N E W S L E T T E R. Director General s Message

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1 ISSUE # 01 SEP 2015 N E W S L E T T E R Future Events: --SARCO Promotional Seminar in Male, Maldives in September th Governing Board Meeting on 19th and 20th September 2015 in Lahore, Pakistan. --SARCO Promotional Seminar in Karachi, Pakistan in November SAARC Charter Day celebration in Islamabad, Pakistan in December EDITOR-in-CHIEF Malik Imran Ahmad Deputy Director SAARC Arbitration Council RESEARCH ASSISTANT SAARC Arbitration Counci Faazaan Mirza SAARC Arbitration Council info@sarco.org.pk www. sarco.org.pk Director General s Message It is my pleasure to send this message to the First Newsletter of the SAARC Arbitration Council (SARCO), which is a specialized body of South Asian Association for Regional Cooperation (SAARC). To accelerate economic growth, social progress and cultural development in the region and to contribute towards mutual trust, are some of the main objectives of SAARC. Having realized that the establishment of a dispute resolution forum is one of the best mechanism of achieving these objectives the Inter-Governmental Expert Group (IGEG) of SAARC recommended the signing of the Agreement for establishment of SAARC Arbitration Council by the Member States on 13th November 2005 at the 13th Summit held in Dhaka, Bangladesh. As stated in that Agreement, this regional forum for settlement of commercial disputes by conciliation and arbitration is established in order to create favorable conditions to foster greater investment by investors of one Member State in the territory of the others and to improve bilateral trade between Member States of the region. Being the co-ordinating agency for ADR in the SAARC region, SARCO s vision is to be the most sought Arbitration Forum in the region, by becoming a center of excellence for Alternate Dispute Resolution outside the courts, by providing fair, inexpensive, expeditious and high quality arbitral and conciliatory services in resolving trade, commercial, investment and dispute of similar nature among business enterprises and the citizens of the SAARC Countries. We are positive that our services will create the required confidence among the business community in the region as an independent institution not subject to the influence of any member state. Although the SARCO Secretariat is in Islamabad, we are prepared to conduct arbitration in any of the Member States in the region. Our Rules of Procedure are based on the UNCITRAL Model Law and the Awards given are deemed to be Foreign Awards. In the recently signed bi-and-multilateral agreements among the SAARC countries, it has been agreed to have referred their disputes to SARCO for settlement, by incorporating its Model Arbitration Clause. I also like to state that the professional staff at SARCO is fully committed to its cause and would be ready to work closely with you. Thusantha Wijemanna

2 SARCO seminar at Lahore Chamber of Commerce, Lahore This Issue Contains 1. Director General s Message 2. SARCO seminar at Lahore Chamber of Commerce, Lahore 3. SARCO officials meet with key Chambers of Commerce and Industry in Karachi 4. SARCO officials make an introductory visit to commercial capitals of India. 5. International Arbitration In Commercial Matters; Making A Case For The SAARC Arbitration Council As The Future For The South Asian Region. 6. SARCO organizes seminars in Delhi and Mumbai 7. Director General SARCO makes a presentation at the 8th Intl. Research Conference at KDU, Sri Lanka SAARC Arbitration Council (SARCO) organized its first seminar in collaboration with Lahore SARCO seminar at LCCI, Lahore, Pakistan Chamber of Commerce & Industries (LCCI), on the 9th April 2015 at the LCCI Auditorium, Lahore. The topic of the seminar was Arbitration & Conciliation Alternate means for settlement of commercial disputes in SAARC Countries. The seminar was attended by the members and office bearers of the LCCI, SAARC Chamber of Commerce & Industries (SCCI) Lahore; the Lahore Tax Bar Association; SAARC Chamber Women Entrepreneurs Council; Pakistan Mediators Association; Lahore High Court Bar Association; All Pakistan Textile Mills Association (APTMA); Association of Chartered Certified Accountants and other professionals. Director General South Asia & SAARC, Ministry of Foreign Affairs, Pakistan Mr. Nafees Zakaria, graced the occasion as the Chief Guest. Director General SARCO, Mr. Thusantha Wijemanna and Deputy Director SARCO, Mr. Malik Imran Ahmad explained the background of SARCO and its rules of procedures and how to adopt them in doing business. They further urged the participants to avail the services of the SAARC Arbitration Council to settle their disputes out of the court with their counter parts in the SAARC member states. They emphasized the fact that with the increase of trade in the region, the possibilities of trade disputes will arise and hence the role of SARCO will become increasingly important.

3 SARCO officials meet with key Chambers of Commerce and Industry in Karachi The Director General, Deputy Director and Legal Research Assistant from SARCO visited Karachi from 16th to 18th of March The purpose of the visit was to introduce SARCO among key stakeholders in Karachi and also to prepare for the seminar to be conducted in November this year. The delegation held productive meetings with Sindh High Court Bar Association, Overseas Investor s Chamber of Commerce & Industries (OICCI), National Centre for Dispute Resolution (NCDR), All Pakistan Shipping Association (APSA), Karachi Gem & Jewelers Development Co; Karachi Chamber of Commerce & Industry (KCCI); Federation of Pakistan Chamber of Commerce & Industry (FPCCI) and Karachi Women Chamber of Commerce & Industry. During the meetings, common grounds for a collaborated effort to increase cross border trade were identified and the role of SARCO in regional trade was discussed in length with the business community. SARCO s independence as an institute, its competitive fee structure, the diversity in its panel of arbitrators and the flexibility in the choice of venue for arbitration were identified as vital differences between SARCO and other arbitration centers in the region. The possibility of signing MoUs with key stakeholders was discussed at the meeting. SARCO delegation at OICCI, Karachi, Pakistan

4 SARCO officials make an introductory visit to commercial capitals of India A delegation from SARCO headed by DG visited Bombay and Delhi, in India, from 21st to 24th of April They met with key officials of following organizations; o All India Association of Industries (AIAI) o Cotton Association of India (CAI) o Bombay Bar Association (BBA) o Indian Merchants Chamber (IMC) o Bombay Chamber of Commerce and Industry (BCCI) o Indian National Shipowners Association (INSA) o Maharashtra Chamber of Commerce, Industry & Agriculture (MACCIA) o Indian Council of Arbitration (ICA) o Federation of India Chamber of Commerce and Industry, New Delhi o Confederation of All India Traders (CAIT) o Associated Chambers of Commerce and Industry of India (ASSOCHAM) o International Center for Alternate Dispute Resolution Although most of institutions had their own Arbitration mechanism which arbitrated both domestic and international disputes. They were prepared to work with SARCO as they understood the potential of a Regional Arbitration Centre. It was highlighted that both SARCO and the local arbitration institutions could facilitate the work of each other without competing with each other in India or in the SAARC region. Key achievements of the visit to India: o All parties wanted to sign a MOU with SARCO in order to collaborate in each other activities. o All the Associations involved in arbitration and ADR was interested in organizing seminar/ workshop on ADR with SARCO in Mumbai to its members and other stakeholders of ADR. o Associations with infrastructure to conduct arbitrations were willing to enter into a written agreement to allow SARCO to use their services for fees. o All parties agreed to invite SARCO for their annual sessions and to Global or Regional Forums organized by them. o Parties with their own new letters agreed to give publicity to SARCO by publishing our articles in them. o All parties agreed to hold the first seminar in Mumbai in August 2015, and the date to be finalized through consultation. The India Center of Arbitration, being a government sponsored ADR promoting institute collaborated with SARCO in conducting a seminar in August to promote ADR. SARCO An introduction SAARC Arbitration Council, Islamabad (SARCO) is one of the Specialized Bodies of South Asian Association for Regional Co-operation (SAARC), comprising the Member States, Islamic Republic of Afghanistan, People s Republic of Bangladesh, The Kingdom of Bhutan, Republic of India, Republic of Maldives, Democratic Republic of Nepal, Islamic Republic of Pakistan and Democratic Socialist Republic of Sri Lanka. It is an inter-governmental body mandated to provide a regional forum for fair and efficient settlement of commercial, industrial, trade, banking, investment and such other disputes through conciliation and arbitration, fostering greater investment and trade activities between the member states. Types of disputes that can be referred to SARCO SARCO is mandated to administer arbitration or conciliation in any dispute that is referred to it. SARCO derive its jurisdiction by recommending the following model arbitration clause to be included in the agreement between the parties. SAARC Model Arbitration Clause Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the SAARC Arbitration Rules as at present in force.

5 International Arbitration in Commercial Matters; Making a Case for the SAARC Arbitration Council As The Future For the South Asian Region. In an age where legal redress is overestimated ( frivolous litigation as described by some legal commentators), arbitration is seen by many as the best alternative to judicial dispute resolution. Arbitration has been used for centuries but the most recent bygone decades have seen an exponential rise in the use of arbitration in international and domestic spheres. This belief in arbitration is, indeed, not unfounded. To understand why arbitration has such allure, one must first understand the core principles that arbitration functions on and the aims it purports to achieve. Arbitration, like all other forms of ADR, is based primarily on the consensus of parties. Put simply, only if the parties consent (explicitly and unequivocally) to solve their dispute through arbitration, will an award be enforceable. The implication therefore, is the one concurred on by a majority of legal analysts; arbitration has a number of advantages that make it, in certain cases, a much more viable method of dispute resolution than the contemporary methods of judicial adjudication. The process is swifter, more cost-effective, the parties can have more privacy especially if they are businesses wishing to protect their privacy (can be contrasted strongly with judicial process; a chief example of this being a media trial). Furthermore, arbitrators are chosen by the parties themselves, ensuring a confidence of the parties in the arbitrators to give a fair, impartial decision. The expertise of the arbitrators is usually relative to the subject area of the dispute; this is an aspect that can quite clearly be distinguished from traditional judicial process, a specific case-inpoint being jury trials in common law systems, where the jury usually lacks legal knowledge and only decides on the factual elements of a case.arbitrators are praised and undoubtedly chosen specifically because of their neutrality. This is something not all judicial systems can claim (the election of US Supreme Court judges is said to have a somewhat political agenda). The relevance of international arbitration lies in commercial matters, more specifically in cross border trade situations. The SAARC Arbitration Council is a separate, impartial body set up by the inter-governmental South Asian organization known as SAARC. SAARC was founded in 1985 and is primarily governed by the SAARC Charter. The Arbitration Council, having formally begun in 2010, is still in its formative years and can, from an astutely objective point of view, be characterized as a fledgling institution for international arbitration. Its rules of arbitration, both substantive and procedural, are derived from the UNCITRAL Arbitration Rules and take inspiration from the domestic arbitrational laws of its Member States, in particular India. This thus, begs the question as to why the SAARC Arbitration Council, given its lack of formative years (till present day today, no case has as of yet been referred to it by either it s Member States or by individuals of its Member States) and the greater experience of other local and international arbitral institutions, could prospectively be the institution to turn to for all cross border trade disputes for the SAARC region. The answer to the aforementioned query lies in the nature of international commercial arbitration, of which international trade forms a formidable chunk (not completely though) and the weaknesses in the individual local arbitration systems of the Member States. To begin with the first, typically all Member States have their own rules on trade. Problems arise when cross-border trade produces disputes. More and more businesses are at risk of being sued in foreign jurisdictions where their commercial rights and trade obligations become subject to unfamiliar laws and procedural technicalities in alien cultural backgrounds. Avoiding such a situation requires careful thought and attention as to the question of when, how and where disputes are amicably settled. In international trade, this

6 Continued International Arbitration in Commercial Matters; Making a Case for the SAARC Arbitration Council As The Future For the South Asian Region. is of utmost importance as compared to purely national transactions. The SAARC Arbitration Council is a regional institutionalized arbitration center that is funded by the governments of the Member States, has extensive networking capability and makes use of expert arbitrators in a diverse range of commercial disputes. With its regional as opposed to local character, it could potentially act as the singular, authoritative, legitimate, harmonizing body of arbitration that has been lacking in South Asia. Secondly, SARCO s role can be elevated when compared with purely local bodies. The local arbitrational systems of all Member States are liable to criticism. Pakistan and Bangladesh have enacted laws that run the risk of being outdated and the development of arbitration as an alternative to judicial process is threatened by a lack of effective legal framework, especially in investment law. This criticism can be extended to Nepal and Sri Lanka and other developing nations where investment law plays a major role as a source of economic development.it is vital to note that Pakistan is in the process of repealing, almost in its entirety, its former Act (The Arbitration Act 1940 Ordinance, 2007 (XXXVIII of 2007, the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards), Ordinance, 2007 (LVIII of 2007), and the Arbitration (International Investment Disputes), are hereby repealed.). The draft bill mirrors closely the Indian Arbitration and Conciliation Act (Mentioned below). An additional problem that can be attributed to certain arbitral system is the impact of court intervention in the preaward phase. The courts are, guided under national law, to intervene should a party wish to back out from initially agreeing to put their matter to an arbitrary tribunal. This defeats the purpose of party autonomy in relation to the procedural concreteness of arbitral proceedings. A further problem, relating to the New York Convention, is that the Maldives does not have a national legal regime on arbitration and has not, as of yet, ratified the convention. India has, with little doubt, the most developed rules on arbitration. However, there are certain fundamental variations the repealed Arbitration and Conciliation Act (1996) employs that deviate from the UNCITRAL Model Rules. To cite as an example, the law on the number of arbitrators permissible only as an odd number has provoked some curious, and rather baffling, case law. Additionally, investment law is limited in scope due to India s consistent refusal to ratify the ICSID and this has brought India into numerous disputes with other investing states. SARCO has the potential to cure the ailments attributed to national arbitration regimes. SARCO aims to provide expert arbitration services in a diverse range of commercial matters including international investment law and has greater flexibility; despite being an institutionalized arbitration council, SARCO provides for arbitration services to be provided in whatever South Asian region the parties deem best. This is characteristic of ad-hoc tribunals. This elucidates the procedural aspect of the arbitration and saves the parties unnecessary expense and resource. SARCO aims to combat problems regarding intervention by courts by bringing in a harmonized regime that, if abided to by the Member States would provide remedies to unnecessary and unwanted court intervention. Conclusively, SARCO s role needs to be looked at from a broader perspective. Its aims are not to simply provide remedial solutions in arbitrational settings, but also to promote economic growth by fostering cross-border trade and guaranteeing investors and entrepreneurs the security of arbitrational redress should a dispute arise. More specifically, SARCO has been provided a role within the SAARC agreements. The SAARC Framework Agreement for Energy Cooperation (Electricity), for example, proposes that should a dispute arise, SARCO could be a viable forum for the settlement of a dispute between the Member States. It is realistic to predict that SARCO s role within the South Asian region will be a prosperous one in light of Asia s growing economic prowess and the explosion of the number parties choosing arbitration over other forms of adjudication. By Imad Anwar Intern at SARCO

7 SARCO organizes seminars in Delhi and Mumbai The SAARC countries can collectively work towards making the region a hub for international commercial arbitration, an Indian official said at a seminar organized by SAARC Arbitration Council (SARCO) in association with the Federation of Indian Chambers of Commerce and Industry ( FICCI) and Indian Council of Arbitration (ICA) at Delhi. Mr. Suresh Chandra, joint secretary, law and justice, India, also noted that institutionalizing of arbitration in SAARC is the key to make arbitration a success story. He emphasized that stability, certainty and predictability in the arbitration system in this region can be introduced through adoption of best practices in the world. Mrs. L. Savithri, Director at the SAARC secretariat in Kathmandu, said that as the SAARC region is in fast tracks movement in getting towards South Asian Economic Union, SARCO seminar at FICCI, Delhi, India free trade area in both goods and services will be the first building block. Arbitration is the best dispute resolution mechanism for businesses of the SAARC region since majority of the countries are members of the New York Convention, 1958, and hence there is easy enforceability of awards, said ICA advisor and FICCI s assistant secretary general Arun Chawla. SARCO held its regional seminars in Mumbai and Delhi on the 21st and 22nd August, respectively. The seminars were attended by practicing lawyers, arbitrators, retired judges, in-house counsels, public sector officials, industry service providers and members of business associations. The participants used the opportunity to clarify role of SARCO during interactive Q&A sessions.

8 Director General SARCO makes a presentation at the 8th International Research Conference at KDU, Sri Lanka International Research Conference organized by the Kotelawala Defence University (KDU IRC ) was commenced with the participation of scholars, foreign and local dignitaries at the KDU premises on the theme of Inculcating Professionalism for National Development on 27 August Delivering the welcome address at the inaugural session Vice Chancellor, Major General Milinda Peiris mentioned that, conference aims to provide a platform for disseminating research findings, exchanging contemporary knowledge and building partnerships and collaborations to advance research and thereby contribute to the national development. Hon. Minister of Justice Dr. Wijedasa Rajapaksha participated as the Chief Guest and delivered the Keynote Speech at the inaugural session. During his address he emphasized the importance of inculcating professionalism for national development and amply highlighted the historical evidences in this context. Further, he expressed that at present every branch or field of professionalism is now inter-winded with the global setup as globe as now shrunk in to a global village. Addressing the law plenary session, DG SARCO emphasized on the importance of professionalism that a lawyer should develop in conducting and arguing a dispute at an arbitration tribunal. He said that both the parties of the dispute should act and behave in a manner with full professionalism if the arbitration is to be a success in the region. He also presided the technical session held on commercial law and investment at the conference SAARC Arbitration Council Staff at Secretariat, Islamabad, Pakistan