Economics, the economic gap, and economic strategy are the backbone of every state’s policy. Aristotle’s concept of Eudaimonia states that the true purpose of a state’s economic planning should not be the mere preservation of wealth, but to provide citizens justice, accessibility, and a flourishing environment.
From the management of scarce resources to creating a deliberate plan of action to meet ends and goals, there exists an “economic gap” — a race between expenses and income. While printing money creates hyperinflation and borrowing money starts the cycle of debts and interest, the last resorts are either remittances or Foreign Direct Investment (FDI).
Remittances are the backbone of Pakistan’s economy. Although they are a passive source, as they only support households of migrants and have no direct participation in the industrial sector. Yet, $23 billion in FY2023 is not an amount to be ignored. The paradigm shift from a passive source of the economy into a more active, FDI-backed industrialization is required. This is only possible if growth and institutional quality are coupled with the rule of law and an accessible, trustworthy justice system.
Investors will only invest in a state where they have “clarity of mind” that, in case of dispute, they will be redressed, and there will be no prejudice or bias. In addition to this, there must be satisfaction that they will not be swallowed by hefty court procedures and decades-long delays. Here is where mediation comes into play.
A link can be drawn through Aristotle’s “Golden Mean” principle, which states that virtue lies between extremes. The balance between extremes is achieved through out-of-court settlement, i.e., mediation. Mediation provides an amicable, swift, and confidential settlement that demonstrates that justice has been served. Bridging the long-driven method of confrontation embedded in our society with a more affable cooperative mechanism of dispute resolution, that not only is cost effective but also helps in preservation of relations, as Bruton said that conflicts can revert to dispute with neutral intervention. This stands in contrast to the deeply rooted adversarial system, which often lacks collaborative procedures and practical solutions.
Bridging the fiscal divide is possible through increasing FDI by convincing and favoring foreign investors. However, certain institutional, legislative, and capacity gaps exist in the current out-of-court settlement mechanism in Pakistan. First and foremost is the lack of proper infrastructure, such as international commercial arbitration and mediation centers like Singapore’s SIAC. Secondly, there is cultural resistance, conflict of laws (customary and international law), and a lack of a unified framework. Some other problems include a lack of awareness that this is another mode of settlement that is binding in our legal system and also that it paves the way to social and economic growth of the nation, and absence of mandatory legal provisions to refer to mediation before litigation.
Legislative gaps include over-dependence on courts for appointments and referral to arbitration, non-recognition of mediation decisions as arbitral awards, and the absence of pre-mediation requirements, making mediation a last resort rather than a first step. Furthermore, the Enforcement of Foreign Awards Act 2011 has granted extensive powers to courts, and “public policy” has often been used as a plea for refusal in a significant number of settled disputes. Therefore, limiting court oversight over settled disputes and devising laws for automatic enforcement after a fixed period can significantly improve the system.
In conclusion, Pakistan has the opportunity to create a more mediation-friendly environment to foster efficient, fair, and trustworthy dispute resolution processes once all of the above reforms are in place. This would alleviate the strain on the judiciary, as well as provide a consistent and stable legal landscape that is vital to the economic development of a country. A successful mediation model would help to build investors’ trust in the system, especially in the field of foreign investment, which would be beneficial to both sides because business disputes could be resolved quickly, cheaply, and without long trials. This will result in greater confidence leading to more investment, more entrepreneurship, more jobs and more sustainable economic development. Concurrently, sustained public education programs, training of professionals, and supportive institutional measures can be implemented to help shift the perception of mediation from an inferior to the traditional judicial process to a sophisticated, legitimate, and respected method of resolving conflict. Adopting mediation as part of the legal and commercial landscape will enhance the rule of law, ease of doing business, and make Pakistan a more attractive place for investment, innovation, and economic growth in the long-term.
If you want to submit your articles and/or research papers, please visit the Submissions page.
To stay updated with the latest jobs, CSS news, internships, scholarships, and current affairs articles, join our Community Forum!
The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.
Noor ul Ain Bukhari is a final-year LLB student at Bahria University, Islamabad campus. She is an assiduous student who has completed certifications and training programs in ADR and IHL domains.
