By Sakib Berjees: 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 the history. The incapacity of our judicial system to deliver swift, prompt, and adequate outcome has become the single greatest hurdle to the 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 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 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 percent, hitting a staggering 2.26 million—82 % at the district level, the rest in higher courts. Evidence that instead of clearing the backlog we are adding to the mountain. What are 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 who invest 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, the Radic mining case—all are 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, I had a meeting with the CEOs of the GCC sovereign funds, they told me that when they recently visit 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. The establishment and the key stakeholders of the government in India, has learned to deliver certainty, to provide frameworks, and to assure investors that if disputes arise, there is a path to dispute resolution. Of course, Indians 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 US81 billion dollars FDI (foreign direct investment) 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 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. Many global firms, because of the DFIC jurisdiction, sign contracts in DFIC even when their operations are in EU, Asia or Africa. It is not the Burj Khalifa or flashy real estate that draws investment to Dubai—it is the very trust in the system that enforces contracts. Dubai too has attracted US45 billion dollars FDI this year.
We can certainly learn from China as well. 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. Multinational corporation are not going to China because of cheap labour. They invest in China because the state guaranteed dispute resolution mechanisms that worked in practice. When disputes emerged between foreign corporations and their local partners, their disagreement is usually resolved by the arbitration panels often weeks, not years. Because of this China has attracted US115 billion dollars FDI last year.
Moreover, 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. Ultimate result: KSA is the recipient of US 35 billion dollars FDI last year.
And then we turn back to Pakistan, where sovereign wealth funds recently toured our cities, met the top government officials and Special Investment Facilitation Council. 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. They wanted clarity on how disputes would be resolved, on how profits would be repatriated, on how dividends would be dispensed. Instead, they encountered the fog of bureaucracy, the absence of frameworks, and the vague assurances of future action. And so, they left with nothing. As one visiting fund manager told me: “We don’t doubt your potential. We doubt your system predictability.” That doubt is lethal.Hence, Pakistan had only mere US1.79 billion dollar FDI last year.
Pakistani story is full of tragedy. Our people prove that they are productive when given a chance to work under system and set of rules. That diaspora, working overseas under systems that deliver predictability, thrives and creates value. Foreign remittance in fiscal year 2024 was US38 billion dollar. 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 US32 billion dollars. The tragedy is that it is not the talent but systems. When we live under clear rules, we prosper; when we live under discretion, we suffocate. It is not potential we lack but it is predictability.
Our judiciary has written chapters on political history, but none on economic progress. There is not a single Pakistani case law that can be cited to the international investors or at the international forum as precedent. Now compare this with UK, their courts shape commercial law worldwide, arbitration awards at Swiss are global benchmarks, and we have seen Singapore transformed itself into Asia’s arbitration centre. Saudi Arabia too, now enforces arbitration awards in line with international norms. Pakistan is nowhere, grappling by stay orders, adjournments, and an addiction to discretion.
Recently, Pakistan finance minister met with the Chief Justice of Pakistan, and after their meeting both gentlemen admitted that the mode of alternative dispute resolution is crucial for Pakistan’s investment climate. When there is an acknowledgement at the top level of both the judiciary and executive then it is not a matter for debate, it is a matter for action by those who are at the helm of affairs. Yet action is delayed, as always, in the mist of red-tape and the comfort of status quo.
There is a vicious cycle in action and the dysfunction does not stop with the courts. Lawyers too in Pakistan have no discipline. They move between politics and practice, a conflict of interest that would be scandalous in any developed country. Our Judges enjoy perks and entitlements, yet performance is measured in adjournments. Even after their death their entire family inherit state privileges. At the lower levels we all know litigants drown in bribery, corruption, dates and endless delay. 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 accused to begging for mercy, not for justice. Nonetheless, our courts are more absorbed in political battles than in the business of justice.
The solution lies not in conferences, not in rhetoric, not in promises of reform. We need to build a system where we eliminate discretion, restore predictability, so that justice can be administrated swiftly. Moreover, we 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 success of Mushily International Centre, where success rate is 83 per cent and case is resolved within a week, is proof that Pakistanis do not lack talent or skill but lacks will at the top.
Foreign direct investment and domestic investment, both demands an effective dispute resolution system. If we want to win the trust of our overseas Pakistani brothers and sisters then we must fix the broken system of justice. If we want Foreign direct investment then we must establish and support alternative dispute resolution culture and system. Investors, across the globe seek money making business, they will not wait decades in courts and engaged in litigation business. Our many political experiments have all failed because none addressed the rule of law and good governance. These are the very foundation of stability, investment, and growth.
History will not remember our image building speeches but 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.
