the examination of witnesses and summonses to produce documents. CHAPTER - VI Making of Arbitral Award and Termination of Proceedings 28. Rules applicable to substance of dispute.– (1) Where the place of arbitration is situate in Pakistan,–(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the law for the time being in force in Pakistan; (b) in international commercial arbitration,–(i) the arbitral tribunal shall decide the dispute in accordance with the rules or law designated by the parties as applicable to the substance of the dispute; (ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws or rules; or (iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the law or rules it considers to be appropriate, keeping in view all the circumstances relating to the dispute. (2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur, only if the parties have expressly authorised it to do so. (3) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. 29. Decision making by panel of arbitrators.– (1) In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members unless otherwise agreed by the parties : Provided that questions of procedure may be decided by the presiding arbitrator if so authorised by the parties or all the members of the arbitral tribunal. 30. Settlement.– (1) The arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement if it is not contrary to the arbitration agreement or the agreement of the parties. (2) If, during, arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms. (3) An arbitral award on agreed terms shall be made in accordance with the provisions of section 31 and shall state that it is an arbitral award and such arbitral award has the same status and effect as any other arbitral award on the substance and merits of the dispute. 31. Form and contents of arbitral award.– (1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal : 17 Provided that in arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated. (2) The arbitral award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given, or the award is an arbitral award on agreed terms under section 30. (3) The arbitral award shall state its date and the place of arbitration as determined in accordance with sub-section (1) of section 20 and the award shall be deemed to have been made at that place. (4) After the arbitral award is made, a signed copy shall be delivered to each party, and to such Court if matter was referred by a Court. (5) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award. (6) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (7) Unless the arbitral award otherwise directs, a sum directed to be paid by an arbitral award shall carry interest at the per annum rate prevailing during such period for such bank loans and notified or declared by the State Bank of Pakistan from the date of the award to the date of payment. (8) Unless otherwise agreed by the parties, the costs of the arbitration shall be fixed by the arbitral tribunal; and the arbitral tribunal shall also specify–(a) the party entitled to costs, (b) the party who shall pay the costs, (c) the amount of costs or method of determining that amount, and (d) the manner in which the costs shall be paid. Explanation.– For the purpose of this sub-section, “costs” means reasonable costs relating to the fees and expenses of the arbitrators and witnesses, legal fees and expenses, any administrative expenses or fees of the institution supervising the arbitration, and any other expenses incurred in connection with the arbitral proceedings and the arbitral award. (9) Notwithstanding anything contained in sub-section (8), the Court may determine the cost of arbitration where the matter is referred by the Court or as prescribed by the Centre. 32. Termination of proceedings.– (1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section (2). (2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where–18 (a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute, (b) the parties agree on the termination of the proceedings, or (c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible. (3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings. 33. Correction and interpretation of arbitral award or additional award.–(1) Within thirty days from the date of receipt of the arbitral award including an additional award, unless another period of time has been agreed upon by the parties–(a) a party, with notice to the other party, may request the arbitral tribunal to correct any errors in computation, any clerical or typographical errors or any other errors of a similar nature occurring in the award; (b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. (2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award and such interpretation shall be final for the purpose and on the point. (3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award. (4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award. (5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request. (6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub-section (5). (7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section. CHAPTER - VII Recourse against Arbitral Award 34. Application for setting aside arbitral award.– (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3) unless the matter is referred by a Court for arbitration. (2) An arbitral award may be set aside by the Court only if–19 (a) the party making the application furnishes proof that–(i) a party to the arbitration agreement was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration : Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that–(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of Pakistan. Explanation.– Without prejudice to the generality of expression public policy it also includes an arbitral award the making of which was induced or affected by fraud, misrepresentation or corruption and in violation of confidentiality. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal : Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter in any case. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. CHAPTER - VIII Finality and Enforcement of Arbitral Awards 20 35. Finality of arbitral awards.– (1) Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively. (2) Notwithstanding anything contained in sub-section (1), where the reference was made by the Court and the arbitral award is submitted to such Court, the Court shall, after the time for making an application to set aside the award has expired under section 34, or such application having been made, after refusing it, proceed to pronounce judgment according to the arbitral award, and upon the judgment so pronounced a decree shall follow for enforcement under section 36, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the arbitral award. 36. Enforcement of arbitral awards.– Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 ( V of 1908), in the same manner as if it were a decree of the Court. CHAPTER - IX Appeals 37. Appealable orders.– (1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:–(a) granting or refusing to grant any interim measure under section 9; (b) setting aside or refusing to set aside an arbitral award under section 34; (c) against an order of the arbitral tribunal accepting the plea referred to in subsection (2) of section 16; or (d) again an order of the arbitral tribunal for granting or refusing to grant an interim measure under section 17. (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. CHAPTER - X Miscellaneous 38. Small Claims and Minor Offences Court not to have jurisdiction over arbitration save arbitration in suits before it.– A Small Claims and Minor Offences Court shall have no jurisdiction over any arbitration proceedings or over any application arising thereout save on application made under sub-section (4) of section 8. 39. Procedure, powers and jurisdiction of Court.– (1) Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court. (2) Subject to the provisions of this Act and of rules made thereunder–(a) the provisions of the Code of Civil Procedure, 1908 (V of 1908), shall apply to all proceedings before the Court, and to all appeals, under this Act; and 21 (b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters mentioned in different provisions of this Act as it has for the purpose of, and in relation to, any proceedings before the Court: Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in an arbitral tribunal for making orders with respect to any of such matters relating to arbitration. 40. Deposits.– (1) The arbitral tribunal may fix the amount of the deposit or supplementary deposit, as the case may be, as an advance for the costs referred to in subsection (8) of section 31, which it expects will be incurred in respect of the claim submitted to it : Provided that where, apart from the claim, a counterclaim has been submitted to the arbitral tribunal, it may fix separate amount of deposit for such claim and counterclaim. (2) The deposit referred to in sub-section (1) shall be payable in equal shares by the parties : Provided that where one party fails to pay his share of the deposit, the other party may pay that share: Provided further that where the other party also does not pay the aforesaid share in respect of the claim or the counterclaim, the arbitral tribunal may suspend or terminate the arbitral proceedings in respect of such claim or counterclaim, as the case may be. (3) Upon termination of the arbitral proceedings, the arbitral tribunal shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the party or parties, as the case may be, or also to such Court if the matter is referred by a Court. 41. Arbitration agreement not to be discharged by death of party thereto.–(1) An arbitration agreement shall not be discharged by the death of any party thereto either as respects the deceased or as respects any other party, but shall in such event be enforceable by or against the legal representative of the deceased. (2) The mandate of an arbitrator shall not be terminated by the death of any party by whom he was appointed. (3) Nothing in this section shall affect the operation of any law by virtue of which any right of action is extinguished by the death of a person. 42. Provisions in case of insolvency.– (1) Where it is provided by a term in a contract to which an insolvent is a party that any dispute arising thereout or in connection therewith shall be submitted to arbitration, the said term shall, if the receiver adopts the contract, be enforceable by or against him so far as it relates to any such dispute. (2) Where a person who has been adjudged an insolvent had, before the commencement of the insolvency proceedings, become a party to an arbitration agreement, and any matter to which the agreement applies is required to be determined in connection with, or for the purposes of, the insolvency proceedings, then, if the case is one to which subsection (1) does not apply, any other party or the receiver may apply to the Court or judicial authority having jurisdiction in the insolvency proceedings for an order directing that the matter in question shall be submitted to arbitration in accordance with the arbitration agreement, and the Court or judicial authority may, if it is of opinion that, having regard to all the circumstances of the case, the matter ought to be determined by arbitration, make an order accordingly. 22 (3) In this section the expression “receiver” includes an Official Assignee. 43. Lien on arbitral award and deposits as to costs.– (1) Subject to the provisions of sub-section (2) and to any provision to the contrary in the arbitration agreement, the arbitral tribunal shall have a lien on the arbitral award for any unpaid costs of the arbitration. (2) If in any case an arbitral tribunal refuses to deliver its award except on payment of the costs demanded by it, the Court may, on an application in this behalf, order that the arbitral tribunal shall deliver the arbitral award to the applicant on payment into Court by the applicant of the costs demanded, and shall, after such inquiry, if any, as it thinks fit, further order that out of the money so paid into Court there shall be paid to the arbitral tribunal by way of costs such sum as the Court may consider reasonable and that the balance of the money, if any, shall be refunded to the applicant. (3) An application under sub-section (2) may be made by any party unless the fees demanded have been fixed by written agreement between him and the arbitral tribunal, and the arbitral tribunal shall be entitled to appear and be heard on any such application. (4) The Court may make such orders as it thinks fit respecting the costs of the arbitration where any question arises respecting such costs and the arbitral award contains no sufficient provision concerning them. 44. Limitations.– (1) The Limitation Act, 1908 (IX of 1908), shall apply to arbitrations as it applies to proceedings in a court. (2) For the purposes of this section and the Limitation Act, 1908 (IX of 1908), an arbitration shall be deemed to have commenced on the date referred in section 21. (3) Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper. (4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1908 (IX of 1908), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted. PART III RECOGNITION AND ENFORCEMENT OF CERTAIN FOREIGN AWARDS, ETC. CHAPTER - I Arbitral Awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards done at New York 45. Definitions.– For the purposes of this Chapter, unless there is anything repugnant in the subject or context,–23 (a) “Contracting State” means a State which is a Party to the Convention; (b) “Convention” means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on the 10th June, 1958, as set forth in the First Schedule to this Act; (c) “Court” means a High Court and such other superior court in Pakistan as may be notified by the Federal Government in the official Gazette; and (d) “foreign arbitral award” means an arbitral award made in a Contracting State and such other State as may be notified by the Federal Government, in the official Gazette. 46. Jurisdiction of Court.– (1) Notwithstanding anything contained in any other law for the time being in force, the Court shall exercise exclusive jurisdiction to adjudicate and settle matters related to or arising from or under this Chapter. (2) An application to stay legal proceedings pursuant to the provisions of Article II of the Convention may be filed in the Court, in which the legal proceedings are pending. (3) In exercise of its jurisdiction, the Court shall,–(a) follow the procedure, as nearly as my be provided in the Code of Civil Procedure, 1908 (V of 1908); and (b) have all the powers vested in a civil court under the Code of Civil Procedure, 1908 (V of 1908). 47. Enforcement of arbitration agreements.– (1) A party to an arbitration agreement against whom legal proceedings have been brought in respect of a matter which is covered by the arbitration agreement may, upon notice to the other party to the proceedings, apply to the court in which the proceedings have been brought to stay the proceedings in so far as they concern that matter. (2) On an application under sub-section (1), the court shall refer the parties to arbitration, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being preformed. 48. Furnishing of documents.– The party applying for recognition and enforcement of foreign arbitral award under this Chapter shall, at the time of the application, furnish documents to the Court in accordance with Article IV of the Convention. 49. Enforcement of foreign arbitral award.– (1) Unless the Court pursuant to section 51, refuses the application seeking recognition and enforcement of a foreign arbitral award, the Court shall recognise and enforce the award in the same manner as a judgment or order of a court in Pakistan. (2) A foreign arbitral award which is enforceable under this Chatper, shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in Pakistan. 50. Unenforceable foreign arbitral awards.– The recognition and enforcement of a foreign arbitral awards shall not be refused except in accordance with Article V of the Convention. 51. Inconsistency.– In the event of any inconsistency between this Chapter, any other law, or any judgment of any court and the Convention, the Convention shall prevail to the extent of the inconsistency. 24 52. Power to make rules.– The Federal Government may, by notification in the official Gazette, make rules to carry out the purposes of this Chapter. 53. Savings.– Notwithstanding the repeal of the Arbitration (Protocol and Convention) Act, 1937 (VI of 1937), or the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2007 (LVIII of 2007), hereinafter in this section referred as “the Act” or “the Ordinance” respectively, the Act or the Ordinance shall continue to have effect in relation to foreign arbitral awards made,–(a) before the date of commencement of this Act; and (b) within the meaning of section 2 of the Act which are not foreign arbitral awards within the meaning of section 2 of the Ordinance and section 46 of this Act. 54. Federal Government to amend the First Schedule.– The Federal Government may, by notification in the official Gazette, amend the First Schedule in conformity with any amendments to the provisions of the Convention set out therein which may hereafter be duly made and adopted from time to time. CHAPTER - II Arbitration under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 55. Definitions.– For the purposes of this Chapter, unless there is anything repugnant in the subject or context,–(a) “award” includes any decision interpreting, reversing or annulling an award, being a decision pursuant to the Convention, and any decision as to costs which under the Convention is to form part of the award; (b) “Centre” means the International Centre for Settlement of Investment Disputes established by the Convention; and (c) “Convention” means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States incorporated in the Second Schedule to this Act. 56. Registration of awards.– (1) An award shall be deemed to have been rendered pursuant to the Convention on the date on which certified copies of the award were dispatched to the parties. (2) Any person seeking recognition or enforcement of an award rendered pursuant to the Convention shall be entitled to have the award registered in the High Court subject to proof of any matters that may be prescribed and to the other provisions of this Chapter. (3) In addition to the pecuniary obligations imposed by the award, the award shall be registered for the reasonable costs of and incidental to registration. (4) If at the date of the application for registration the pecuniary obligations imposed by the award have been partly satisfied, the award shall be registered only in respect of the balance, and accordingly if those obligations have been wholly satisfied, the award shall not be registered. 25 57. Effect of registration.– Subject to the provisions of this Chapter, an award registered under section 57 shall, as respects the pecuniary obligations which it imposes, be of the same force and effect for the purposes of execution as if it had been a judgment of the High Court given when the award was rendered pursuant to the Convention and entered on the date of registration under this Act, and, so far as it relates to such pecuniary obligations:–(a) proceedings may be taken on the award; (b) the sum for which the award is registered shall carry interest; and (c) the High Court shall have the same control over the execution of the award, as if the award had been a judgment of the High Court. 58. Binding on the Federal Government.– Sections 57 and 58 shall bind the Federal Government but not so as to make an award enforceable against the Federal Government in a manner in which a judgment would not be enforceable against the Federal Government. 59. Federal Government contribution to expenses under the Convention.–Any sums required to meet any obligations of the Federal Government arising out of Article 17 of the Convention (which obliges the Contracting States to meet any deficit of the Centre) shall be charged on and paid out of the Federal Consolidated Fund. 60. Exclusion of other provisions of the Act.– The provisions of this Act except this Chapter, shall not apply to proceedings pursuant to the Convention. 61. Certain provisions of Convention to have force of law.– (1) Notwithstanding anything to the contrary in any law, the provisions of Articles 18, 19, 20, 21(a), Article 22 as it applies to Article 21(a), 23(1) and 24 shall have the force of law. (2) Nothing in Article 24(1) of the Convention shall be construed as–(a) entitling the Centre to import into Pakistan goods free of any customs duty without restriction on their subsequent sale therein; (b) conferring on the Centre any exemption from taxes or duties which form part of the price of goods sold; or (c) conferring on the Centre any exemption from taxes or duties which are in fact no more than charges for services rendered. (3) For the purposes of Article 20 and Article 21(a) of the Convention as given the force of law by this section, a statement to the effect that the Centre has waived an immunity in the circumstances specified in the statement, being a statement certified by the Secretary-General of the Centre, or by the person acting as Secretary-General, shall be conclusive evidence of such waiver. 62. Power to make rules.– The Federal Government may make rules,–(a) to prescribe the procedure for applying for registration of an award under this Chapter, and to require the applicant to give prior notice of his intention to register to other parties; (b) to prescribe matters to be proved on the application and the manner of proof, and in particular to require the applicant to furnish a copy of the award certified pursuant to the Convention; (c) to provide for the service of notice of registration of the award by the applicant on other parties; 26 (d) to provide for the stay of execution whether provisionally or otherwise of any award registered under this Chapter in accordance with the provisions of the Convention; and (e) on any other matter which may be necessary to carry out the purposes of this Chapter of the Act. 63. Federal Government to amend the Second Schedule.– The Federal Government may, by notification in the official Gazette, amend the Second Schedule in conformity with any amendments to the provisions of the Convention set out therein which may hereafter be duly made and adopted from time to time. PART IV CONCILIATION 64. Application and scope of conciliation.– (1) Save as otherwise provided by any law for the time being in force and unless the parties have otherwise agreed, this Chapter shall apply to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto. Explanation.– For the purposes of this Chapter, “conciliation” means a process, whether referred to by the expression conciliation, mediation, a traditional method of dispute settlement by amicable intervention of a third person, or an expression of similar import, whereby parties request a third person or persons (the conciliator) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship and the conciliator does not have the authority to impose upon the parties a solution to the dispute. (2) This Chapter shall not apply where by virtue of any law for the time being in force certain disputes may not be submitted to conciliation. 65. Application of certain laws barred.– The provisions of the Code of Civil Procedure, 1908 (V of 1908) or the Qanun-e-Shahadat, 1984 (President’s Order No. 10 of 1984), shall not apply on conciliation proceedings. 66. Commencement of conciliation proceedings.– (1) The party initiating conciliation shall send to the other party a written invitation to conciliate under this Chapter, briefly identifying the subject of the dispute. (2) Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate. (3) If the other party rejects the invitation, there will be no conciliation proceedings. (4) If the party initiating conciliation does not receive a reply within thirty days from the date on which he sends the invitation, or within such other period of time as specified in the invitation, he may elect to treat this as a rejection of the invitation to conciliate and if he so elects, he shall inform in writing the other party accordingly. 67. Number of conciliators.– (1) There shall be one conciliator unless the parties agree that there shall be two or three conciliators. (2) Where there is more than one conciliator, they ought, as a general rule, to act jointly. 27 68. Appointment of conciliators.– (1) Subject to sub-section (2),–(a) in conciliation proceedings with one conciliator, the parties may agree on the name of a sole conciliator; (b) in conciliation proceedings with two conciliators, each party may appoint one conciliator; and (c) in conciliation proceedings with three conciliators, each party may appoint one conciliator and the parties may agree on the name of the third conciliator who shall act as the presiding conciliator. (2) Parties may enlist the assistance of a suitable institution or person in connection with the appointment of conciliators, and in particular,–(a) a party may request such an institution or person to recommend the names of suitable individuals to act as conciliator; or (b) the parties may agree that the appointment of one or more conciliators be made directly by such an institution or person : Provided that in recommending or appointing individuals to act as conciliator, the institution or person shall have regard to such considerations as are likely to secure the appointment of an independent and impartial conciliator and, with respect to a sole or third conciliator, shall take into account the advisability of appointing conciliators of a nationality other than the nationalities of the parties. (3) When a person is approached in connection with his possible appointment as conciliator, he shall disclose circumstances likely to give rise to justifiable doubts as to his impartiality or independence unless the parties already have knowledge of such fact. 69. Administrative assistance for conciliation.– In order to facilitate the conduct of the conciliation proceedings, the parties, or the conciliator with the consent of the parties, may arrange for administrative assistance by a suitable institution or person. 70. Submission of statements to conciliator.– (1) Upon his appointment, the conciliator may request each party to submit a brief written statement describing the general nature of the dispute and the points at issue. (2) The conciliator shall send a copy of statement under sub-section (1) to each party. (3) The conciliator may request each party to submit a further written statement of his position and the facts and grounds in support thereof, supplemented by any document and other evidence that such party deems appropriate on receipt of copy of statement under sub-section (2) and such statement, documents and other evidence shall also be provided to the parties for their comments or reply. (4) The conciliator may request a party to submit such additional information as he may deem appropriate at any stage of the conciliation proceedings. Explanation.– Where there are more than one conciliator, the presiding conciliator shall coordinate between the other conciliators and the parties for provision of statements, documents and other evidence. 71. Conduct of conciliation proceedings.– (1) The conciliator shall assist the parties to reach an amicable settlement of their dispute in an independent and impartial manner. 28 (2) Subject to any agreement between the parties on the manner in which the conciliation proceedings are to be conducted, the conciliator may conduct the conciliation proceedings in such a manner as the conciliator considers appropriate, taking into account the circumstances of the case, any wishes that the parties may express and the need for a speedy settlement of the dispute. (3) Among other things, the rights and obligations of the parties relating to the dispute, the conciliator shall follow the principles of objectivity, equity and justice while giving due consideration to the usages of the trade concerned and the prevailing circumstances including any previous business practices between the parties. (4) The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute and such proposals need not be in writing and need not be accompanied by a statement of the reasons therefor. (5) Each party may, on his own initiative or at the invitation of the conciliator, submit to the conciliator suggestions for the settlement of the dispute. (6) The parties shall in good faith cooperate with the conciliator and, in particular, shall endeavour to comply with requests by the conciliator to submit written materials, provide evidence and attend meetings. 72. Communication between conciliator and parties.– (1) The conciliator may invite the parties to meet him or may communicate with them orally or in writing. (2) The conciliator may meet or communicate with the parties together or with each of them separately. (3) Subject to convenience of the parties and unless otherwise agreed between the parties, the meeting with the conciliator shall be held at such place as may be determined by the conciliator, after consultation with the parties, having regard to the circumstances of the conciliation proceedings. 73. Disclosure of information.– When the conciliator receives information concerning the dispute from a party, he shall disclose the substance of that information to the other party in order that the other party may have the opportunity to present any explanation which he considers appropriate : Provided that when a party gives any information to the conciliator subject to a specific condition that it be kept confidential, the conciliator shall not disclose that information to the other party to the conciliation. 74. Confidentiality.– (1) Notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential all matters and information relating to the conciliation proceedings. (2) Confidentiality shall extend also to the settlement agreement except where its disclosure is necessary for purposes of implementation and enforcement. 75. Settlement agreement.– (1) During the conciliation proceedings, when it appears to the conciliator that there exist elements of a settlement which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit them to the parties for their observations and after receiving their observations, the conciliator may reformulate the terms of a possible settlement in the light of such observations. (2) If the parties reach agreement on a settlement of the dispute, they may draw up and sign a written settlement agreement. 29 (3) Subject to sub-section (2), the conciliator may draw up, or assist the parties in drawing up, the settlement agreement if so requested by the parties. (4) When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively and the conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties. 76. Effect of settlement agreement.– The settlement agreement shall have the same effect to the parties as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30. 77. Termination of conciliation proceedings.– The conciliation proceedings shall be terminated–(a) by the conclusion and signing of the settlement agreement by the parties, on the date of the agreement; or (b) by a declaration in writing of the conciliator, after consultation with the parties, to the effect that further efforts at conciliation are no longer justified, on the date of the declaration; or (c) by a declaration in writing of the parties addressed to the conciliator to the effect that the conciliation proceedings are terminated, on the date of the declaration; or (d) by a declaration in writing of a party to the other party and the conciliator, if appointed, to the effect that the conciliation proceedings are terminated, on the date of the declaration. 78. Resort to arbitral or judicial proceedings.– The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject-matter of the conciliation proceedings except that a party may initiate arbitral or judicial proceedings where, in his opinion, such proceedings are necessary for preserving his rights. 79. Costs.– (1) Notwithstanding the costs prescribed by the Centre or as agreed between the parties, upon termination of the conciliation proceedings, the conciliator shall fix the costs of the conciliation and give written notice thereof to the parties. (2) For the purpose of sub-section (1), “costs” means reasonable costs relating to–(a) the fee and expenses of the conciliator and witnesses requested by the conciliator with the consent of the parties; (b) any expert advice requested by the conciliator with the consent of the parties; (c) any assistance provided pursuant to clause (b) of sub-section (2) of section 69 and section 70; (d) any other expenses incurred in connection with the conciliation proceedings and the settlement agreement. (3) The costs shall be borne equally by the parties unless the settlement agreement provides for a different apportionment : Provided that all other expenses incurred by a party shall be borne by that party. 30 80. Deposits.– (1) Subject to sub-section (2) of section 80, the conciliator may direct each party to deposit an equal amount as an advance for the costs which he expects will be incurred. (2) During the course of the conciliation proceedings, the conciliator may direct supplementary deposits in an equal amount from each party. (3) If the required deposits under sub-sections (1) and (2) are not paid in full by both parties within thirty days, the conciliator may suspend the proceedings or may make a written declaration of termination of the proceedings to the parties, effective on the date of that declaration. (4) Upon termination of the conciliation proceedings, the conciliator shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the parties. 81. Role of conciliator in other proceedings.– Unless otherwise agreed by the parties, the conciliator shall not, act as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceedings in respect of a dispute that is the subject of the conciliation proceedings; or be presented by the parties as a witness in any arbitral or judicial proceedings in respect of another dispute that has arisen from the same contract or legal relationship or any related contract or legal relationship. 82. Admissibility of evidence in other proceedings.– The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute that is the subject of the conciliation proceedings,–(a) an invitation by a party to engage in conciliation proceedings or the fact that a party was willing to participate in such proceedings; (b) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute in conciliation; (c) statements or admissions made by the other party in the course of the conciliation proceedings; (d) proposals made by the conciliator; (e) the fact that the other party had indicated his willingness to accept a proposal for settlement made by the conciliator; or (f) a document prepared solely for purposes of the conciliation proceedings. PART V PAKISTAN NATIONAL ARBITRATION AND CONCILIATION CENTRE 83. Definitions.– Nothing contained in Act and unless there is anything repugnant in the subject or context of this Chapter,–(a) “arbitrator” means an arbitrator registered and affiliated with the Centre; (b) “Centre” means the Pakistan National Arbitration and Conciliation Centre established under section 84; 31 (c) “conciliator” means a conciliator registered and affiliated with the Centre; (d) “Director General” means the Director General of the Centre; (e) “Fund” means the Fund of the Centre under section 88; and (f) “prescribed” means prescribed by rules. 84. Establishment of the Pakistan National Arbitration and Conciliation Centre.– (1) There shall be established the Pakistan National Arbitration and Conciliation Centre for institutionalizing the services relating to arbitration, conciliation and alternative dispute resolution in the country in a systematic and regulated manner. (2) The Centre shall be a body corporate having perpetual succession and common seal with powers to enter into agreements, contracts, acquire and hold property, both moveable and immovable, subject to the provisions of this Act and to sue and be sued in its name. (3) The head office of the Centre shall be at Islamabad and the Federal Government may set up offices of the Centre at such places, as it may deem necessary, as and when required. (4) The Centre shall consist of the Director General, such other officers and necessary supporting, as may be prescribed, by the rules. (4) The Director General shall exercise the powers and functions of the Centre under this Act. (5) The Director General may delegate any of his powers to any officer subordinate to him in writing by imposing such conditions as he deems fit and necessary. 85. Powers and functions of the Centre.– The powers and functions of the Centre shall be to,–(a) conduct research in the fields of arbitration, conciliation and alternative dispute resolution methods; (b) advise the Government of Pakistan on policy matters and modern international trends in the fields of arbitration, conciliations and other alternative dispute resolutions methods; (c) coordinate, liaise or interact with other authorities, bodies or international organizations in any study or cooperation in the fields of arbitration, conciliation and alternative dispute resolution; (d) enter into contracts for the supply of goods, materials and services or for the execution of works as may be necessary for the discharge of any of its powers and functions; (e) determine qualifications, experience and other ancillary matters for arbitrators, conciliators or other persons providing services relating alternative dispute resolution in their areas of expertise except for persons enrolled as an advocate with any Bar Council in Pakistan who shall be entitled to act as arbitrator or conciliator or for alternative dispute resolution in fields of their expertise or interest; (f) accredit, certify, register, prepare lists of arbitrators, conciliators and persons providing services for alternative dispute resolution and regulate their 32 conduct of business as such and fees for their registration or other matters relating to their conduct of performance and discipline; (g) make rules and provide suitable penalties like imposition of fines, suspension and cancellation of registration of persons or institutions registered or affiliated with the Centre for providing arbitration, conciliation or alternative dispute resolution services, their appointment, registration or affiliation procedures, appeal procedure for any disciplinary action taken under such rules as prescribed; (h) prescribe fees for arbitrators, conciliators or persons providing services for alternative dispute resolution; (i) establish and provide infrastructural facilities for arbitration, conciliation and alternative dispute resolution purposes on reasonable cost to the arbitral tribunals, arbitrators, conciliators or persons providing alternative dispute resolution services or other parties related thereto; (j) launch awareness campaigns in masses about the use, application and advantages of alternative dispute resolutions methods including arbitration and conciliation; (k) develop working manuals, reference materials and procedures to assist the arbitral tribunals, arbitrators, conciliators or to persons providing services relating alternative dispute resolution and to educate the general public; (l) adopt or make rules for the purposes of arbitration, conciliation and alternative dispute resolution or any matter mentioned in this Part or Act is specifically authorized; and (m) perform and carry out any other act, thing or function relating to arbitration, conciliation or alternative dispute resolution or matters ancillary thereto or thereunder the Act. 86. Director General.– (1) There shall be a Director General, having reasonable experience in arbitration, conciliation or in alternative dispute resolution methodologies and qualifications in the fields of law, business or international trade, of the Centre who shall be appointed by the Federal Government on such other terms and conditions as may be prescribed. (2) The Director General shall be the Chief Executive of the Centre and shall discharge such duties and perform such functions as are assigned to him by or under the Act or by the Federal Government and the Centre. (3) The Director General shall hold office for a period of three years extendable for another term of three years keeping in view his meritorious services for the advancement of the purposes of the Centre and its functions under the Act. (4) The Federal Government shall prescribe other terms and conditions relating to the appointment, service and office of the Director General. 87. Appointment of officers and staff of the Centre.– (1) The Director General may appoint such officers, experts, consultants and members of his staff as it may consider necessary for the efficient performance of its functions on such terms and conditions as may be prescribed under the rules made with the prior approval of the Federal Government. (2) The Director General, officers, experts, consultants and members of staff of the Centre when acting or purporting to act under any of the provisions of this Act or rules 33 made thereunder shall be deemed to be public servants within the meaning of section 21 of the Pakistan Penal Code (Act XLV of 1860). 88. Fund.– (1) There shall be established a non-lapsable fund to be known as Pakistan National Arbitration and Conciliation Centre Fund which shall vest in the Centre and shall be utilized by the Centre to meet charges and expenditure in connection with its functions and operations under this Act including payment of salaries and other remuneration payable to the Director General, officers, experts, consultants and other staff members of the Centre. (2) The Fund shall consist of –(a) funds provided by the Federal Government for payment of salaries, establishing infrastructure and running the day to day business of the Centre; (b) loans or grants by the Federal Government, any other Government, local authority or organization as well as from any other source recognized and allowed by the Federal Government; (c) foreign aid, grants and loans negotiated and raised, or otherwise obtained, by the Centre; (d) fees for registration of persons to serve individually or as panels of arbitrators, conciliators or persons providing alternative dispute resolution services or amounts generated from provision of infrastructural facilities for conciliation, arbitration or alternative dispute resolution; (e) amounts received from fines, penalties or from other charges of the Centre; (f) income from moveable or immovable property; and (g) all other sums received by the Centre from different sources. (3) The Fund shall be kept in one or more accounts maintained by the Centre in any currency in any schedule bank in Pakistan and shall be operated by the Director General in accordance with the directions of the Federal Government. 89. Accounts and audit.– (1) The Centre shall prepare its budget in respect of each financial year and submit for the approval of Federal Government on such date as may be prescribed for the purpose, in accordance with the prescribed procedure and shall maintain complete and accurate books of accounts of its actual expenses and receipts. (2) The accounts of the Centre shall be maintained in the manner prescribed by the Controller General of Accounts. (3) The Auditor-General of Pakistan shall conduct audit of the accounts of the Centre. (4) A copy of the audit report shall be sent to the Federal Government, alongwith the comments of the Director General. (5) The Federal Government may issue directions to the Director General for the rectification of any item objected to by the Auditor-General of Pakistan and the Director General shall comply with such directions. 90. Annual and other reports.– (1) Within three months of the conclusion of each calendar year, the Director General shall submit an annual report to the Federal Government in respect of activities of the Centre including the status of its programmes, 34 projects and future plans formulated in furtherance of its aims and objects and purposes of this Part. (2) In addition to the annual report, the Director General shall, from time to time, if necessary, prepare such special reports relating to any special activity of the Centre and submit it to the Federal Government or the Federal Government may direct for preparation of a special report about any particular subject under the Act. 91. Power to make rules.– (1) The Director General, with the previous approval of the Federal Government, may make or adopt with certain variation rules for performance of different functions and powers under this Part. (2) The rules made under sub-section (1) shall be effective after their publication in the official Gazette. (3) The contravention of rules made under sub-section (1) shall be punishable with a penalty of fine, suspension or cancellation of registration or affiliation, etc., as the case may be, as prescribed by the rules, if relating to conduct and discipline of the persons or institutions registered, certified or affiliated to provide services as arbitrators, arbitral tribunal, conciliators, individually or as a panel, or for alternative dispute resolution purposes. (4) No penalty shall be imposed under the rules on any person or institution without giving an opportunity of being heard. PART VI MISCELLANEOUS PROVISIONS 92. Power of the Federal Government to make rules.– (1) The Federal Government may, by notification in the official Gazette, make rules for carrying out the purposes of this Act except where such power shall be exercised by the High Court or any other person or authority. 93. Power of High Court to make rules.– The High Court may make rules consistent with this Act as to all proceedings before the Court under this Act as provided under different provisions of this Act. 94. Removal of difficulties.– (1) In case any difficulty arises in giving effect to provisions of this Act, the Federal Government may, for the purpose of removing such difficulty, make such order as it considers expedient and any such order shall be deemed to be, and given effect to, as a part of the provisions of this Act : Provided that no such power shall be exercised after the expiry of three years from the commencement of this Act. 95. Repeal and savings.– (1) The Arbitration Act, 1940 (X of 1940), the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2007 (LVIII of 2007), and the Arbitration (International Investment Disputes) Ordinance, 2007 (XXXVIII of 2007), are hereby repealed. (2) Notwithstanding such repeal,–(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force or any arbitral award made or its enforcement proceedings initiated unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force; and 35 (b) all rules made and actions taken under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or taken under this Act and shall continue in force until altered or rescinded by rules made or actions taken under this Act. 36 THE FIRST SCHEDULE [See section 46] CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS ARTICLE I 1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought. 2. The term “arbitral awards” shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted. 3. When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It may also declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration. ARTICLE II 1. Each Contracting State shall recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration. 2. The term “agreement in writing” shall include all arbitral clauses in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. 3. The Court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative and incapable of being performed. ARTICLE III Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of 37 arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards. ARTICLE IV 1. To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply–(a) the duly authenticated original award or a duly certified copy thereof; (b) the original agreement referred to in article II or a duly certified copy thereof. 2. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent. ARTICLE V 1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that–(a) the parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or (b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or (c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced; or (d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. 2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that–(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of that country; or 38 (b) the recognition or enforcement of the award would be contrary to the public policy of that country. ARTICLE VI If an application for the setting aside or suspension of the award has been made to a competent authority referred to in article V(1)(e), the authority before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security. ARTICLE VII 1. The provisions of the present Convention shall not affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral awards entered into by the Contracting States nor deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon. 2. The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the extent that they become bound by this Convention. ARTICLE VIII 1. This Convention shall be open until 31st December, 1958 for signature on behalf of any Member of the United Nations and also on behalf of any other State which is or hereafter becomes member of any specialized agency of the United Nations, or which is or hereafter becomes a party to the Statute of the International Court of Justice, or any other State to which an invitation has been addressed by the General Assembly of the United Nations. 2. This Convention shall be ratified and the instrument of ratification shall be deposited with the Secretary-General of the United Nations. ARTICLE IX 1. This Convention shall be open for accession to all States referred to in article VIII. 2. Accession shall be effected by the deposit of an instrument of accession with the Secretary-General of the United Nations. ARTICLE X 1. Any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible. Such a declaration shall take effect when the Convention enters into force for the State concerned. 39 2. At any time thereafter any such extension shall be made by notification addressed to the Secretary-General of the United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary-General of the United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned, whichever is the later. 3. With respect to those territories to which this Convention is not extended at the time of signature, ratification or accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent of the Governments of such territories. ARTICLE XI In the case of a federal or non-unitary State, the following provisions shall apply–(a) with respect of those articles of this Convention that come within the legislative jurisdiction of the federal authority, the obligations of the federal Government shall to this extent be the same as those of Contracting States which are not federal States; (b) with respect to those articles of this Convention that come within the legislative jurisdiction of constituent States or provinces which are not, under the constitutional system of the federation, bound to take legislative action, the federal Government shall bring such articles with a favourable recommendation to the notice of the appropriate authorities of constituent States or provinces at the earliest possible moment; (c) a federal State Party to this Convention shall, at the request of any other Contracting State transmitted through the Secretary-General of the United Nations, supply a statement of the law and practice of the federation and its constituent units in regard to any particular provision of this Convention, showing the extent to which effect has been given to that provision by legislative or other action. ARTICLE XII 1. This Convention shall come into force on the ninetieth day following the date of deposit of the third instrument of ratification or accession. 2. For each State ratifying or acceding to this Convention after the deposit of the third instrument of ratification or accession, this Convention shall enter into force on the ninetieth day after deposit by such State of its instrument of ratification or accession. ARTICLE XIII 1. Any Contracting State may denounce this Convention by a written notification to the Secretary-General of the United Nations. Denunciation shall take effect one year after the date of receipt of the notification by the Secretary-General. 2. Any State which has made a declaration or notification under article X may, at any time thereafter, by notification to the Secretary-General of the United Nations, declare that this Convention shall cease to extend to the territory concerned one year after the date of the receipt of the notification by the Secretary-General. 40 3. This Convention shall continue to be applicable to arbitral awards in respect of which recognition or enforcement proceedings have been instituted before the denunciation takes effect. ARTICLE XIV A Contracting State shall not be entitled to avail itself of the present Convention against other Contracting States except to the extent that it is itself bound to apply the Convention. ARTICLE XV The Secretary-General of the United Nations shall notify the States contemplated in Article VIII of the following: (a) signatures and ratifications in accordance with Article VIII; (b) accessions in accordance with Article IX; (c) declarations and notifications under Articles I, X and XI; (d) the date upon which this Convention enters into force in accordance with Article XII; (e) denunciations and notifications in accordance with Article XIII. ARTICLE XVI 1. This Convention, of which the Chinese, English, French, Russian and Spanish texts shall be equally authentic, shall be deposited in the archives of the United Nations. 2. The Secretary-General of the United Nations shall transmit a certified copy of this Convention to the States contemplated in Article XIII. 41 THE SECOND SCHEDULE [See section 56] CONVENTION ON THE SETTLEMENT OF INVESTMENT DISPUTES BETWEEN STATES AND NATIONALS OF OTHER STATES PREAMBLE The Contracting States CONSIDERING the need for international cooperation for economic development, and the role of private international investment therein; BEARING IN MIND the possibility that from time to time disputes may arise in connection with such investment between Contracting States and nationals of other Contracting States; RECOGNISING that while such disputes would usually be subject to national legal processes, international methods of settlement may be appropriate in certain cases; ATTACHING PARTICULAR IMPORTANCE to the availability of facilities for international conciliation or arbitration to which Contracting States and nationals of other Contracting States may submit such disputes if they so desire; DESIRING to establish such facilities under the auspices of the International Bank for Reconstruction and Development; RECOGNIZING that mutual consent by the parties to submit such disputes to conciliation or to arbitration through such facilities constitutes a binding agreement which requires in particular that due consideration be given to any recommendation of conciliators, and that any arbitral award be complied with; and DECLARING that no Contracting State shall by the mere fact of its ratification, acceptance or approval of this Convention and without its consent be deemed to be under any obligation to submit any particular dispute to conciliation or arbitration; HAVE AGREED as follows:–CHAPTER I INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES SECTION 1 .– ESTABLISHMENT AND ORGANIZATION ARTICLE 1 (1) There is hereby established the International Centre for Settlement of Investment Disputes (hereinafter called the Centre). 42 (2) The purpose of the Centre shall be to provide facilities for conciliation and arbitration of investment disputes between Contracting States and nationals of other Contracting States in accordance with the provisions of this Convention. ARTICLE 2 The seat of the Centre shall be at the principal office for the International Bank for Reconstruction and Development (hereinafter called the Bank). The seat may be moved to another place by decision of the Administrative Council adopted by a majority of two-thirds of its members. ARTICLE 3 The Centre shall have an Administrative Council and a Secretariat and shall maintain a Panel of Conciliators and a Panel of Arbitrators. SECTION 2.– THE ADMINISTRATIVE COUNCIL