Our many political experiments have all failed because no one addressed rule of law and good governance. These are the very foundation of stability, investment and growth. Pakistan’s crisis of justice is no longer an abstract debate confined to the law schools or academic panels; the issue is becoming not just legal but economic. It is not about judicial activism or restraint and certainly not concerning whether judges sit on the right or left side of history.
The incapacity of our judicial system to deliver swift, prompt and adequate outcomes has become the single greatest hurdle to foreign direct investment. The internal market confidence is also suffering, and the country’s journey out of perpetual bailouts into sustainable development has become impossible. No country, no matter how rich in resources or strategic in geography, can be prosperous when its courts are graveyards of litigations and its law is a theatre of endless delay.
Pakistani judicial statistics speak louder than speeches. More than 2.3 million cases remain pending across courts, and civil suits linger for an average of 15 years. Pakistan Institute of Development Economics (PIDE)’s own research reveals that an ordinary civil case goes through nearly 40 hearings, of which 15 are adjourned without an outcome. Each delay (another date) is not merely an adjournment but a silent tax on productivity, and an erosion of trust. In 2023 alone, the backlog grew by nearly 4.0 per cent, hitting a staggering 2.26 million – 82 per cent at the district level, the rest in higher courts.
What is the repercussion for the economy? It means that a contract signed in Pakistan (whether with the public or private sector) is not a promise; it is a gamble. It means that a foreign company that invests in the energy sector today may spend the next decade in courts seeking what was promised in ink. The Karkey rental power dispute, the Reko Diq catastrophe and the Radic mining case are all reminders that the cost of judicial dysfunction is not conjectural. It ends up in billions of dollars, arbitration awards against the state, and above all in reputational damage that no investment roadshow or media campaign can address.
Supreme Court Justice Mansoor Ali Shah recently expressed his views in a conference earlier this year that businesses must resort to alternative dispute resolution (ADR) if they are serious about survival. “Leading organisations like Apple, Meta, Google and Amazon do not go to court", he said. “They resolve their disputes internally, swiftly, through arbitration and mediation”. In the global economy for investors, time is money and delay is fatal for businesses. Pakistan has yet to internalise this phenomenon.
Recently, during a meeting with the CEOs of sovereign funds I was told that when they recently visited New Delhi, they did not leave with vague MoU or empty promises of future legislation. They left with signed deals worth five to ten billion dollars, often within a week. India and the stakeholders there have learnt to deliver certainty, provide frameworks and assure investors that if disputes arise, there is a path to dispute resolution. Of course, the Indian judiciary has its own flaws – its backlog too is colossal – but it has developed dedicated commercial benches, fast-track courts and arbitration-friendly policies that assured foreign investments and their investors. This mechanism created predictability in businesses, and this predictability is worth more than promises. Thus, India secured $81 billion in FDI this year.
Dubai too has developed its flourishing economy on the back of its dispute resolution system. The Dubai International Financial Centre (DIFC) Courts, operating under English common law, are not just courtrooms but an enabling mechanism of investments. Investors know that if a contract terms are infringed or breached, the DIFC Court will provide an adequate remedy without political interference. It is not the Burj Khalifa that draws investment to Dubai; it is the very trust in the system that enforces contracts. Dubai attracted $45 billion in FDI this year.
We can certainly learn from China as well. The Chinese story and struggle are well known to the world. Their economic engine is thriving because it has been built on a system of specialised arbitration commissions and commercial courts. In China, commercial disputes are resolved with a speed and scale matched to its industrial expansion. When disputes emerge between foreign corporations and their local partners, they are usually resolved by the arbitration panels in weeks, not years. Because of this China attracted $115 billion in FDI last year.
Saudi Arabia too has reformed its arbitration laws in line with the UNCITRAL Model Law, setting strict timelines and ensuring enforceability. The Saudi Center for Commercial Arbitration reflects the kingdom’s determination about Vision 2030. The Saudi system has been successful in assuring their Investors that their grievances will not drown in bureaucracy but will be handled with speed and finality. The ultimate result: KSA was the recipient of $35 billion in FDI last year.
And then we turn back to Pakistan, where sovereign wealth funds recently toured our cities and met top government officials. During their interaction they were assured promises of swift legislation, red-tape removal and enabling frameworks. Yet not a single dollar was invested. Why? Because investors do not invest in speeches. They invest in systems.
Pakistan's story is full of tragedy. Our people prove that they are productive when given a chance to work under a system and set of rules. That diaspora, working overseas under systems that deliver predictability, thrives and creates value. Foreign remittance in FY2024 was $38 billion. Ten million overseas Pakistanis send home billions of dollars annually whereas 250 million Pakistanis, at home, blessed with land and resources, produce less and our entire export base is only $32 billion. The tragedy is that it is not the talent but the system.
Our judiciary has written chapters on political history, but none on economic progress. There is no Pakistani case law that can be cited to international investors or at the international forum as precedent. A stay order that should have been resolved in a month, goes on for years. A family court matter that should conclude within six months goes on for half a decade whereas a criminal case reduces the accused to begging for mercy, not for justice. Nonetheless, our courts are more absorbed in political battles than in the business of justice.
Foreign and domestic investment both demand an effective dispute resolution system. To win the trust of the diaspora and to attract FDI, we must establish and support alternative dispute resolution culture and systems. We also need to ensure that the new Arbitration Act, inspired by international best practices, must not become another piece of dormant legislation. The Act must be applied in practice and supported by all institutions.
The solution lies neither in conferences, nor in promises of reform. We need to build a system where we eliminate discretion, restore predictability, so that faith in the judicial system can be restored. History will judge us by the institution we build and a system that enforces contracts, resolves disputes and keeps promises. And if we do not, then we will remain a nation of adjournments, and keep waiting for our glorious tomorrow that will never come.
The writer is a political economist, public policy commentator and advocate for principled leadership and regional cooperation across the Muslim world.
