The Compliance of the International Arbitral Awards in Pakistan with Islamic Principles

Abstract

This research explored the refined challenges surrounding the enforcement and recognition of international arbitral awards in Pakistan in the context of contemporary arbitration and Sharia law. It was important to examine the legal framework of Pakistan incorporating the New York Convention (NYC) along with the Recognition and Enforcement Act of 2011 with Islamic concepts of riba, gharar, and public policy. Different and analytical approaches to the research problem were combined with doctrinal legal analysis of landmark judicial decisions invoking Islamic law, as well as some biographical case studies. In order to contextualize Pakistan's position with other Muslim countries, primary documents were supplemented with literature from Bangladesh, Turkey, Saudi Arabia, and Malaysia. The research showed that Pakistan's status as a party to the NYC and its willingness to engage in international arbitration is undermined by frequent vague Sharia-based public policy provisions on contract enforcement cited in cross border contracts under Article 227 of the Constitution. This has led to the denial of claims involving interest and speculative transactions which has eroded legal certainty and trust among investors. The examples of Saudi Arabia and Malaysia show that even modernized arbitration law may seek to observe Islam while incorporating international practices through avoidance of public policy restrictions and enhancement of clarity regarding procedural frameworks. Turkey and Bangladesh demonstrated secular or pragmatic enforcement tendencies, underscoring the challenges that dominate Pakistan. This research has led to the conclusion that reform Pakistan’s arbitration framework is necessary in order to more effectively integrate Islamic legal principles with treaty obligations on the international level. By easing the Sharia-compliant limitations and setting clear boundaries, Pakistan would improve certainty, attract foreign investment, and strengthen its position as a competitive forum for resolution of cross-border arbitration dispute. This study is important for the policymakers, the judiciary and the investors as it enables them appreciate the implications of the Islamic law and the International Arbitration in Pakistan.