The United Nations Convention on International Settlement Agreements Resulting from Mediation was adopted on December 20 2018 by the UN, and this was followed by its opening for signatures in Singapore on August 7, 2019. Popularly called the Singapore Convention on Mediation, it was signed by 51 countries, including Pakistan’s traditional allies such as Saudi Arabia, China, Malaysia, Turkey, Iran and other major international players such as India and the USA. Why was Pakistan not present at its signing?

It is natural for contractual disputes to arise over a wide range of matters when two parties sign a contractual agreement. Conflict is inevitable, after all, and it is how one tackles it that matters. The ratification of the Convention is inevitable, too, and Pakistan is depriving itself of a major method of conflict resolution by being oblivious to it, or worse, ignoring it.

On August 22 2017, the International Centre for Settlement of Investment Dispute (ICSID) gave its judgement in favour of the Turkish power company, Karkey Karadeniz Elektrik Uretim AS, in the “Karkey case”. Pakistan was to pay USD760 million in damages excluding penalties, and it was only through extensive negotiations with Turkey that Pakistan was able to escape the USD1.2 billion penalty.

On July 14 2019, The ICSID announced an award of USD5.976 Billion against Pakistan in the Reko Diq case. William Hayes, Chairman of Tethyan Copper Company or TCC, who lodged the case against Pakistan, later stated that they were still willing to strike a deal with Pakistan, but they would not stop protecting their legal and commercial interests.

Engaging in mediation at this point through a professional body of mediators such as the Centre for Effective Dispute Resolution (CEDR), Singapore International Mediation Institute (SIMI) or ADR ODR International trained mediators, could have possibly saved Pakistan billions of USD by reaching a settlement. The country ill affords a penalty of nearly USD6 billion; the equivalent of returning the latest IMF bailout package, lest Pakistan’s foreign assets and funds be seized to compensate TCC. Mediation could have fulfilled the role of damage control to some extent.

On January 2 2020, reports emerged that Pakistan’s government may accept UAE based Etisalat’s final offer of USD 275 million out of the remaining USD 800 million for acquiring a 26% stake in Pakistan Telecommunication Company Limited (PTCL) for USD 2.598 billion. Adviser to Prime Minister on Finance and Revenue, Dr Abdul Hafeez Shaikh said it would be better to accept a reasonable payment rather than pursue an amount that’s taken 13 years with no success. Pakistan is likely to settle for a total of USD1.935 billion.

Pakistan’s concurrent losses in international arbitration cases are due to its lacklustre policies for formatting contractual agreements with international firms it engages with for economic projects. The selection for arbitration counsels is not based on a transparent process, and the government often goes for foreign law firms to fight its cases, and ends up losing because Pakistan’s national laws do no cater to the arbitral dimensions modern domestic legal systems do around the globe. Arbitration clauses are almost always included in contracts before they are signed, and they specifically mention the jurisdiction whose laws shall be followed, the laws themselves, and the seat of arbitration. Successive governments have willingly set aside their sovereignty in matters of arbitral awards enforcement to sign financial deals, which prevent any arising cases from being heard in local courts.

This must stop, and contracts must be drafted after gaining necessary legal advice from experts who have command over both domestic and international rules of arbitration. It is also the responsibility of the parliament to draft arbitration laws in line with international conventions on arbitration, such as the New York Convention on Arbitration, and it is the duty of the courts to apply those laws so that past mistakes are not repeated. It may take a while, yet.

In hindsight, perhaps it is a blessing in disguise that the Singapore Convention on Mediation has not been signed and ratified by Pakistan yet. It allows Pakistan to learn from its long list of mistakes in pursuing arbitration to settle its international commercial disputes, and to do better in utilising mediation as a method of resolving any future claims that may arise. There are several policies that the government should pursue to achieve this goal.

Firstly, its legal arm must thoroughly understand what international mediation is by seeking guidance and training from experts in the field. Aforementioned bodies such as CEDR, SIMI, and ADR-ODR International Ltd have Pakistani legal experts associated with them, those who understand the dynamics of international mediation, possess the necessary qualifications and training to represent Pakistan, and can also train Pakistan’s best litigation experts in this modern field of dispute resolution. The ADR Initiative is a Pakistan based initiative which promotes and train mediators with the ADR ODR International and provides CMC and SIMI accredited qualifications.

Secondly, it should send its own officials to receive training in the field of mediation through courses offered by these bodies and encourage these bodies to expand their services in Pakistan by collaborating with them. An added benefit would be of Pakistan being able to enhance the quality of the ADR Centre’s the provincial governments of Sindh and Punjab have established at their respective province’s High Courts.

Thirdly, it should set up an equivalent of the Pakistan Bar Council for experts offering ADR services. Through this it will be able to keep checks and balances on their quality, and all groups operating in Pakistan must be approved by this body.

Fourthly, it should engage the services of these expert bodies to draft any potential mediation agreements. Pakistan cannot afford any further blunders arising from drafting errors.

Finally, it should draft its own acts of parliament on mediation to ratify the convention, just like the Arbitration Act, 1940 and Pakistan’s ratification of the New York Convention on Arbitration.

These steps should be followed for Pakistan to maximize the benefits it can reap from signing the Singapore Convention on Mediation and enhance the chances of Pakistan’s success in any arising dispute claims which can be settled through mediation.