SC suspends IHC order relating to enforcement of ICC London foreign arbitral awards

ISLAMABAD: The Supreme Court suspended the Islamabad High Court (IHC) order relating to enforcement of the International Chamber of Commerce (ICC) London foreign arbitral awards.

A two-judge bench comprising Justice Syed Mansoor Ali Shah and Justice Aqeel Ahmed Abbasi heard the appeals of Frontier Holdings Limited (petitioner) against an interim order of a division bench of the IHC.

The apex court written order stated that the interim order of the IHC Division Bench shall remain suspended until the next date of hearing. The said appeals shall be listed before a three-member bench after a fortnight.

The bench while issuing notice to the respondents (Petroleum Exploration Pvt Limited) ordered that the interim restraining order passed by the single judge of IHC shall remain in field and continue to operate.

The case minutiae are that the dispute between the parties was referred for arbitration under the auspices of the ICC, London. Upon conclusion of the proceedings, a partial foreign arbitral award was rendered on 12.12.2024, and subsequently, a separate award on costs was issued on 31.03.2025. The awards were filed before the IHC for enforcement under the Recognition and Enforcement (Arbitration, Agreements and Foreign Arbitral Awards) Act, 2011 (Act).

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The single judge of the IHC while admitting the enforcement petition, issued interim relief vide order dated 24.04.2025, restraining the respondents from assigning, transferring, or alienating their working interest in Badin Fields and from creating any charge, lien, or encumbrance thereon.

This interim order was subsequently challenged before a Division Bench in an intra-court appeal (ICA), which vide impugned order dated 19.05.2025, suspended the interim relief granted by the single judge.

It is contended that the interim relief was granted in aid of enforcement under the Act and did not amount to final relief. Courts are empowered to pass interim measures to protect the integrity and efficacy of the enforcement process. Denial of such protection would defeat the very purpose of the Act and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“Convention”).

Reliance was placed on Taisei Corporation and another v. AM Construction Company (Pvt) Ltd (2024 SCMR 640), Orient Power Company (Pvt) Ltd, Lahore v. Sui Northern Gas Pipelines Ltd. (2021 SCMR 1728), Government of India v. Vedanta Limited and Ors (AIR 2020 SC 4550), and Zeiler v. Deitsch (500 F.3d 157 (2007)) which affirm that courts must maintain a pro-enforcement bias while dealing with foreign arbitral awards.

It was further argued that the IHC Division Bench interfered at the interim stage without recording or satisfying any of the limited grounds of non enforcement under Article V of the Convention, as incorporated into the Act. Such premature judicial interference sends an adverse signal to the international community, undermines arbitral sanctity, erodes investor confidence, and undermines Pakistan’s international obligations. A stable and enforcement-friendly legal environment is vital for encouraging foreign direct investment.

It is further submitted with respect that the impugned order passed by the Division Bench, whereby the interim relief granted to the petitioners was suspended, has effectively obstructed the enforcement of the foreign arbitral award and is therefore inconsistent with the pro-enforcement mandate of the Act, the Convention, and the settled jurisprudence of this Court. Foreign arbitral awards are not to be treated as ordinary civil decrees; rather, they possess a binding character under international law, to which Pakistan has expressly committed itself.

It is also contended that the ICA before the Division Bench was not maintainable. Orders passed therein are not amenable to an ICA appeal under Section 3(2) of the Law Reforms Ordinance, 1972. It is well settled that ICAs do not lie from orders passed under special laws that contain a self-contained appellate mechanism and do not expressly provide for such appeals.

Copyright Business Recorder, 2025