THE first ever “Mediation Centre” is expected to be functional early next year in Karachi to provide an institutional dispute resolution mechanism to businesses.
Initially, the centre will focus on commercial cases. As a pilot project, its activities will be restricted to Karachi. But later, the mediation facilities will be extended to other cities as well. The centre is being set up with financial and technical support of the International Finance Corporation.
The centre is being set up with the help of London based “Centre for Effective Dispute Resolution” which is providing expertise to have a “set of trained mediators in Pakistan” for resolving disputes.
According to IFC officials, the Centre would offer “international standard” mediation through a group of trained experts. “This would be a real alternate dispute resolution forum which would facilitate the concerned parties and investors to sit down and settle their disputes without seeking the indulgence of courts”, an official of the IFC said.
“It would not be an arbitration but a mediation to encourage the investors to settle disputes amicably”, he said.
The centre, he said, will work as a “neutral party” whose findings cannot be discussed or used as reference in the courts. All the process will be conducted voluntarily, but if both sides are not convinced and do not reach to any dispute resolution mechanism, they can go back to litigation.
“But both sides will be bound not to disclose the proceedings of the mediation in any court”, he clarified.
“This is how we hope that the backlog of thousands of cases could be cleared”, the official said adding that IFC has provided $1 million for the training of judges and improving the processes of the courts.
Chairman Central Board of Revenue (CBR) Abdullah Yousef was in a upbeat mood when asked about the situation and said that a 3- member committee comprising two men from the private sector and one from the CBR was already working to look into any thing pertaining to litigation. The committee is headed by a private sector member which means that CBR does not influence any party that has been caught up in a dispute.
In the absence of mediation centre, the CBR would be extending support to help the investors and businessmen get their disputes settled without recourse to the courts.
“Now this committee is a window to opt for dispute resolution without jeopardising his or her legal case or without withdrawing from the court”, Yousef said.
The introduction of this 3-member committee, he believed, has proved to be a very useful and effective way to settle disputes.
“There is a thinking in the government that some efficient legal mechanism be introduced to deal with the litigation cases involving the Small and Medium Enterprises (SMEs) by having some forum other than the courts”.
This 3-member committee is working for the last two years and has succeeded in removing a considerable number of litigation cases. “Nearly 1000 cases have been decided by this committee,” the chairman CBR said adding that he was encouraging people to get their commercial cases decided out of the court within a short period of time.
“There is a also view in the government that we should start working simultaneously like a court through some mechanism to restrict the overall level of litigation cases in the country”, he said.
This is how, he believed, the level of cases pending in the courts could be minimised. “We have changed the system and procedure in the income tax by giving up the assessment based system and by opting for self-assessment system which has greatly helped to reduce substantial number of pending cases.
In this behalf, the chairman CBR said that overall 80,000 cases had been decided over the years other than the ones taken up by a 3-member committee. “And we are totally current on the first level of appeal”.
In the second level of appeal, special benches of the supreme court have helped reduce 82-90 per cent of the cases. And out of 24,000 income tax related cases, 15000 had been decided at the level of income tax tribunals and about 6000 cases at the level of special benches of the Supreme Court.
“And that has become a direction for the lower courts to deal with commercial cases involving disputes”.
The CBR chairman was hopeful that bulk of the cases will be decided during 2006-07 without the involvement of the courts. The pending cases were getting cleared and the CBR did not see much problem in the future, Yousef asserted.
He said that chambers of commerce and industry of the country had been taken into confidence to ensure the success of the 3- member committee for dispute resolution.
He agreed that it takes 5-10 years to decide cases in the court and that effective mechanism, out of the courts, must be worked to deal with legal cases. CBR is working on many issues particularly about the restructuring of the organisation for which the World Bank has provided $150 million. This restructuring is an on going process and once that is achieved in 2009, things are expected to be greatly improved.
