Reform beyond economics
Pakistan’s economic reform discourse is increasingly moving beyond taxation and fiscal stabilization toward deeper questions of institutional efficiency, regulatory predictability, and enforcement of economic rights. As the country navigates a difficult economic transition under broader governance frameworks, dispute resolution has quietly emerged as a central issue affecting investor confidence, commercial certainty, and economic trust.
Within this evolving landscape, Alternative Dispute Resolution (ADR) is being positioned not merely as a legal mechanism, but as part of a wider economic governance strategy. Under current reform initiatives, ADR is increasingly viewed as a practical instrument for improving contract enforcement, reducing delays, and strengthening economic justice.
A long history, limited institutional evolution
Despite renewed policy attention, ADR is not new to Pakistan or the broader region. Informal dispute resolution mechanisms have long existed through jirgas, panchayats, musalihat committees, and community-based mediation structures.
Formal arbitration also has a long legal history. Pakistan inherited the Arbitration Act 1940, which governed arbitration for decades. More recently, the Alternative Dispute Resolution Act 2017 provided broader statutory recognition to mediation, conciliation, and negotiated settlement mechanisms.
Yet despite this historical and legislative foundation, ADR has not evolved into a consistently trusted institutional system. The core issue is not absence of law or tradition, but weak institutional modernization, uneven professionalization, and uncertain enforceability.
The economic cost of delayed justice
Dispute resolution is no longer a purely legal concern. Globally, governments increasingly recognize that economic growth depends on institutions capable of resolving disputes fairly, predictably, and within reasonable timeframes.
Commercial certainty is ultimately grounded in confidence that contracts, obligations, and legal rights will be enforced without excessive delay or procedural distortion.
Pakistan’s judicial landscape reflects the scale of the challenge. More than 1.8 million cases remain pending in the district judiciary, while hundreds of thousands more burden the superior courts. Commercial disputes often take years due to procedural delays, overlapping jurisdictions, and prolonged appeals.
These delays are not merely legal inefficiencies; they are economic constraints that increase uncertainty, weaken contract enforcement, and raise investor risk. Predictability — central to investment decisions — becomes compromised.
This is why economies with strong investment climates have integrated ADR into broader governance systems.
The global ADR ecosystem
Globally, ADR has developed into a sophisticated institutional system supported by internationally recognized arbitration and mediation centres. Institutions such as the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), Singapore International Arbitration Centre (SIAC), Dubai International Arbitration Centre (DIAC), and the International Centre for Settlement of Investment Disputes (ICSID) have become central pillars of global commercial governance.
The scale reflects growing reliance on ADR. The ICC alone registered more than 830 new arbitration cases in 2024, involving parties from over 130 jurisdictions, with disputes collectively worth hundreds of billions of dollars.
Singapore has built a globally trusted arbitration hub through neutrality and enforceability, while the UK embedded mediation within commercial practice. The UAE aligned ADR with its investment strategy, and India expanded mediation frameworks to address judicial backlog pressures.
Across these systems, the common denominator is not legislation alone, but institutional confidence.
ADR as a reform instrument
Pakistan’s current ADR push must be understood within this broader economic governance context. ADR offers a reform mechanism that is quicker to operationalise, less politically sensitive than judicial restructuring, and capable of producing measurable outputs such as settlement rates and case reductions.
In reform environments increasingly shaped by governance benchmarks and investment indicators, ADR naturally becomes an attractive entry point. It aligns with policy priorities focused on predictability, enforcement, and investor confidence.
However, the central challenge is not introduction of ADR frameworks, but building confidence in their outcomes.
The institutional credibility gap
Pakistan does not lack ADR laws or contractual mechanisms. Arbitration clauses, mediation provisions, and negotiated settlement structures already exist across commercial contracts, infrastructure projects, investment frameworks, and public-private partnerships.
The deeper issue is institutional credibility.
Pakistan still lacks a sufficiently developed ecosystem producing professionally accredited and internationally credible mediators and arbitrators. Procedural approaches vary widely across forums. Enforcement remains vulnerable to delay and judicial intervention. Even arbitral awards often face prolonged challenges, reducing the economic value of speed and finality.
The legal culture also remains litigation-heavy, where adjournments and prolonged litigation cycles often weaken incentives for early settlement.
Pakistan’s quasi-judicial system — including tribunals, regulators, and tax forums — also remains fragmented and uneven in enforcement capacity.
As a result, ADR is often perceived not as a robust institutional mechanism, but as a negotiated alternative operating outside the formal justice structure.
Economic justice and institutional trust
This is where the broader concept of economic justice becomes central.
Economic justice reflects the confidence that businesses and citizens place in institutions responsible for enforcing economic rights and contracts.
Efficient dispute resolution therefore becomes part of economic infrastructure itself — alongside taxation systems, regulatory governance, and financial oversight.
Pakistan does not lack ADR provisions; it lacks institutional confidence in ADR outcomes.
Without neutrality, enforceability, procedural consistency, and professional credibility, ADR risks becoming procedural compliance rather than meaningful reform.
Courts must support ADR
International experience highlights a critical principle: ADR succeeds where courts support it.
In effective systems, courts encourage settlement, minimize unnecessary intervention, and reinforce enforceability of outcomes. They function as facilitators of commercial certainty rather than extensions of prolonged dispute cycles.
In Pakistan, however, enforcement proceedings can sometimes become continuations of the original dispute, weakening confidence in both ADR and the broader justice system.
The objective, therefore, is not to develop ADR as a parallel justice structure, but to embed it within the broader judicial ecosystem.
Building a credible ADR ecosystem
Pakistan’s reform strategy must focus on strengthening court-linked ADR systems, standardizing mediation and arbitration procedures, improving accreditation and professional training, and ensuring stronger enforceability of outcomes.
Government contracts and investment frameworks should incorporate dispute resolution clauses that promote early settlement while ensuring neutrality and legal certainty.
Equally important is institutional culture. ADR cannot succeed if procedural incentives continue to reward delay, technicality, and prolonged litigation.
Ultimately, sustainable economic growth depends not only on investment incentives or regulatory reform, but on confidence that economic disputes will be resolved fairly, efficiently, and predictably.
Reform signal or reform substance
Pakistan’s ADR push should therefore not be viewed merely as a procedural reform initiative. It reflects a deeper recognition that economic governance and dispute resolution are increasingly interconnected.
ADR can become an important pillar of Pakistan’s economic governance reforms — but only when it evolves from a procedural shortcut into a credible institution of economic justice.
Copyright Business Recorder, 2026
The writer is (PhD): Former Executive Director General, Board of Investment, Prime Minister’s Office; Public Policy & Corporate Law Expert. Email: raania.ahsan1@gmail.com