Topic # 1

Legal System of Pakistan

INTRODUCTION TO LAW
Meaning of Law:
Law is the rules and regulations which are adopted by society to help it to function or to regulate
the actions of its citizens, and if these rules are broken penalties and other sanctions are to be
imposed.
Law means a set of rules or a system of rules of conduct designed and enforced by the state to
control and regulate the conduct of people. Law is not stagnant. As circumstances and conditions
in a society change, law is also changed as per the requirements of the society.
For instance: Civil law, Criminal Law, Business Law etc.
Definition of Law:
Some definitions are given below:
a) Law is a body of Acts, Orders, Ordinances, Regulations, Rules, Conventions, Customs
and practices which have the sanction of an authority capable of establishing law and
order and which is thus enforced or recognized by courts and other law-enforcing body.
b) Law in Dictionary: Law is a body of principles recognized and applied by the
government in the administration of justice.
c) The word law necessarily connotes a written law or a written instrument having the force
of law.
d) Law is a set of rules imposed and enforced by a society with regard the attribution and
exercise of power over persons and things.

Pakistan Legal System:

‘Pakistan Legal System’ consists of:

• The entire framework of the law of Pakistan
• The manner of its creation
• The procedure for applying it
• The court structure
• Methods of interpreting it
• The procedure of changing the law etc.

Criminal matters are the subject of Criminal Law dealt with the Criminal Procedure Code
(CPC)

Objectives of Studying Legal System:

The study of Pakistan legal system provides a good working understanding of:
• How the Pakistan legal system function
• What are legal consideration in making contracts
• What are the constraints upon setting up and running companies
• How employment contracts are protected

Definition of Mercantile Law:

Business Law is the part of civil law which deals with the rights and obligations of persons
dealing with each other. It includes laws relating to contracts, partnership, sales of goods,
negotiable instruments etc.

Where to apply law in practical life?

A general knowledge of important legal principles and how they apply to certain problems will
help in avoiding conflict with the people around us. Civil law involves the problems that impact
on people’s everyday life like debts, tenancy issues, sale of goods etc. One should know the law
to which he is subject because generally ignorance of law is neither excuse nor defense.

Why study law?

The objective of studying law in Accountancy/Management is to be aware when legal problems

arise, be able to judge when outside assistance is required, evaluate financial implications of law
and communication with the lawyers.
This aspect may be considered from different angles:

a) Effect of Law on citizens

b) Effect of Law on business
c) Effect of Law on profession

a. Effect of Law on citizens:

Every citizen is subject to law. Its consequence affects us all every day while:
• Making consumer contracts
• Making employment contracts
• Making social contracts
• Enjoying welfare rights
• Lending and borrowing funds
• Protection of life and property
• Enjoying acquiring or transferring ownership rights
• Traveling in a bus or car

b. Effect of Law on Business:

Trade is nothing but a series of contracts. Such contracts shall be enforceable and valuable to
business only when they are legally protected. They are certain rules and guidelines for setting
up and administrative running of certain categories of businesses e.g.
• Partnership organization is governed by the Partnership Act, 1932.
• Companies are governed by Companies Ordinance, 1984
• Insurance companies are subject to Insurance Act, 1938.
• Banking companies are controlled by Banking Companies Ordinance, 1962.

c. Effect of Law on Business:

An accountant is considered an expert in auditing, taxation and corporate law matters and
he/she is required to provide professional assistance to his clients on matters such as:
• Formation of a company
• Underwriting agreement
• Agency contracts
• Purchase and supply contracts
• Forward trading
• Settlement of labor disputes
• Protection of trademarks, copy rights
• Many other matters of business interest

COURT AND ITS LAW

 • The legal system is derived from English common law and is based on the much-
amended 1973 constitution and Islamic law (sharia).
• The Supreme Court, provincial high courts, and other courts have jurisdiction over
criminal and civil issues.
• The president appoints the Supreme Court's chief justice and formally approves other
Supreme Court justices as well as provincial high court judges on the advice of the
chief justice.
• The Supreme Court has original, appellate, and advisory jurisdiction, and high courts
have original and appellate jurisdiction.
• The Federal Shariat Court determines whether laws are consistent with Islamic
injunctions.

SOURCES OF LAW IN PAKISTAN

The legal system is derived from English common law (Equity) and is based on the
constitution of Pakistan 1973 as well as Islamic law (sharia). Thus, we can say that in Pakistan
the main sources of law are following:
1. Legislation: It is the law created by the Parliament of a country and other bodies to
whom it has delegated authority. The MNAs present the bills which ar4e discussed in
parliament and when after voting they are passes in a consultation of the senate they
become ‘LAWs’ (Acts).
2. Precedent: Precedent is a judgment or decision of a court which are binding on the
subordinate courts. It is a judgment of the court in court decision which is cited and
referred to as an authority for deciding identical cases, the precedents serve as authority
for legal principles embodied in its decision.
3. Customs: It so happens that the initial source of laws is based on the customary conduct
of community life. Society life creates customs and when these customs become old and
popular or well established then majority of the members of the society assume the
customs to be respectful and matter of honor and prestige and customary principles
become customary laws. In other words rules of customary conduct are framed which are
recognized by the majority of the community in general and they influence the judicial
decisions as well and later they become laws. With the passage of time as the society
develops this source of law diminished its tendency as a source of law. In Pakistan, the
customary law has been replaced by the Sharia Law.
4. Agreement: Parties in their agreement stipulate terms for themselves which constitute
law for the contracting parties.
Example: Parties to the contract are A and B. They enter into an agreement and mention
terms of contract (Lets say Tenancy agreement or Sale). This contract will be binding on
both A and B.
LEGISLATION :
Legislation is a law or a set of laws that have been passed by Parliament. The word is also used
to describe the act of making a new law.
Legislation refers to the preparation and enactment of laws by a legislative body through its
lawmaking process. The legislative process includes evaluating, amending, and voting on
proposed laws and is concerned with the words used in the bill to communicate the values,
judgments, and purposes of the proposal. An idea becomes an item of legislative business when
it is written as a bill. A bill is a draft, or tentative version, of what might become part of the
written law. A bill that is enacted is called an act or statute.
Legislature: Legislature is a word that comes from the Latin language, meaning "those who
write the laws." A legislature is therefore a group of people who vote for new laws, for example
in a state or country.
Each person in the legislature is usually either elected or appointed. The constitution of that state
or country usually tells how a legislature is supposed to work.
In many countries, the legislature is called a Parliament, Congress, or National Assembly.
Sometimes there are two groups of members in the legislature. This is called a "bicameral"
legislature. A unicameral legislature has only one group of members.
The process of legislation
The general procedure of enactment of legislation is governed by the relevant constitution. When
a bill is first introduced by a sponsor it is referred to a committee. If the bill must go through
more than one committee, the first committee must refer it to the second. To accommodate
interested and affected groups and to eliminate technical defects a bill can be amended. If the
committee recommends that the bill be passed, the bill is placed on the agenda for action by the
full legislative body, or floor action. After a lengthy and complex procedure of deliberation and
debates, legislators vote on the final passage of the bill. In bicameral legislatures (legislatures
that are divided into to two bodies as Senate and National Assembly in the Pakistan government)
the bill must be passed through both houses in exactly the same form to become the law. When
the two houses cannot agree on a final form for the bill, a complex procedure of compromise is
attempted. Once the bill is approved by both houses and is put into final form, it must be signed
by the executive. An executive can refuse to sign a bill and can return it to the legislature with a
veto message explaining why. If the executive signs the bill, it is filed and becomes law.
PRECEDENT:
Literal meaning of Precedent is “Something that has happened before”, As defined in Black’s
Law Dictionary, "precedent" is a "rule of law established for the first time by a court for a
particular type of case and thereafter referred to in deciding similar cases( Black’s Law
Dictionary P 1059 5th edition 1979) Precedent can be defined as the legal principle or rule that is
created by a court to guide the judges when a similar set of facts come.
Types of Precedent
1. Original Original precedent is one which creates and applies a new rule.
2. Declaratory Declaratory precedent is the application of an already existing rule of law.
3. Binding Binding precedent is one which is required to be followed.
4. Persuasive Persuasive precedent is one which is not required to be followed e.g. a
decision by lower court, decision by courts of other countries.
Doctrine of binding precedent (vs persuasive precedent)
Pre-requisite for binding precedent Characteristics of persuasive precedent
The judicial decision that creates a
precedent must be based on a proposition of This is precedent based on question of fact
law or principle of law. (or point of fact).
 This proposition or principle of law must Any other statement of the law is irrelevant
have been used by the judge in reaching his to the decision and such statements are
decision in the particular case (called ‘ratio sometimes called ‘obiter dicta’, which
decidendi’). means ‘said by the way’.
The facts in the case must be materially the
same as in case that is used as precedent. The facts in case are not same but similar.
The precedent must be established by
higher (or sometimes) equal status court. The precedents established by lower court.

How a precedent may be altered or avoided?

Precedents can sometimes be altered or avoided by judges:
1. Overruled by higher court
2. Overruled by subsequent statute
3. The facts of case being distinguished by the judge.
4. Ratio decidendi is obscure (particularly, if different judges gave different reasons)
Advantages of Precedent
1. It saves time and expense as same arguments need not be repeated.
2. Judicial decisions are consistent in all cases of similar nature.
3. It incorporates flexibility in legal system as law is created whenever the need arises.
Disadvantages of Precedent
1. Large number of precedents makes it difficult to apply the rules in a case (esp. when
reported cases are with different outcome).
2. A precedent may be unjust and unfair, and it will continue to be binding.
3. This is undemocratic. The judiciary is not supposed to make law.

CLASSIFICATION OF PAKISTAN LAW

Pakistan law may be divided into a number of categories which have not been laid down by any
statute but have been devised as aids to understanding and exposition. Such categories are:
a) Civil law involves the problems that impact on peoples everyday life like debts, tenancy
issues, sales of goods etc. It also deals with disputes between individuals and
organizations, and it regulates relationships between them regarding their rights and
obligations.
Examples:
• property disputes (Transfer of property Act)
• work-related disputes (employment law)
• accusations of negligence (negligent behavior) (Tort)
• claims by consumers against manufacturers or service providers
• commercial disputes between business entities (commercial law)
• copyright disputes
• claims of defamation of character (Tort)
• disputes about an alleged breach of contract (Contract Act)
 b) Criminal Law: Criminal law establishes conduct that the state considers unacceptable,
and which it wishes to prevent. Individuals or organizations that act contrary to the
criminal law are threatened with punishment by the state, in the form of imprisonment or
fines.
Example:
• Pakistan Penal Code
• Anti-Money Laundering Act
• Prevention of Electronics Crimes Act
Many of the legal aspects of commercial and business law are aspects of the civil law, but the
criminal law may also apply. For example fraud and money laundering are criminal activities
that may occur in business.
It is also important to remember that the same action may be in breach of the criminal law and
also a tort in civil law. In such a situation, the action may give rise to:
➢ criminal prosecution by the State; and
➢ civil action by a private person, claiming a remedy such as damages.
Distinguish between Civil and Criminal law
Civil Law Criminal Law
1) Civil law cases affect only the injured 1) Criminal law cases, as a result of a
party and not the entire society. crime affect the whole community or
society.
2) Civil proceedings are initiated by the 2) Criminal proceedings are started by the
injured party. State and the victim has no say in the
matter.
3) Civil law regulates disputes over the 3) Criminal law punishes the guilty person
rights and obligation of persons or offender.
dealings with each other.
4) In Civil cases compensation awarded is 4) In criminal cases the fine recovered
given to the injured party. from the offender are retained by the
State.
5) In Civil cases breach is to be proved by 5) In criminal cases burden of proof to
the party claiming compensation. convict the accused lies on the State.
6) Civil proceedings assist individuals to 6) Criminal proceedings are taken top
recover property or enforce obligations suppress crimes and are largely
owed to them. controlled by State (Government)
7) Civil law aims to provide individuals 7) Criminal law does not in any way
compensation for his loss. benefit the victim from a conviction.
8) Under civil law action plaintiff cannot 8) Criminal law aims to deter wrongdoers
recover more than he has lost. and in principle correct and reform
offenders.

PROCESS OF LEGISLATION:
Governing Structure
Pakistan has a Federal Parliamentary System of government, with the President as the Head of
State and popularly elected Prime Minister as Head of Government. The Federal Legislature is a
bicameral Majlis-e-Shoora (Parliament), composed of the President, National Assembly (Lower
House) and Senate (Upper House).
President
• The President of Pakistan is Pakistan’s Head of State and is considered a symbol of unity.
 • President must be a Muslim.
• President is elected for a five year term by Senate, National Assembly and members of
Provincial Assemblies.
• President is eligible for re-election, but no individual may hold the office for more than
two consecutive terms.
• The majority party in the National Assembly usually nominates and elects a person as the
President.
• The President approves the statutes passed by the National Assembly and thereafter by
the Senate.
• He guides the Prime Minister in the matters of national importance.
Prime Minister

• The Prime Minister must be nominated and elected by a majority of members in the
National Assembly. That individual is then appointed as Prime Minister by the President.
• The Prime Minister is assisted by the Federal Cabinet. A council of ministers whose
members are appointed by the President on the advice of the Prime Minister.
• Federal Ministers are supported by secretaries and other government officers appointed in
each department for ensuring that policies formulated by the government are acted upon.
Senate

• The Senate is a permanent legislative body with equal representation from each of the
four Provinces with representatives elected by the members of their respective Provincial
Assemblies.
• The role of the Senate is to promote national cohesion and harmony and to alleviate fears
of the smaller provinces regarding domination by any one province because of its
majority, in the National Assembly.
• There are also representatives from Islamabad Capital Territory.
• Members are elected for a period of six years. Half the members retire after three years
and are replaced by the equal number of newly elected senators.
• Senate is a permanent institution. The election of all members is not held at the same time
and so it continues to be present on a permanent basis.
• The Chairman of the Senate under the constitution is next in line to act as President if the
office becomes vacant and until such time a new President can be formally elected.
• The members elect from themselves a chairman and a Deputy Chairman.
• All statutes passed by the National Assembly are also approved by the Senate with the
exception of money bills.
National Assembly

• The seats for the national assembly are determined on the basis of population of
provinces.
• The members on general seats are elected for a period of five years on the basis of direct
votes by the voters registered. There are also reserved seats for women and non-Muslims.
• The members elect from themselves Speaker, Deputy Speaker and Prime Minister.
• The most important function of the National Assembly is law making and formulation of
policies.
Process of Legislation
When National Assembly is in session a bill in respect of any matter may originate in either
house
1. Basic Scenario: If it is passed by the house in which it is originated then it is transmitted
to the other house and if the bill is also passed by the other house (without any
amendment) then it is presented to the President for assent.
2. With Amendment Scenario: If the bill is transmitted to a House and is passed with
amendments it shall be sent back to the House in which it originated and if that House
passes the Bill with those amendments it shall be presented to the President for assent.
3. Joint sitting of both Houses Scenario: If a bill transmitted to a House is rejected or not
passed within 90 days or a Bill sent to a House with amendments is not passed by that
House with such amendments, the bill at the request of the house in which it originated
shall be considered in the joint sitting of both the house i.e. National Assembly and the
Senate and if it is passed by the votes of the majority of the members present and voting
in the joint sitting it shall be presented to the President for assent.
4. Returned by President Scenario: When the President has returned a Bill to the
Parliament it shall be reconsidered by the Parliament in Joint Sitting and if it is again
passed with or without amendment by the Parliament by the votes of the majority of the
members of both Houses present and voting. It shall be presented to the President for
assent.
5. Assent by President: The President shall within 10 days assent to the bill or return it to
the Parliament for reconsideration (in case of a bill other than money bill) of any
provision or any amendment therein.
6. Lapse of bill: In case a bill is pending in the National Assembly or passed by it, is
pending in the Senate. The bill shall lapse on the dissolution of National Assembly. If the
bill is pending in the Senate not passed by the National Assembly shall not lapse on
dissolution of the National Assembly.
7. Money Bill: A money bill shall originate in the National Assembly and after it has been
passed by the Assembly it shall (without being transmitted to the Senate) be presented to
the President for assent.
8. The Ordinance: The President if deems necessary to take immediate action, he has
power to make an Ordinance when the National Assembly is not in session. Such
Ordinance promulgated thus, shall have the same force and effect as an Act of the
Parliament.
The Ordinance shall stand repealed after one hundred and twenty days if it is not presented or
passed:

• by the National Assembly in case of Money Bill and

• by both houses if it is other than Money Bill.
Delegated legislation
In Delegated Legislation power is given to an Executive (a minister or public body to make
subordinate or delegated legislation for specified purposes only) e.g. local authorities are given
statutory powers to make bye-laws which apply within a specific locality.
Control Over Delegated Legislation:
a) Parliamentary control: Parliament has some control over delegated legislation by
restriction and defining the power to make rules.
 b) Judicial control: Rules made under delegated power to move legislation may be
challenged in the courts on the grounds that it exceeds the prescribed limits or has been
made without due compliance. If the objection is valid the court declares it void.
Advantages of Delegated Legislation:
• Time saving for Parliament and it can focus on broad issues.
• Expert knowledge of public or professional body is utilized.
• Simpler to make, simpler to amend.
Disadvantages of Delegated Legislation:
• Undemocratic, as law being made by non-elected persons.
• Questions of accountability over so much power given to individuals.
• Large volume makes it difficult to manage and keep these up to date.

The chart below shows the process of legislation:

COURTS’ STRUCTURE IN PAKISTAN

JUDICIAL SYSTEM HIERARCHY
Civil Courts Criminal Courts
Supreme Court of Pakistan
High Courts (Lahore, Sindh, Peshawar, Baluchistan, Islamabad)
District Court Session Court |5
(Session Judges, Additional Session Judges &
(District Judges & Additional District Judges) Assistant Session Judges)
Civil Court / Family Court Magistrate Courts
(Civil Judges of 1st , 2nd and 3rd Class) (Magistrate of 1st , 2nd, and 3rd Class)
RELEVANT TERMINOLOGY

The area of authority for a court giving it power to hear and decide cases.
Jurisdiction This is determined according to constitution, court rules and legislation.
The court where a particular case shall be heard for the first time. This is
1st Instance also called court of original jurisdiction.
The right to request the higher court to reconsider the decision made by
Appeal lower court.
The facts of the case established by the parties contesting the case before the
Point of fact court.
The law applicable to the case pending adjudication in the court. These are
Point of law applied once the facts of the case are established by the court.
The procedure whereby a court higher up in the hierarchy sets aside a legal
Overruling ruling established in a previous case. Overruling operates retrospectively
with the effect that the principle of law overruled is held
never to have been law.
The procedure whereby as the result of an appeal, a superior court in the
Reversing hierarchy reverses the decision of a lower court in the same case.
The main device used by the judiciary where they want to avoid following
Distinguishing an otherwise apparently binding precedent. This is done because material
facts of the case differ significantly from the case cited.
Any offence, other than one punishable with death or transportation for life,
committed by any person under the age of fifteen years. The age is
Juveniles calculated at the date when he appears or brought before the court, may be
tried by a District Magistrate working under the Reformatory Schools
Act, 1897.

SUPREME COURT OF PAKISTAN

Supreme Court is the apex court in judicial hierarchy and all executive and
judicial authorities are bound to act in aid of the Supreme Court. The
Introduction Constitution assigns the Supreme Court a unique responsibility of
maintaining harmony and balance between the three pillars of the State,
namely, the Legislature, the Executive and the Judiciary.
Chief Justice of Pakistan and such number of other judges as may be
Structure determined by the Act of Parliament.
Chief Justice is appointed by President and other Judges are appointed by
Appointment President after consultation with the Chief Justice.
Criteria to be ▪ A person with 5 years’ experience as a Judge of High Court, or
Judge ▪ 15 years standing as an advocate of High Court
▪ Original: disputes between and among Provincial/Federal governments. It
may also exercise suo-moto power on human rights matter.
Jurisdiction ▪ Appellate: appeals from decisions by High Court and Federal Shariat
Court.
▪ Advisory: on questions of public importance, if President considers it
necessary.
HIGH COURT
Introduction A High Court is the principal court of its province.
Structure A Chief Justice and other Judges as may be determined by law.
▪ A person with 10 years’ experience as an advocate of High Court; or
Criteria to be ▪ 10 years’ service as civil servant including 3 years’ experience as a District
Judge Judge; or
▪ 10 years’ experience in judicial office.
 ▪ Original: in civil cases including as Company Courts
Jurisdiction ▪ Appellate: in civil and criminal cases, both.
▪ Supervisory: habeas corpus and prerogative orders (see below)
▪ Constitutional: on matters relating to Constitution
▪ Habeas Corpus: order for the release of a person wrongfully detained.
▪ Prerogative: authority over inferior courts, tribunals and other bodies;
➢ Mandamus: requires the lower court or other body to carry out a
Supervisory public duty.
Role ➢ Prohibition: prevents the lower court or tribunal from exceeding its
jurisdiction.
➢ Certiorari: ordering to send record relating to specific case for
review.

FEDERAL SHARIAT COURT

It consists of not more than 8 Muslim Judges, including:

▪ A Chief Justice (to be appointed by President);
Composition ▪ Not more than 3 Judges having at least 15 years’ experience in Islamic law
and research;
▪ Not more than 4 judges who are qualified to be judge of High Court
The judges hold office for a period of 3 years. However, the President may
Term extend such period.
The Court may, either of its own motion or on the petition of citizen of
Original Pakistan or the Federal / Provincial Government, examine and decide the
Jurisdiction question whether or not any law or provision of the law is repugnant to the
Injunctions of Islam.
Appellate The Court also has jurisdiction to hear appeals from the decision of criminal
Jurisdiction courts under any law relating to enforcement of Hudood laws.
If court decides that a law or the provision of any law is repugnant to the
Injunctions of Islam, it shall set out in its decision:
Process ▪ reasons for its holding that opinion and
▪ extent to which such law or provision is so repugnant
▪ specify the day on which decision shall take effect (unless appeal is filed)
A party aggrieved by the final decision of the court within 60 days of such
Appeal decision may prefer an appeal to the Supreme Court. An appeal on behalf of
the Federation or a Province may be preferred within 6 months of such
decision.

OTHER CIVIL COURTS

In each district of a province, Provincial Government appoints a District Judge

District and Additional District Judges as necessary.
Court Jurisdiction: Appeal from civil courts for suits valuing below Rs. 200,000
(Above Rs. 200,000 appeals are made to High Court).
Civil Judges function under the superintendence and control of District Judge
and all matters of civil nature originate in the courts of Judges. The District
Civil Judge may, however, withdraw any case from any Civil Judge and try it himself.
Courts Jurisdiction: 1st Class (unlimited value);
2nd Class (up to Rs. 50,000);
3rd Class (up to Rs. 5,000)
Family These courts deal with matrimonial cases. Most divorce cases are heard in the
Courts family court, family property cases and proceedings relating to children etc.

▪ The court having jurisdiction under the Companies Act, 2017 is the High
court having jurisdiction in the place at which the registered office of the
company is situated.
Company ▪ The Federal Government may empower any civil court to exercise all or any
Courts of the jurisdictions.
▪ In each High Court one or more benches known as the company bench are
constituted by the chief justice of High Court.
▪ All the matters coming before these courts are disposed of within 90 days
from the date of presentation.
Industrial Tribunals were established by the Industrial Relation Act, 2008. They
have a wide jurisdiction over most disputes between employee and employer.
Industrial ▪ Redress of individual grievances
Tribunal ▪ Complaints of unfair dismissal
▪ Pay claims
▪ Questions as to the terms of employment
▪ Appeals against health and safety notices.

OTHER CRIMINAL COURTS

Appointed by Provincial Governments in each division of the province.

Jurisdiction:
Sessions Judge & Additional Sessions Judge: All other offences not covered in
Sessions Judicial Magistrate Jurisdiction, but sentence of death is passed subject to the
Court confirmation of High Court. Cases of enforcement of law relating to Hudood
are also tried by sessions judges.
Assistant Sessions Judge: Offences with punishment not exceeding seven
years.
Magistrates’ Courts are the subordinate criminal courts. In addition, they also
exercise certain family law, administrative law and minor civil functions.
Jurisdiction (Offences with punishment of)
Magistrate st
1 Class: imprisonment up to 3 years, fine up to Rs. 15,000 and whipping.
Courts 2nd Class: imprisonment up to 1 year, fine up to Rs. 5,000.
3rd Class: imprisonment up to 1 month, fine up to Rs. 100.
Special Judicial: Provincial Government on recommendation of High Court
confer upon any person, powers of Judicial Magistrate.

ALTERNATE DISPUTE RESOLUTION

Alternate Dispute Resolution (ADR) is any type of procedure or combination of procedures

voluntarily used to resolve issues in controversy, other than court based adjudication.
 ▪ Negotiation: Participation is voluntary, no third party involved.
▪ Mediation: Third party facilitates but does not impose decision.
Types ▪ Arbitration: Third party facilitates and imposes the decision.
▪ Conciliation: Third party meets the parties separately to resolve
grievances.
▪ Speedy: faster than litigation in courts.
▪ Cheaper and flexible: Timing and procedures are simpler.
For ▪ Privacy: public and press have no right of hearing.
▪ Appeal: limited avenues of appeals lead to final conclusion.
▪ Service of expert: parties may choose expert of the relevant field.
▪ Appeal: limited appeal means erroneous decision cannot be easily
overturned.
Against ▪ Expensive: in some cases, the court proceedings may be cheaper.
▪ Applicability of law: law may not be applied by arbitrators as it is applied
by courts.
▪ Delay: Difficult to manage schedules when there are multiple arbitrators.
Islamic arbitration is known as Takhim.
Qualification to be an arbitrator
Takhim ▪ Must be a Muslim
▪ Male
▪ Knowledge in Sharia and
▪ Free from any defects that could affect his ability to arbitrate.