Mandatory Mediation in Pakistan: From Judicial Imperative to Legislative Urgency – Can Parliament Keep Pace?

Introduction

Pakistan’s legal landscape is undergoing a subtle but strategic transformation. Mediation, once a peripheral courtesy in commercial disputes, is now emerging as a constitutionally anchored norm. Assertive judicial direction has repositioned mediation from optional experiment to institutional policy. This shift places Pakistan alongside jurisdictions where mediation is the expected standard, and not the exception. However, this evolution raises a critical challenge - can judicial authority alone sustain a national mediation culture without legislative codification or international enforceability? The answer lies in Pakistan’s jurisprudential pivot, its comparative positioning, and the urgent need to translate judicial momentum into statutory clarity.

Judicial Authority Reconfigures Commercial Dispute Resolution in Pakistan

The Lahore High Court’s judgment in M/s 5H Insaat Ve Ticaret Anonim Sirketi v. Secretary Local Government marks a jurisprudential shift in Pakistan’s dispute resolution architecture. In one of the first cases involving a foreign investor in public infrastructure, the Court directed mediation – not as a procedural courtesy, but as a constitutional imperative. In this case, the foreign party had not yet initiated international arbitration, though it had signalled its intention to do so following the termination of its contract for convenience. The Court, while setting-aside the termination notice, appointed the Secretary, Local Government and Community Development Department, Government of the Punjab, to act as mediator. Although the process reached an impasse, the judgement redefined mediation’s role in Pakistan’s dispute resolution mechanism involving foreign investors.

The judgment affirms a judicial intent to embed amicable resolution within the legal process, not as a concession to efficiency, but as a constitutional obligation grounded in public law and investor-state equity. This is not a mere procedural adjustment; it marks a principled recalibration of how legal access is structured in investment-related disputes. This judgment casts mediation as foundational, not subordinate to arbitration. Unlike arbitration, mediation is portrayed as a dignity-preserving process that restores relationships and empowers parties. The Court’s pro-mediation bias is not incidental; it reflects a systemic shift where mediation is treated as the preferred gateway to dispute resolution, with arbitration and litigation positioned as residual options.

The Lahore High Court’s reliance on M/s Mughals Pakistan (Private Limited v Employees Old Age Benefits Institutions and others is instructive. There, the Supreme Court of Pakistan recognised mediation as a right, not a privilege, emphasising its role in preserving party autonomy, reducing adversarial strain, and ensuring procedural fairness. Building on the Supreme Court’s precedent, the Lahore High Court went a step further by mandating mediation in spite of the underlying agreement providing for ICC arbitration. The implication is clear: arbitration, while robust, must not eclipse the constitutional imperative of collaborative justice.

Transformation of Mediation’s Legal Status: From Option to Obligation

A series of judicial rulings in the recent past has cemented mediation as a dignified, culturally attuned, and party‑driven process. For instance, in Faisal Zafar v Siraj‑ud‑Din, the Lahore High Court articulated the ‘Doctrine of Expeditious Resolution of Corporate Disputes through Mediation,’ interpreting Sections 6, 276 and 277 of the Companies Act 2017 to enable consensual restructuring of Genome Pharmaceuticals (Private) Limited. This involved transferring assets, liabilities, and shares to a new company, Solaris Life Sciences (Private) Limited. The restructuring methodology allowed the parties to resolve their dispute without resorting to adversarial litigation, preserving both business continuity and shareholder autonomy. It also positioned Early Neutral Evaluation as a gateway to mediation, emphasising that judicial intervention should protect continuity of commercial operations over punitive adjudication.

This ethos extends beyond corporate disputes. In Muhammad Naseer Butt v Additional District Judge Lahore etc., after a pendency of three and a half years, the Supreme Court referred the parties embroiled in a family dispute to mediation before. Ms. Sara Tarrar, an accredited Mediator. The process culminated in a successful agreement, resolving the dispute in five weeks. In passing the decree in line with the mediated settlement, the Supreme Court emphasised the benefits of mediation by stating that “it reduces the costs associated with protracted legal battles, alleviates the burden on courts, and ensures quicker resolution of disputes”.

Judicial endorsement of mediation in family matters is evident in other jurisdictions, including Italy, Lithuania and Azerbaijan, where mandatory mediation has been institutionalised to streamline family dispute resolution.

Similarly, in Descon Engineering Ltd v. Cynergyico PK Ltd, the parties were locked in a multi-contract dispute over alleged defects, delays, and unpaid dues arising from industrial works at a refinery in Balochistan. The Sindh High Court required parties to engage in mediation before pursuing arbitration. The Court referred the parties to the Musaliha International Center for Arbitration and Dispute Resolution, set a 45-day timeline, and directed both sides to appoint authorized officers for settlement discussions. This judgement reaffirmed judiciary’s endorsement of mediation as a preferred method for dispute resolution.

Constitutional Authority Behind Mediation: No Statute, No Problem

The constitutional foundation for this judicial posture is clear. Article 189 of the Constitution of Islamic Republic of Pakistan provides that ‘Any decision of the Supreme Court shall, to the extent that it decides a question of law or is based upon or enunciates a principle of law, be binding on all other Courts in Pakistan’. Thus, judgments advocating for mandatory mediation acquire binding force, even in the absence of legislative codification.

 Judicial Convergence: Global Mediation Norms Recast Pakistan’s Dispute Resolution Architecture

Pakistan’s judicial embrace of mediation mirrors global trends. In Re Atlantic Pipe Corp. (304 F.3d 135), the U.S. First Circuit affirmed courts’ authority to compel non-binding mediation under their inherent powers, while In re African-American Slave Descendants’ Litigation (307 F. Supp. 2d 977) the U.S. District Court emphasised that inherent powers are ‘necessary to the exercise of all others’, validating court-ordered mediation as a procedural instrument grounded in judicial authority. The High Court of Hong Kong in Leung Ping Yeung etc. v Jetour Holiday Limited Personal Injuries Action No.707 of 2008 introduced cost consequences for an unreasonable refusal to mediate. India’s Supreme Court, in recent judgements, has established that Indian courts may proactively refer suitable disputes to mediation without party consent (Afcons Infrastructure Ltd. v. Cherian Varkey Construction), and that pre-institution mediation is a mandatory procedural prerequisite in commercial matters (Patil Automation Private Limited and Ors v Rakheja Engineers Private Limited). In the UK, with Churchill v Merthyr Tydfil Borough Council and its application in DKH Retail Ltd v City Football Group Ltd, the English Courts emphasised that litigants can no longer avoid mediation merely by preferring trial; if the court believes mediation could assist in resolving the dispute, it may order it.

These comparative references serve a dual purpose. First, they legitimise Pakistan’s judicial experimentation with mandatory mediation by situating it within a global continuum. Second, they reinforce the principle that courts are not passive arbiters but active facilitators of justice, empowered to steer parties toward resolution that preserves relationships, reduces costs, and enhances institutional credibility.

Pakistan’s Domestic Mediation Overhaul from Informal Practice to Statutory Mandate

Judicial endorsement of mediation finds expression in Pakistan’s domestic legislation as well. Pakistan has made notable strides in institutionalising mediation through targeted legislative reforms. The Alternative Dispute Resolution Act 2017, applicable in the Islamabad Capital Territory, empowers courts to refer civil and compoundable criminal disputes to Alternate Dispute Resolution mechanisms, including mediation, before or during trial. The Code of Civil Procedure (Sindh Amendment) Act, 2018 introduced court-annexed mediation in civil disputes, with mandatory referral at the judge’s discretion. Similarly, the Punjab Alternate Dispute Resolution Act 2019 authorises courts to refer civil disputes to mediation before trial, establishing procedural safeguards and empowering trained mediators. Most recently, the Mediation Practice Direction (Civil) Rules 2023, issued by the Islamabad High Court under Article 202 of the Constitution of Islamic Republic of Pakistan, regulate court-referred mediation in civil disputes. Collectively, these laws mark a shift from voluntary mediation to structured, often mandatory processes. This integration offers meaningful relief to Pakistan’s overburdened judiciary.

Embracing the Singapore Convention on Mediation in Strategy but Not in Legislation

Despite notable domestic advances, Pakistan lacks a mechanism for the cross-border enforcement of mediated settlement agreements. For foreign investors, enforceability is paramount. The Singapore Convention on Mediation fills this gap by providing a globally recognised framework for enforcement across member states.

Pakistan’s signature of the Singapore Convention earlier this year signals strategic intent. Already ratified by key trading partners like China, Qatar and Singapore, the Convention strengthens Pakistan’s credibility in international commerce. The Convention also offers strategic flexibility: under Article 8, Contracting Parties may exclude mediation agreements involving the state or government entities. This enables Pakistan to safeguard national interests while fully leveraging the Convention’s enforcement regime. By embracing the Convention, Pakistan not only aligns with global enforcement norms but also reassures foreign investors that mediated settlements will be honoured across jurisdictions. This reduces uncertainty while reinforcing Pakistan’s position as a responsible and reliable jurisdiction for dispute resolution.

However, signature alone is insufficient. To translate this commitment into enforceable practice, Pakistan must legislate with urgency. A domestic statute is not a procedural formality – it is the statutory foundation that gives the Convention binding force. This legislative step must be precise, accessible and aligned with both, constitutional values and international standards. It must offer clarity to foreign investors and domestic stakeholders alike, ensuring mediated settlements are recognised with consistency and legal certainty. Without this, mediated agreements remain vulnerable to challenge and Pakistan risks eroding its credibility in cross-border commercial engagement.

Conclusion

Mediation is not a headline reform; it is a structural recalibration of how justice is delivered. Pakistan’s judiciary has done the heavy lifting in constitutionalising mediation. However, without domestic ratification, the Singapore Convention remains a promise, not a tool. Pakistan’s Parliament must act. Not eventually. Now!

This is not about symbolic alignment. It is about building an operational infrastructure i.e., training mediators, embedding mediation clauses in contracts, and equipping regulatory bodies to support non-adversarial resolution across sectors. With enabling legislation, Pakistan can elevate from a reformer to a global standard-setter in consensual justice.