Overview of commercial courts ordinance

The constitutional and procedural legal system in Pakistan is well suited to accommodate specialised commercial courts with various constitutional safeguards and procedural provisions lending legitimacy to such ventures.

This was reinforced ahead of the arrival of the ordinance by the decision of the Lahore High Court in an eatry v Multan Development Authority and others (2021).

The ordinance envisages setting up of dedicated commercial courts and appellate forums in the districts of Punjab which will have exclusive jurisdiction to try commercial disputes and dispose of them within a period of 180 days from the date of filing of a suit.

It has a provision for e-filing of written and oral pleadings and recording of evidence. Commercial courts will be the first courts to formally allow arrangements to deal with crises like the current global Covid-19 pandemic without obstructing the judicial process.

Short shrift given to adjournments, which plague the efficiency of courts in Pakistan and are the most common dilatory tactic employed by obstructive advocates, section 11 of the ordinance allows two adjournments “for a specific purpose” and a third, final adjournment under exceptional circumstances and, that too, for only one week subject to payment of costs awarded at the discretion of the judge;

Apportioning of costs under section 12. section 12(1)(c) affords an opportunity to argue for wasted costs against a party resorting to dilatory tactics, not limited to unnecessary adjournments. Disposal of appeals within 120 days from the date of filing of an appeal and mandatory court-ordered alternative dispute resolution (ADR) under the provisions of Order IX-B of the Code of Civil Procedure, 1908.

A bigger concern is the appellate forum envisaged by the ordinance. This is dealt with in section 15 on Commercial Appellate Tribunals. This is a cumbersome procedure which falls neither at the District Court level nor at the High Court level. It would allow a district judge not yet been elevated to the High Court, as well as a retired judge, to form the panel of members of the tribunal. It is doubtful that it will sit comfortably with the sitting judges to be bypassed for an appointment in favor of a retired judge. A tribunal would bypass the High Court altogether while decisions rendered by it would be challenged directly in the Supreme Court which goes against the civil procedure code and practice.

Another concern is the definition of a commercial dispute which is somewhat opaque in its ambit by “excluding sale or purchase of immovable property.” This definition needs refinement since much of the discourse on the rule of law and economic development revolves around two critical factors:

Enjoyment of property rights; and enforcement of contracts.

Indeed, there are social philosophers and economists who argue that the rule of law in a country can precede or operate independently of democracy if the following two elements in a legal system are strong: Effective courts; and tight commercial law Apart from having a lot of advantages the ordinance contains certain short comings also. The definition has excluded immovable property despite the fact that construction industry is given preference by the government and if dispute about land arises, what would be the efficacious remedy for the aggrieved company. Section 2 (d) has given six options of the parties if there is any dispute relating to statutory body, local government or government department, especially keeping in view CPEC, then commercial court would not be able to exercise jurisdiction, the secretariat is yet to be established or set up as under Section 4 the secretariat has to maintain and update record and statistical data in physical and electronic form, no rules are yet framed as required by Section 9 and without said rules commercial courts cannot work because e-filing is required and no process thereof if given, instead of Appellate Tribunal under Section 15 there should be a Bench of the High Court which is to be headed by a serving Judge of the High Court because the Tribunal does not give that force which the High Court has. It also has physiological affect on trial court as well as litigants. There is also apprehension that favorite person may be obliged by government and the authority by making them as members of tribunal which may comprise impartiality, no mode of Alternate Dispute Resolution (ADR) is given as required under Section 17. No forum is mentioned, if the suit is filed and the defendant files an application under Section 34 of the Arbitration Act 1940, then what would be the fate if arbitration is to be conducted outside the country as per terms of agreement between the parties, Section 17 says that after leave to defend or appeal is accepted, the matter shall be referred to (ADR). This point needs to be clarified that if the Appellate Court accepts the appeal against the order of the trial court, then why the matter be referred to ADR after acceptance of appeal.

A journey of a thousand miles begins with a single step. This single step taken by the Ordinance 2021 is undoubtedly a leap in the right direction.