IFC Establishing Pilot Mediation Center in Pakistan

Karachi, Pakistan, November 14, 2005—The International Finance Corporation, the private sector arm of the World Bank Group, has signed a Memorandum of Understanding with the High Court of Sindh to establish a pilot court-referred mediation center in Karachi, Pakistan. The pilot centre is expected to serve as model for Pakistan.

IFC is promoting the institutionalization of mediation as an alternative dispute resolution (ADR) mechanism for the private sector. The project’s goals are to mitigate expensive and lengthy court procedures incurred by the private sector, to help extricate small and medium businesses from litigation, and to help release assets caught up in legal disputes. The project is establishing a pilot mediation center in Karachi, a hub for business investors and industry.

Pakistan’s commercial dispute settlement processes are generally considered discouraging to market-based growth and to domestic and foreign investment. Small and medium businesses commonly face five-to-10 year litigation processes, and courts are backlogged with cases. A third of these cases are commercial in nature, many of which go to trial. Individuals and businesses have little alternative recourse in the event of a contract breach, which creates a disincentive for foreign and local investors to do business in Pakistan.

The IFC project will work with the High Court of Sindh to support the pilot mediation center. The high court and the selected district and session court will provide the pipeline of cases to the mediation center. At the center, cases will be handled by trained mediators following international best practice.

The project will also help professionalize mediation through the training, mentoring, certification, and registration of mediators, and it will campaign to raise awareness and promote mediation among the country’s practitioners, end users, and general public.

In August this year, IFC and the government convened a workshop in Karachi on Institutionalizing Mediation in Pakistan. The workshop was supported by the Ministry of Law, Justice, and Human Rights, as well as the country’s judiciary, bar, and private sector. Participants including Chief Justices of the Supreme Court of Pakistan and of the High Court of Sindh; the Minister of Law, Justice, and Human Rights; and the Attorney General.

The workshop shared international experiences in ADR mediation, with guest speakers including Lord Justice Carnwath, Lord Justice of the UK Court of Appeal; Justice James Ogoola, Principal Judge of the High Court of Uganda; and Justice A.M. Ahmadi, former Chief Justice of India. These senior judges cited the positive impact of mediation on the judicial systems in their countries, where a large percentage of commercial cases are settled out of court through court-referred or pre-court mediation, substantially reducing the backlog of cases in courts. For businesses, this has meant faster resolution of disputes and the freeing up of assets and working capital. Early resolution of disputes has also reduced the risk of bankruptcy and business stagnation and has raised investors’ confidence in the legal system.

Michael Essex, IFC’s Acting Director for the Middle East and North Africa, said, “We believe that the establishment of a pilot mediation center, the first of its kind in Pakistan, will demonstrate the effectiveness of mediation in resolving small and medium enterprises’ commercial disputes speedily and cost-effectively. We are excited to work with the High Court of Sindh in this innovative project, which we hope will also help ease the heavy case load judges currently face.”

IFC, in addition to a range of investment and advisory activities, is supporting private sector development across the region through its technical assistance facility, the Private Enterprise Partnership for the Middle East and North Africa.

The International Finance Corporation, the private sector arm of the World Bank Group, promotes sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Its 178 member countries provide its share capital and collectively determine its policies.

From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit www.ifc.org.

Contact Information

Corrie Shanahan

International Finance Corporation

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