ARBITRATION ACT, 1940

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THE ARBITRATION ACT, 1940 
(X of 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 Courts to modify award 
16.  Power to remit award 
17.  Judgment in terms of award 
18.  Power of Court to pass interim orders 
19.  Power to supersede arbitration whe n 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 suits 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 where arbitration agreement is ordered not to apply to a 
particular diffe rence, to order that a provision making an award a 
condition precedent to an action shall not apply to such difference 
37.  Limitations 
38.  Disputes as to arbitrator’s remuneration or costs 
39.  Appealable orders 
40.  Small Cause Court not to have jurisdiction over arbitration save 
arbitrations in suits before it 
41.  Procedure and powers of Court 
42.  Service of notice by party or arbitrator 
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 
THE SECOND SCHEDULE 
THE THIRD AND FOURTH SCHEDULES 
 
TEXT 
THE ARBITRATION ACT, 1940 
1
(X of 1940) 
[16th 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 any thing 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 s 
forming the subject -matter of the reference if  the same had been the 
                                                 
1For 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., s ubject to certain 
modifications- see N.W.F..P (Upper Tananwal) (Excluded Area) Laws Regulation, 1950;   and also extended to the Excluded 
Area of Upper Tanawal (N.W.F.P) other than Phulera by the aforesaid Regulation, and declared to be in force in that are a 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). 
This Act has been published in the Gazette of India, Part IV, dated 16.3.1940, pages 41-52. 
2Substituted for the words “the Provinces and the Capital of the Federation” by the Central Laws (Statue Reform) Ordinance, 
1960 (XXI of 1960); and published in the Gazette of Pakistan (Extraordinary), dated 9. 6.1960, pages 725 -845, s. 3 and 2nd 
Schedule (with effect from the 14 th October, 1955),  which had been substituted for the words “British India” by the Adaptation 
of Central Acts and Ordinances Order, 1949 (G.G.O.4 of  1949); and published in the Gazette of Pakistan (Extraordinary), 
dated 28.3.1949, pages 223-283, Article 3 & 4. 
3Substituted by the Central Laws (Statue Reform) Ordinance, 1960 (XXI of 1960); and published in the Gazette of Pakistan 
(Extraordinary), dated 9.6.1960, pages 725 -845, s. 3 and 2n d Schedule ( with effect from the 14 th October, 1955 ) , for the 
original sub-section (2) as amended by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of  1949); and 
published in the Gazette of Pakistan (Extraordinary), dated 28.3.1949, pages 223-283, Article 3 & 4. 
 
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 reference to arbitration. 
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 
provisions 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 there under shall be to an 
arbitrator or arbitrators to be appointed by a person d esignated 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 de ath 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 revoked 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 is 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 required 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 ought 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 agreement 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 
(b) if any appointed arbitrator or umpire 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 parti es 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 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 certain 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 arbitrators, 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 fifteen 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 
sole arbitrator in the ref erence, 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 
arbitrators made under clause (b) and either, on sufficient cause being 
shown, allow further time to the defaulting party to appoint an arbitrator 
or pas such other order as it thinks fit. 
 
Explanation.– The fact that an arbitrator or umpire, after request by either party to 
enter on and proceed with the reference, does not within one month comply with t he 
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 shall be to three arbitrat ors, 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 b y 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. 
(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 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 
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 on 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 been 
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 awa rd any clerical mistake or error arising from any 
accidental slip or omission; 
(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 and filed .– (1) Wh en 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 arbitra tors 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 arising 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 lef t 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. 
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 applicatio n 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 decree 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 the 
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 
award is ju st 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 orders as it deems necessary and just. 
19.  Power to supersede arbitration when  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 shall th ereupon 
order that the arbitration agreement shall cease to have effect with respect to the 
difference referred. 
CHAPTER III 
ARBITRATION WITH INTERVENTION OF A COURT WHERE 
THERE IS NO SUIT PENDING. 
20.  Application to file in Court arbitration 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 su it 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 notic e 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, w here the 
parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court. 
(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 of  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 j udgment 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 or der, 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 them 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 pursuance 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 
sections 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. 
4
[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. 
(2)  Where the award does not state the reas ons 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 exte nded 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 arbitrators to make an interim awa rd.– (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 
adjusted 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; 
                                                 
4Section 26A inserted by the Arbitration (Amendment) Ordinance, 1981 (XV of 1981); and published in the Gazette of Pakistan 
(Extraordinary), dated 11.5.1981, pages 87-88, s.2. 
 
(b) that an award has been made after the issu e 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 regardi ng the 
validity, effect or existence of an award or an arbitration agreement between the 
parties to the agreement or persons claiming under them sh all 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 the 
award has been, or may be, filed, and to no other Court. 
(4)  Notwithstanding anything contain ed elsewhere in this Act or in any 
other law for the time being in force, where in any reference any application under 
this Act has been made in a Court competent to entertain it, that Court alone shall 
have jurisdiction over the arbitration proceedings an d all subsequent application s 
arising out of that reference and the arbitration proceeding shall be made in that 
Courts 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 arbitration 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 desiring 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 su ch orders for 
the discovery and particulars as it may do in a suit 
5
[.] 
6
[* * * * * * * * * * * *   ] 
34.  Power to stay legal proceedings where there is an arbitration 
agreement.– Where any party to an arbitration agreement or any person claiming 
under hi m commences any legal proceedings against any other party to the 
agreement or any person claiming under him in respect of any matter agreed to be 
                                                 
5Substituted for colon by the Arbitration (Amendmen t) Ordinance, 1977 (XXVII of 1977); and published in the Gazette of 
Pakistan (Extraordinary), Part I, dated 24.7.1977, s. 2. 
6Omitted by the Arbitration (Amendment) Ordinance, 1977 (XXVII of 1977); and published in the Gazette of Pakistan 
(Extraordinary), Part I, dated 24.7.1977, s. 2. 
 
referred, any party to such legal proceedings may, at any time before filing a written 
statement or taking any other steps in the 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 remains, 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 thereof 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, be invalid. 
(2)  In this section the expression “parties to the reference” includes any 
persons claiming under any of the parties and litigating under the same title. 
36.  Power of Court where arbitration agreement is ordered not to apply to a 
particular difference , to order that a provision making an award a condition 
precedent to an action shall not apply to such 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 other law) that the agreement shall cease to have effect as 
regards any particular differ ence, may further order that the said provision shall also 
cease to have effect as regards that difference. 
37.  Limitations.– (1) All the provisions of the  
7
[**** ] Limitation Act, 1908
8
, shall 
apply to arbitrations as they apply to proceedings in Court. 
(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 award 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 
9
[**** ] Limitation Act, 1908
10
, 
an arbitration shall be d eemed 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 designat ed in the agreement, requiring that the difference be 
submitted to the person so named or designated. 
                                                 
7The word “Indian” omitted by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in 
the Gazette of Pakistan (Extraordinary), dated 25.3.1949, pages 223-283, Article 2 and Schedule.   
8IX of 1908 
9The word “Indian” omitted  by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in 
the Gazette of Pakistan (Extraordinary), dated 25.3.1949, pages 223-283, Article 2 and Schedule.   
10IX of 1908 
 
(4)  Where the terms of an agreement to refer future differences to 
arbitration provide 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 trine fixed by the 
agreement, and a difference 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 justice 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 respect to the difference referred, the period between the commencement 
of th e arbitration and the date of the order of the Court shall be excluded in 
computing the time prescribed by the 
11
[****] Limitation Act, 1908
12
, for the 
commencement of the proceedings (including 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 arbitra tion 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 authorized by law to hear appeals 
from original decrees of the Court passing the order:– 
An order– 
(i)  superseding an arbitration; 
(ii)  on an award stated in the form of a special case; 
(iii)  modifying or correcting an award; 
                                                 
11The word “Indian” omitted by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in 
the Gazette of Pakistan (Extraordinary), dated 25.3.1949, pages 223-283, Article 2 and Schedule.   
12IX of 1908 
 
(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 a ny 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 
13
[the Supreme Court]. 
CHAPTER VII 
MISCELLANEOUS 
40.  Small Cause Court not to have jurisdiction over arbitration save 
arbitrations in suits before it.– A Small Cause Court shall have no jurisdiction over 
any arbitration 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 there under– 
(a) the provisions of the Code of Civil Procedure, 1908
14
, 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 any 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 arbitrator or umpire for making 
orders with respect to any of such matters. 
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 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 post in a letter addressed to that person at his usual or 
last known place of abode or business in  
15
[Pakistan] and registered 
under Chapter VI of the 
16
[****] Post Officer Act, 1898
17
. 
                                                 
13Substituted for the words  “His Majesty in Council” by the  Central Laws Adaptation Order, 1961, (1 of 1961); and published in 
the Gazette of Pakistan (Extraordinary), dated 24.1.1961, pages 102 -176,  Article 2 and Schedule ( with effect from the 23rd 
March, 1956).  
14V of 1908 
15Substituted for the words “the Provinces and the Capital of the Federation” by the Central Laws (Statue Reform) Ordinance, 
1960 (XXI of 1960); and published in the Gazette of Pakistan (Extraordinary), dated 9.6.1960, pages 725 -845, s. 3 and 2nd 
Schedule (with effect from the 14 th October, 1955),  which had been substituted for the words “British India” by the Adaptation 
of Central Acts and Ordinances Order, 1949 (G.G.O.4 of  1949); and published in the Gazette of Pakistan (Extraordinary), 
dated 28.3.1949, pages 223-283, Article 3 & 4. 
 
43.  Power of Court to 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 in accordance with such process, or making 
any other default, or refusing to give their evidence, of guilty o f any contempt to the 
arbitrator or umpire during the investigation of the reference, shall be subject to the 
like disadvantag es, penalties and punishments 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 of 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.  
18
[Government] to be bound.– The provisions of this Act shall be binding on 
the 
19
[Government].  
46.  Application of Act to statutory arbitrations .– The provisions of this Act, 
except sub-section (1) of section 6 and section 7, 12, 
20
[,36] and 37, shall apply to 
every arbitration under any 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 agre ement, 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 so far as is otherwise provided by any law for th e time being in force, the 
provisions of this Act shall apply to all arbitrations and to all proceedings thereunder: 
                                                                                                                                                        
16The word “Indian” omitted by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in 
the Gazette of Pakistan (Extraordinary), dated 25.3.1949, pages 223-283, Article 2 and Schedule.   
17VI of 1898 
18Substituted for the word “Crown”  by the Central Laws Adaptation Order, 1961, (1 of 1961); and published in the Gazette of 
Pakistan (Extraordinary), dated 24.1.1961, pages 102-176,  Article 2 and Schedule (with effect from the 23rd March, 1956).  
19Substituted for the word “Crown”  by the Central Laws Adaptation Order, 1961, (1 of 1961); and published in the Gazette of 
Pakistan (Extraordinary), dated 24.1.1961, pages 102-176,  Article 2 and Schedule (with effect from the 23rd March, 1956).  
20Inserted by the Repealing and Amending Act, 1942 (XXV of 1942), received the assent of Governor General on 1.10.1942, s. 
3 and the Second Schedule. 
 
Provided that an arbitration award otherwise obtained may with the consent of 
all the parties interested be taken into consideration as a c ompromise 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 this Act, to which the law in force 
immediately before the commencement of this Act shall, notwithstanding any repeal 
effected by this Act, continue to apply. 
49. 
21
[Repeals and amendments.–  * * * * * * *   ] 
 
                                                 
21Repealed by the Repealing and Amending Act, 1945 (VI of 1945) ; and published in the Gazette of India, Part IV, dated 
21.4.1945, pages 8-17, s. 2 and First Schedule 
 
THE FIRST SCHEDULE 
(See section 3) 
IMPLIED CONDITIONS OF ARBITRATION AGREEMENTS 
1.  Unless o therwise 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 notice 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. 
6.  The parties to the reference and all persons claiming under them shall , 
subject to the provi sions of any law for the time being in force, submit to be 
examined by the arbitrators or umpire on oath or affirmation in relation to the matters 
in difference and shall, subject as aforesaid, produce before the arbitrators or umpire 
all books, deeds, pap ers, accounts, writings and documents within their possession 
or power 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 there of shall be paid, and may tax or settle the amount of costs to 
be so 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 custo dy or sale of any goods which are the 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 q uestion may arise therein and 
authorizing for any of the aforesaid purposes any person to enter upon or into any 
land or building in the possession o f any party to the reference, or authorizing any 
samples to be taken or any observation to be made, or expe riment 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. 
____ 
22
THE THIRD AND FOURTH SCHEDULES. 
[ENACTMENTS REPEALED. ENACTMENTS AMENDED.] 
                                                 
22Repealed by the Repealing and Amending Act, 1945 (VI of 1945)  ; and published in the Gazette of India, Part IV, dated 
21.4.1945, pages 8-17, s. 2 and First Schedule.