Arbitration Act, 1940

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s 
 
 
THE ARBITRATION ACT, 1940 
 
 
 
      CONTENTS 
1.  Short title, extent and commencement. 
2.  Definitions. 
3.  Provisions implied in arbitration agreement.  
4.  Agreement that arbitrators be appointed by third party. 
5.  Authority of appointed arbitrator or umpire irrevocable except by leave of Court. 
6.  Arbitration agreement not to be discharged by death of party thereto. 
7.  Provisions in case of insolvency.  
8.  Power of Court to appoint arbitrator or umpire. 
9.  Power to party to appoint new arbitrator or, in certain cases, a sole arbitrator. 
10.  Provisions as to appointment of three or more arbitrators.  
11.  Power to Court to remove arbitrators or umpire in certain circumstances.  
12.  Power of Court where arbitrator is removed or his authority revoked.  
13.  Powers of arbitrator.  
14.  Award to be signed and filed.  
15.  Power of Court to modify award. 
16.  Power to remit award.  
17.  Judgment in terms of award.  
18.  Power of Court to pass interim orders.  
 
 

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19.  Power to supersede arbitration where award becomes void or is set aside.  
20.  Application to file in Court arbitration agreement.  
21.  Parties to suit may apply for order of reference. 
22.  Appointment of arbitrator. 
23.  Order of reference.  
24.  Reference to arbitration by some of the parties.  
25.  Provisions applicable to arbitrations under this Chapter.  
26.  Application of Chapter. 
26-A.   Award to set out reasons  
27.  Power of arbitrators to make an interim award. 
28.  Power to Court only to enlarge time for making award  
29.  Interest on awards.  
30.  Grounds for setting aside award.  
31.  Jurisdiction.  
32.  Bar to suit contesting arbitration agreement or award.  
33.  Arbitration agreement or award to be contested by application.  
34.  Power to stay legal proceedings where there is an arbitration agreement.  
35.  Effect of legal proceedings on arbitration. 
36.       Power of Court, to order that a provision making an award a condition precedent to  
an action shall not apply to a particular difference.  
37.  Limitations. 
38.  Disputes as to arbitrator’s remuneration or costs.  
39.  Appealable orders. 
40.  Small Cause Court not to have jurisdictions over arbitrations save arbitrations in suit  
before it.  
41.  Procedure and powers of Court.  
42.  Service of notice by party or arbitrator.  
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43.  Power of Court to issue processes for appearance before arbitrator . 
44.  Power of High Court to make rules.  
45.  Government to be bound. 
46.  Application of Act to statutory arbitrations.  
47.  Act to apply to all arbitrations. 
48.  Saving for pending references. 
 49.  [Omitted] 
THE FIRST SCHEDULE 
Implied conditions of arbitration agreements 
THE SECOND SCHEDULE 
Power of Court 
THE THIRD SCHEDULE 
[Repealed.] 
THE FOURTH SCHEDULE 
[Repealed.] 
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THE ARBITRATION ACT, 1940. 
 
1ACT NO. X OF 1940 
[11 March, 1940] 
 
An Act to consolidate and amend the law relating to Arbitration. 
 
WHEREAS it  is expedient to consolidate and amend the law relating to arbitration in 
2[Pakistan]; 
 
It is hereby enacted as follows :— 
CHAPTER I 
 
INTRODUCTORY 
1. Short title, extent and  commencement.—(1) This Act may be called the Arbitration Act, 
1940. 
3[(2) It extends to the whole of Pakistan]. 
(3) It shall come into force on the 1st day of July, 1940. 
2. Definitions. In this Act, unless there is anything repugnant in the subject or context— 
(a) “arbitration agreement” means a written agreement to submit present or future 
differences to arbitration, whether an arbitrator is named therein or not; 
(b) “award” means an arbitration award; 
(c) “Court” means a Civil Court having jurisdiction to decide the question 
forming the subject -matter of the reference if the same had been the 
subject-matter of a suit, but does not, except for the purpose of arbitration 
proceedings under section 21, include a Small Cause Court; 
(d) “legal representative” means a person who in law represents the estate of a 
deceased person, and includes any person who intermeddles with the estate of 
the deceased, and, where a party acts in representative character, the person on 
whom the estate devolves on the death of the party so acting; 
(e) “reference” means a reference to arbitration. 
 
 
 
 
1 For statement of Objects and Reasons, see Gazette of India, 1939, Pt. V, p. 142, ; for the Report of Select Committee, see ibid., 1940, Pt. V, p. 35. 
This Act has been applied to Baluchistan, see Notification No. 168- N., dated the 17th October, 1940, Gazette of India, 1940, Pt. I, p. 1478; 
Phulera in the Excluded Area of Upper Tanawal to the extent the Act is applicable in the N. W. F. P., subject to certain modi fications- see N.W.F..P 
(Upper Tananwal) (Excluded Area) Laws Regulation, 1950;   and also extended to the Excluded Area of Upper Tanawal other than Phulera by the 
aforesaid Regulation, and declared to be in force in that area with effect from the 1st June, 1951, see N.W.F.P. Gazette, Ext., dated the 1st June, 1951. 
It has been extended to the Leased Areas of Baluchistan by the Leased Areas (Laws) Order, 1950 (G. G. O. 3 of 1950). 
2 Subs. by the Central Laws (Statue Reform) Ordinance, 1960 (21 of 1960), s. 3 and 2nd Sch (with eff ect from the 14th October, 1955), for “the 
Provinces and the Capital of the Federation” which had been subs., by A. O., 1949, for British India”. 
3 Subs. by Ordinance 21 of 1960, s. 3 and Sch (with effect from the 14th October, 1955), for the original sub-section (2) as amended by A. O, 1949. 
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CHAPTER II 
ARBITRATION WITHOUT INTERVENTION OF A COURT 
3. Provisions implied in arbitration agreement . An arbitration agreement, unless a 
different intention is expressed therein, shall be deemed to include the provisi ons set out in the First 
Schedule in so far as they are applicable to the reference. 
4. Agreement that arbitrators be appointed by third party . The parties to an arbitration 
agreement may agree that any reference thereunder shall be to an arbitrator or arb itrators to be 
appointed by a person designated in the agreement either by name or as the holder for the time being 
of any office or appointment. 
5. Authority of appointed arbitrator or umpire irrevocable except by leave of 
Court. The authority of an appointed arbitrator or umpire shall not a revocable except with the leave 
of the Court unless a contrary intention is expressed in the arbitration agreement. 
6. Arbitration agreement not to be discharged by death of party thereto .—(1) An 
arbitration agreement shall not be discharged by the death of any party thereto, either as respects the 
deceased or any other party, but shall in such event be enforceable by or against the legal 
representative of the deceased. 
(2) The authority of an arbitrator shall not be re voked by the death of any party by whom he 
was appointed. 
(3) Nothing in this section shall affect the operation of any law by virtue of which any right 
of action is extinguished by the death of a person. 
7. Provisions in case of insolvency .—(1) Where it i s provided by a term in a contract to 
which an insolvent is a party that any differences arising thereout or in connection therewith shall be 
referred to arbitration, the said term shall, if the receiver adopts the contract, be enforceable by or 
against him so far as it relates to any such differences. 
(2) Where a person who has been adjudged an insolvent had, before the commencement of 
the insolvency proceedings, become a party to an arbitration agreement, and any matter to which the 
agreement applies is r equired to be determined in connection with, or for the purposes of the 
insolvency proceedings, then, if the case is one to which sub -section (1) does not apply, any other 
party to the agreement or the receiver may apply to the Court having jurisdiction in  the insolvency 
proceedings for an order directing that the matter in question shall be referred to arbitration in 
accordance with the agreement, and the Court may, if it is of opinion that, having regard to all the 
circumstances of the case, the matter ou ght to be determined by arbitration, make an order 
accordingly. 
(3) In this section the expression “receiver” includes an Official Assignee. 
8. Power of Court to appoint arbitrator or umpire.—(1) In any of the following cases:— 
(a) where an arbitration agr eement provides that the reference shall be to one or 
more arbitrators to be appointed by consent of the parties, and all the parties 
do not, after differences have arisen, concur in the appointment or 
appointments; or 
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(b) if any appointed arbitrator or um pire neglects or refuses to act, or is incapable 
of acting, or dies, and the arbitration agreement does not show that it was 
intended that the vacancy should not be supplied, and the parties or the 
arbitrators, as the case may be, do not supply the vacancy; or 
(c) where the parties or the arbitrators are required to appoint an umpire and do 
not appoint him; 
any party may serve the other parties or the arbitrators, as the case may be, with a written notice to 
concur in the appointment or appointments or in supplying the vacancy. 
(2) If the appointment is not made within fifteen clear days after the service of the said notice, 
the Court may, on the application of the party who gave  the notice and after giving the other parties 
an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who 
shall have like power to act in the reference and to make an award as if he or they had been 
appointed by consent of all parties. 
9. Power to party to appoint new arbitrator or, in certa in cases, a sole arbitrator. Where 
an arbitrations agreement provides that a reference shall be to two arbitrators, one to be appointed by 
each party, then, unless a different intention is expressed in the agreement,— 
(a) if either of the appointed arbitra tors, neglects or refuses to act, or is incapable 
of acting or dies, the party who appointed him may appoint a new arbitrator in 
his place; 
(b) if one party fails to appoint an arbitrator, either originally or by way of 
substitution as aforesaid, for fifte en clear days after the service by the other 
party of a notice in writing to make the appointment, such other party having 
appointed his arbitrator before giving the notice, the party who has appointed 
an arbitrator may appoint that arbitrator to act as so le arbitrator in the 
reference, and his award shall be binding on both parties as if he had been 
appointed by consent: 
Provided that the Court may set aside any appointment as  sole arbitrator made under clause 
(b) and either, on sufficient cause being show n, allow further time to the defaulting party to appoint 
an arbitrator or pass such other order as it thinks fit. 
Explanation.— The fact that an arbitrator or umpire, after a request by either party to enter on 
and proceed with the reference, does not with in one month comply with the request may constitute a 
neglect or refusal to act within the meaning of section 8 and this section. 
10. Provisions as to appointment of three or more arbitrators .—(1) Where an arbitration 
agreement provides that a reference sh all be to three arbitrators, one to be appointed by each party 
and the third by the two appointed arbitrators, the agreement shall have effect as if it provided for the 
appointment of an umpire, and not for the appointment of a third arbitrator, by the two  arbitrators 
appointed by the parties. 
(2) Where an arbitration agreement provides that a reference shall be to three arbitrators to be 
appointed otherwise than as mentioned in sub -section (1), the award of the majority shall, unless the 
arbitration agreement otherwise provides, prevail. 
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(3) Where an arbitration agreement provides for the appointment of more arbitrators than 
three, the award of the majority, or if the arbitrators are equally divided in their opinions, the award 
of the umpire shall, unless the arbitration agreement otherwise provides, prevail. 
11. Power to Court to remove arbitrators or umpire in certain circumstances .—(1) The 
Court may, on the application of any party to a reference, remove an arbitrator or umpire who fails to 
use all reasonable dispatch in entering on and proceeding with the reference and making an award. 
(2) The Court may remove an arbitrator or umpire who has misconduct ed himself or the 
proceedings. 
(3) Where an arbitrator or umpire is removed under this section, he shall  not be entitled to 
receive any remuneration in respect of his services. 
(4) For the purposes of this section the expression “proceeding with the reference” includes, 
in a case where reference to the umpire becomes necessary, giving notice of that fact to the parties 
and to the umpire. 
12. Power of Court where arbitrator is removed or his authority revoked .—(1) Where 
the Court removes an umpire who has not entered on the reference or one or more arbitrators (not 
being all the arbitrators), the Court may, on  the application of any party to the arbitration agreement, 
appoint persons to fill the vacancies. 
(2) Where the authority of an arbitrator or arbitrators or an umpire is revoked by leave of the 
Court, or where the Court removes an umpire who has entered o n the reference or a sole arbitrator or 
all the arbitrators, the Court may, on the application of any party to the arbitration agreement, 
either— 
(a)  appoint a person to act as sole arbitrator in the place of the person or persons 
displaced, or 
(b)  order that the arbitration agreement shall cease to have effect with respect to 
the difference referred. 
(3) A person appointed under this section as an arbitrator or umpire shall have the like power 
to act in the reference and to make an award as if he had bee n appointed in accordance with the 
arbitration agreement. 
13. Powers of arbitrator . The arbitrators or umpire shall, unless a different intention is 
expressed in the agreement, have power to— 
(a) administer oath to the parties and witnesses appearing; 
(b) state a special case for the opinion of the Court on any question of law 
involved, or state the award, wholly or in part, in the form of a special case of 
such question for the opinion of the Court; 
(c) make the award conditional or in the alternative; 
(d) correct in an award any clerical mistake or error arising from any accidental 
slip or omission; 
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(e) administer to any party to the arbitration such interrogatories as may, in the 
opinion of the arbitrators or umpire, be necessary. 
14. Award to be signed a nd filed .—(1) When the arbitrators or umpire have made their 
award, they shall sign it and shall give notice in writing to the parties of the making and signing 
thereof and of the amount of fees and charges payable in respect of the arbitration and award. 
(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or 
any person claiming under such party or if so directed by the Court and upon payment of the fees and 
charges due in respect of the arbitration and award and of  the costs and charges of filing the award, 
cause the award or signed copy of it, together with any depositions and documents which may have 
been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to 
the parties of the filing of the award. 
 
 (3) Where the arbitrators or umpire state a special case under clause (b) of section 13, the 
Court, after giving notice to the parties and hearing them, shall pronounce its opinion thereon and 
such opinion shall be added to, and shall form part of, the award. 
15. Power of Court to modify award . The Court may by order modify or correct an 
award— 
(a) Where it appears that a part of the award is upon a matter not referred to 
arbitration and such part can be separated from the other  part and does not 
affect the decision on the matter referred; or 
(b) Where the award is imperfect in form, or contains any obvious error which can 
be amended without effecting such decision; or 
(c) Where the award contains clerical mistake or an error ari sing from an 
accidental slip or omission. 
16. Power to remit award .—(1) The Court may from time to time remit the award or any 
matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it 
thinks fit— 
 
(a) where the award has left undetermined any of the matters referred to 
arbitration, or where it determines any matter not referred to arbitration and 
such matter cannot be separated without affecting the determination of the 
matters referred; or 
(b) where the award is so indefinite as to be incapable of execution ; or 
(c) where an objection to the legality of the award is apparent upon the face of it. 
(2) Where an award is remitted under sub -section (1) the Court shall fix the time within 
which the arbitrator or umpire shall submit his decision to the Court: 
Provided that any time so fixed may be extended by subsequent order of the Court. 
(3) An award remitted under sub-section (1) shall become void on the failure of the arbitrator 
or umpire to reconsider it and submit his decision within the time fixed. 
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17. Judgment in terms of award . Where the Court sees no cause to remit the award or any 
of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, 
after the time for making an application to set aside the award has expired, or such application 
having been made, after refusing it, proceed to pronounce judgment according to the award, and 
upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decr ee 
except on the ground that it is in excess of, or not otherwise in accordance with, the award. 
18. Power of Court to pass interim orders .— (1) Notwithstanding anything contained in 
section 17, at anytime after the filing of the award, whether notice of t he filing has been served or 
not, upon being satisfied by affidavit or otherwise that a party has taken or is about to take steps to 
defeat, delay or obstruct the execution of any decree that may be passed upon the award, or that 
speedy execution of the aw ard is just and necessary, the Court may pass such interim orders as it 
deems necessary. 
(2) Any person against whom such interim orders have been passed may show cause against 
such orders, and the Court, after hearing the parties, may pass such further or ders as it deems 
necessary and just. 
19. Power to supersede arbitration where award becomes void or is set aside . Where an 
award has become void under sub -section (3) of section 16 or has been set aside, the Court may by 
order supersede the reference and s hall thereupon order that the arbitration agreement shall cease to 
have effect with respect to the difference referred. 
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CHAPTER III 
ARBITRATION WITH INTERVENTION OF A COURT WHERE THERE IS NO SUIT 
PENDING. 
20. Application to file in Court arbi tration agreement .—(1) Where any persons have 
entered into an arbitration agreement before the institution of any suit with respect to the subject -
matter of the agreement or any part of it, and where a difference has arisen to which the agreement 
applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having 
jurisdiction in the matter to which the agreement relates, that the agreement be filed in the Court. 
(2) The application shall be in writing and shall be numbered and registered as a suit between 
one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the 
remainder as defendant or defendants, if the application has been presented by all the parties, or, if 
otherwise, between the applicant as plaintiff and the other parties as defendants. 
(3) On such application being made, the Court shall direct notice thereof to be given to all 
parties to the agreement other than the applicants, requiring them to show cause within the time 
specified in the notice why the agreement should not be filed. 
(4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and 
shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement 
or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the 
Court. 
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(5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the 
other provisions of this Act so far as they can be made applicable. 
___________ 
CHAPTER IV 
ARBITRATION IN SUITS 
21. Parties to suit may apply for order or reference . Where in any suit all the parties 
interested agree that any matter in difference between them in the suit shall be referred to arbitration, 
they may at any time before judgment is pronounced apply in writing to the Court for an order or 
reference. 
22. Appointment of arbitrator . The arbitrator shall be appointed in such manner as may be 
agreed upon between the parties. 
23. Order of reference .—(1) The Court shall, by order, refer to the arbitrator the matter in 
difference which he is required to determine, and shall in the order specify such time as it thinks 
reasonable for the making of the award. 
(2) Where a matter is referred to arbitration, the Court shall not, save in the manner and to the 
extent provided in this Act, deal with such matter in the suit. 
 
 24. Reference to arbitration by some of the parties . Where some only of the parties to a 
suit apply to have the matters in difference between th em referred to arbitration in accordance with, 
and in the manner provided by section 21, the Court may, if it thinks fit, so refer such matters to 
arbitration (provided that the same can be separated from the rest of the subject -matter of the suit) in 
the manner provided in that section, but the suits shall continue so far as it relates to the parties who 
have not joined in the said application and to matters not contained in the said reference as if no such 
application had been made, and an award made in p ursuance of such a reference shall be binding 
only on the parties who have joined in the application. 
25. Provisions applicable to arbitrations under this Chapter.  The provisions of the other 
Chapters shall, so far as they can be made applicable, apply to arbitrations under this Chapter: 
Provided that the Court may, in any of the circumstances mentioned in Section 8, 10, 11 and 
12, instead of filing up the vacancies or making the appointments, make an order superseding the 
arbitration and proceed with the suit, and where the Court makes an order superseding the arbitration 
under section 19, it shall proceed with the suit. 
_________ 
CHAPTER V 
GENERAL 
26. Application of Chapter . Save as otherwise provided in this Act, the provisions of this 
Chapter shall apply to all arbitrations. 
1[26-A. Award to set out reasons.—(1) The arbitrators or umpire shall state in the award the 
reasons for the award in sufficient detail to enable the Court to consider any question of law arising 
out of the award. 
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(2) Where the award  does not state the reasons in sufficient detail, the Court shall remit the 
award to the arbitrators or umpire and fix the time within which the arbitrator or umpire shall submit 
the award together with the reasons in sufficient detail: 
 
Provided that any time so fixed may be extended by subsequent order of the Court. 
 
(3) An award remitted under sub -section (2) shall become void on the failure of the 
arbitrators or umpire to submit it in accordance with the direction of the Court.]  
 
27. Power of arbitrato rs to make an interim award .—(1) Unless a different intention 
appears in the arbitration agreement, the arbitrators or umpire may, if they think fit, make an interim 
award. 
 
(2) All references in this Act to an award shall include references to an interim award made 
under sub-section (1). 
 
28. Power to Court only to enlarge time for making award .—(1) The Court may, if it 
thinks fit, whether the time for making the award has expired or not and whether the award has been 
made or not, enlarge from time to time the time for making the award. 
 
(2) Any provisions in an arbitration agreement whereby the arbitrators or umpire may, except 
with the consent of all the parties to the agreement, enlarge the time for making the award, shall be 
void and of no effect. 
 
29. Interest on awards . Where and in so far as an award is for the payment of money the 
Court may in the decree order interest, from the date of the decree at such rate as the Court deems 
reasonable, to be paid on the principal sum as adjudged by the award and confirmed by the decree. 
 
30. Grounds for setting aside award. An award shall not be set aside except on one or more 
of the following grounds, namely;— 
 
(a) that an arbitrator or umpire has misconducted himself or the proceedings; 
 
(b) that an award has b een made after the issue of an order by the Court 
superseding the arbitration or after arbitration proceedings have become 
invalid under section 35; 
 
(c) that an award has been improperly procured or is otherwise invalid. 
 
31. Jurisdiction. —(1) Subject to the provisions of this Act, an award may be filed in any 
Court having jurisdiction in the matter to which the reference relates.  
 
(2) Notwithstanding anything contained in any other law for the time being in force and save 
as otherwise provided in his Act , all questions regarding the validity, effect or existence of an award 
or an arbitration agreement between the parties to the agreement or persons claiming under them 
shall be decided by the court in which the award under the agreement has been, or may be , filed, and 
by no other Court. 
 
(3) All applications regarding the conduct of arbitration proceedings or otherwise arising out 
of such proceedings shall be made to the Court where award has been, or may be, filed, and to no 
other Court. 
 
 
1 Section 26A ins. by the Arbitration (Amdt.) Ordinance, 1981 (15 of 1981),s.2. 
(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time 
being in force, where in any reference any application under his Act has been made in a Court 
competent to entertain it, that Court alone shall have jurisdiction over the arbitrat ion proceedings and 
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all subsequent application arising out of that reference and the arbitration proceeding s shall be made 
in that court and in no other Court 
 
32. Bar to suit  contesting arbitration agreement or award . Notwithstanding any law for 
the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, 
effect or validity of an arbitration agreement or award, nor shall any arbitratio n agreement or award 
be set aside, amended, modified or in any way affected otherwise than as provided in this Act. 
 
33. Arbitration agreement or award to be contested by application . Any party to an 
arbitration agreement or any person claiming under him d esiring to challenge the existence or 
validity of an arbitration agreement or an award or to have the effect of either determined shall apply 
to the Court and the Court shall decide the question on affidavits : 
 
Provided that where the Court deems it just and expedient, it may set down the application 
for hearing on other evidence also and it may pass such orders for the discovery and particulars as it 
may do in a suit 1[.] 
 
2*         *                *             *               *               *               * 
 
34. Power to stay legal proceedings where there is an arbitration agreement . Where any 
party to an arbitration agreement or any person claiming under him commences any legal 
proceedings against any other party to the agreement or any person claim ing under him in respect of 
any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a 
written statement or taking any other steps in proceedings, apply to the judicial authority before 
which the proceedings are pending to stay the proceedings; and if satisfied that there in no sufficient 
reason why the matter should not be referred in accordance with the arbitration agreement and that 
the applicant was, at the time when the proceedings were commenced, and still r emains, ready and 
willing to do all things necessary to the proper conduct of the arbitration , such authority may make 
an order staying the proceedings. 
 
35. Effect of legal proceedings on arbitration .—(1) No reference nor award shall be 
rendered invalid by reasons only of the commencement of legal proceedings upon the subject- matter 
of the reference, but when legal proceedings upon the whole of the subject matter of the reference 
have been commenced between all the parties to the reference and a notice th ereof has been given to 
the arbitrators or umpire, all further proceedings in a pending reference shall, unless a stay of 
proceedings is granted under section 34, by invalid. 
 
(2) In this section the expression “parties to the reference” includes any perso ns claiming 
under any of the parties and litigating under the same title. 
 
36. Power of Court, to order that a provision making an award a condition precedent to 
an action shall not apply to a particular difference . Where it is provided (whether in the 
arbitration agreement or otherwise) that an award under an arbitration agreement shall be a condition 
precedent to the bringing of an action with respect to any matter to which the agreement applies, the 
Court, if it orders (whether under this Act or any othe r law) that the agreement shall cease to have 
effect as regards any particular difference, may further order that the said provision shall also cease 
to have effect as regards that difference. 
 
 
1 Subs. and added by the Arbitration (Amdt.) Ordinance, 1977 (27 of 1977), 
s. 2 for colon, which was previously amended by Ordinance 12 of 1972,  
s. 2 and Sch., to read as above. 
2  Provisio omitted by Ordinance 12 of 1972, s. 2 and Sch. 
37. Limitations. —(1) All the provisions of the Limitation Act, 1908 (IX of 1908 ), sha ll 
apply to arbitrations as they apply to proceedings in Court. 
 
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(2) Notwithstanding any term in an arbitration agreement to the effect that no cause of action 
shall accrue in respect of any matter required by the agreement to be referred until an aw ard is made 
under the agreement, a cause of action shall, for the purpose of limitation, be deemed to have accrued 
in respect of any such matter at the time when it would have accrued but for that term in the 
agreement 
 
(3) For the purposes of this section  and of the Limitation Act, 1908 (IX of 1908), an 
arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on 
the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration 
agreement provides that the reference shall be to a person named or designated in the agreement, 
requiring that the difference be submitted to the person so named or designated. 
 
(4) Where the terms of an agreement to refer future differences to arbitration pr ovide that any 
claims to which the agreement applies shall be barred unless notice to appoint an arbitrator is given 
or an arbitrator is appointed or some other step to commence arbitration proceedings is taken within 
a time fixed by the agreement, and a d ifference arises to which the agreement applies, the Court, if it 
is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and 
notwithstanding that the time so fixed has expired, may on such terms, if any, as the justic e of the 
case may require, extend the time for such period as it thinks proper. 
 
(5) Where the Court orders that an award be set aside or orders, after the commencement of 
an arbitration that the arbitration agreement shall cease to have effect with respec t to the difference 
referred, the period between the commencement of the arbitration and the date of the order of the 
Court shall be excluded in computing the time prescribed by the Limitation Act, 1908 (IX of 1908), 
for the commencement of the proceedings  (including 1908 arbitration) with respect to the difference 
referred. 
 
38. Disputes as to arbitrator’s remuneration or costs .—(1) If in any case an arbitrator or 
umpire refuses to deliver his award except on payment of the fees demanded by him, the Court may, 
on an application in this behalf, order that the arbitrator or umpire shall deliver the award to the 
applicant on payment into Court by the applicant of the fees demanded, and shall, after such inquiry, 
if any, as it thinks fit, further order that out  of the money so paid into Court there shall be paid to the 
arbitrator or umpire by way of fees such sum as the Court may consider reasonable and that the 
balance of the money, if any, shall be refunded to the applicant. 
 
(2) An application under sub-section (1) may be made by any party to the reference unless the 
fees demanded have been fixed by written agreement between him and the arbitrator or umpire, and 
the arbitrator or umpire shall be entitled to appear and be heard on any such application. 
 
(3) The  Court may make such orders as it thinks fit respecting the costs of an arbitration 
where any question arises respecting such costs and the award contains no sufficient provision 
concerning them. 
 __________ 
 
CHAPTER VI 
 
APPEALS 
39. Appealable  orders.—(1) An appeal shall lie from the following orders passed under this 
Act (and from no others) to the Court authori sed by law to hear appeals from original decrees of the 
Court passing the order:— 
An order— 
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(i)  superseding an arbitration; 
(ii)  on an award stated in the form of a special cases; 
(iii)  modifying or correcting an award; 
(iv)  filing or refusing to file an arbitration agreement; 
(v)   staying or refusing to stay legal proceedings where there is an arbitration 
agreement; 
(vi)  setting aside or refusing to set aside an award: 
Provided that the provisions of this section shall not apply to any order passed by a Small 
Cause Court. 
(2) No second appeal shall lie from an order passed in appeal  under this section, but nothing 
in this Section shall affect or take away any right to appeal to 1[the Supreme Court]. 
____________ 
CHAPTER VII 
MISCELLANEOUS 
40. Small Cause Court not to have jurisdictions over arbitration save arbitrations in suit 
before it. A Small Cause Court shall have no jurisdiction over any a rbitration proceedings or over 
any application arising there out save on application made under section 21. 
41. Procedure and powers of Court. Subject to the provisions of this Act and of rules made 
thereunder— 
(a) the provisions of the Code of Civil  and Procedure, 1908 (V of 1908), shall 
apply to all proceedings before the Court, and to all appeals, under this Act, 
and 
(b) the Court shall have, fo r the purpose of, and in relation to , arbitration 
proceedings, the same power of making orders in respect of an y of the matters 
set out in the Second Schedule as it has for the purpose of, and in relation to, 
any proceedings before the Court: 
Provided that nothing in clause (b) shall be taken to prejudice any power which may be 
vested in an arbitration or umpire for making orders with respect to any of such matters. 
 
 
 
1 Subs. by A.O., 1961, Art.2 and Sch., for  “His Majesty in Council” (with effect from the 23rd March, 1956). 
42. Service of notice by party or arbitrator . Any notice required by this Act to be served  
otherwise than through the Court by a party to an arbitration agreement or by an arbitrator or umpire 
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shall be served in the manner provided in the arbitration agreement, or if there is no such provision, 
either— 
(a) by delivering it to the person on whom it is to be served, or 
(b) by sending it by the post in a letter addressed to that person at his usual or last 
known place of abode or business in 1[Pakistan] and registered under Chapter 
VI of the Post Officer Act, 1898 (VI of 1898). 
43. Power of Court t o issue processes for appearance before arbitrator .— (1) The Court 
shall issue the same processes to the parties and witnesses whom the arbitrator or umpire desires to 
examine as the Court may issue in suits tried before it. 
(2) Persons failing to attend i n accordance with such process, or making any other default, or 
refusing to give their evidence, of guilty or any contempt to the arbitrat or or umpire during the 
investigation of the reference, shall be subject to the like disadvantages, penalties and puni shments 
by order of the Court on the representation of the arbitrator or umpire as they would incur for the like 
offices in suits tried before the Court. 
(3) In this section the expression “processes” includes summonses and commissions for the 
examination of witnesses and summonses to produce documents. 
44. Power to High Court to make rules . The High Court may make rules consistent with 
this Act as to— 
(a) the filing of awards and all proceedings consequent thereon or incidental 
thereto; 
(b) the filing and hearing of special cases and all proceedings consequent thereon 
or incidental thereto; 
(c) the staying of any suit or proceeding in contravention of an arbitration 
agreement; 
(d) the forms to be used for the purposes of this Act; 
(e) generally, all proceedings in Court under this Act. 
45. Government to be bound . The provisions of this Act shall be binding on 
the 2[Government]. 
 
 
s 
 
1 Subs. by the Central Laws (Statute Reform) Ordinance, 1960  (21 of 1960), s. 3 and 2 nd Sch. (with effect from the 14 th October, 1955), for “the       
Provinces and the Capital of the Federation” which had been subs. by A.O., 1949, for “British India” 
2 Subs. by A.O.,1961. Art.2, for “Crown” (with effect from the 23rd March, 1956 ). 
46. Application of Act to statutory arbitrations . The provisions of this Act, except 
sub-section (1) of section 6 and section 7, 12, 1[,36] and 37, shall apply to every arbitration under any 
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other enactment for the time being in force, as if the arbitration were pursuant to an arbitration 
agreement and as if that other enactment were an arbitration agreement, except in so far as this Act is 
inconsistent with that other enactment or with any rules made thereunder. 
47. Act to apply to all arbitrations.  Subject to the provisions of section 46, and save in s o 
far as is otherwise provided by any law for the time being in force, the provisions of this Act shall 
apply to all arbitrations and to all proceedings thereunder: 
Provided that an arbitration award otherwise obtained may with the consent of all the parti es 
interested be taken into consideration as a compromise or adjustment of a suit by any Court before 
which the suit is pending. 
48. Saving for pending references . The provisions of this Act shall not apply to any 
reference pending at the commencement of t his Act, to which the law in force immediately before 
the commencement of this Act shall, notwithstanding any repeal affected by this Act, continue to 
apply. 
 49. [Repeals and amendments] Rep. by the Repealing and Amending Act, 1945 (VI of 
1945),s. 2 and First Schedule. 
______________ 
THE FIRST SCHEDULE 
(See Section 3) 
IMPLIED CONDITIONS OF ARBITRATION AGREEMENTS 
1. Unless otherwise expressly provided, the reference shall be to a sole arbitrator. 
2. If the reference is to an even number of arbitrators, the arbitrators shall appoint an umpire 
not later than one month from the latest date of their respective appointments. 
3. The arbitrators shall make their award within four months after entering on the reference or 
after having been called upon to act by noti ce in writing from any party to the arbitration agreement 
or within such extended time as the Court may allow. 
4. If the arbitrators have allowed their time to expire without making an award or have 
delivered to any party to the arbitration agreement or to  the umpire a notice in writing stating that 
they cannot agree, the umpire shall forthwith enter on the reference in lieu of the arbitrators. 
5. The umpire shall make his award within two months of entering on the reference or within 
such extended time as the Court may allow. 
 
 
1Ins. by Repealing and Amending Act, 1942 (25 of 1942), s.3 and 2nd Sch. 
6. The parties to the reference and all persons claiming under them shall subject to the 
provisions of any law for the time being in force, submit to be examine d by the arbitrators or umpire 
on oath or affirmation in relation to the matters in difference and shall, subject as aforesaid, produce 
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before the arbitrators or umpire all books, deeds, papers, accounts writings and documents within 
their possession or po wer respectively, which may be required or called for, and do all other things 
which, during the proceedings on the reference, the arbitrators, or umpire may require. 
7. The award shall be final and binding on the parties and persons claiming under them 
respectively. 
` 8. The cost of the reference and award shall be in the discretion of the arbitrators or umpire 
who may direct to, and by whom, and in what manner, such costs or any part thereof shall be paid, 
and may tax or settle the amount of costs to be s o paid or any part thereof and may award costs to be 
paid as between legal practitioner and client. 
________ 
THE SECOND SCHEDULE 
(See Section 41) 
POWERS OF COURT 
1. The preservation, interim custody or sale of any goods which are subject matter of the 
reference. 
2. Securing the amount in difference in the reference. 
3. The detention, preservation or inspection of any property or thing which is the subject of 
the reference or as to which any questio n may arise therein and authoris ing for any of the aforesaid  
purposes any person to enter upon or into any land or building in the possession or any party to the 
reference, or authorising any samples to be taken or any observation to be made, or experiment to be 
tried, which may be necessary or expedient for the purpose of obtaining full information or evidence. 
4. Interim injunctions or the appointment of a receiver. 
5. The appointment of a guardian for a minor or person of unsound mind for the purposes of 
arbitration proceedings. 
_________ 
THE THIRD AND FOURTH SCHEDULES. [ENACTMENTS REPEALED. ENACTMENTS 
AMENDED.] Rep. by the Repealing and Amending Act, 1945 (VI of 1945),s.2  and First Schedule. 
 
___________