The Arbitration Act 1940 (Arbitration Act) governs and regulates arbitration proceedings conducted in Pakistan and the enforcement of domestic arbitral awards.
The parties are free to adopt procedures of their choice for the conduct of arbitration proceedings. The court, however, plays a pivotal role in the conduct of a domestic arbitration from the appointment to the removal of an arbitrator. The court, on the application of the arbitrator, summons the parties and witnesses to appear before the arbitrator. If the parties or witnesses fail to appear before the arbitrator and produce evidence, the arbitrator may make an award on the basis of the evidence before him or her. The court may order the preservation, interim custody or sale of any goods or property that form part of the subject matter of the arbitration.
The award given by an arbitrator is final and cannot be appealed on a point of law. However, appeals are permissible where there has been a procedural irregularity. The court may, on request of either party, modify or correct an award on a matter that is not part of the referral to arbitration, or where the award is imperfect in form or contains an obvious error or mistake. After the expiration of the time allowed for either party to apply for the arbitral award to be set aside, the court will proceed to pronounce judgment and issue a decree on the basis of the award.
Where a party to an arbitration agreement governed by the Arbitration Act commences legal proceedings against another party to such arbitration agreement in respect of any matter agreed to be referred to arbitration, the Arbitration Act entitles such other party to apply to the judicial authority before which the proceedings are pending to stay the legal proceedings. This can be done at any time before the filing of a written statement or before taking any other steps in the legal proceedings. The judicial authority, however, has discretion and is not bound to order a stay of legal proceedings in every case.
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