{ "schema_version": "qanun-law-text/1", "id": "punjab-code-c1d0689648a987e9", "title": "ARBITRATION ACT, 1940", "source_collection": "Punjab", "content_kind": "stored_law_text", "content_extent": null, "source_url": "https://punjabcode.punjab.gov.pk/en/show_article/XGpTZwYzUWA-", "version": null, "source_snapshot": "2026-08-06T16:16:39Z", "legal_status": "not independently verified", "text_quality": "Complete stored UTF-8 TXT file recovered byte-for-byte from owned Drive. Source transcription retained verbatim; legal completeness, OCR accuracy and current consolidation unverified.", "text_sha256": "ae22cfbf6510450fe59b3d01c162adc8c351c441e465d2f8e233d20788c5ca03", "source_sha256": "ae22cfbf6510450fe59b3d01c162adc8c351c441e465d2f8e233d20788c5ca03", "text_version_id": "law:punjab-code-c1d0689648a987e9:sha256:ae22cfbf6510450fe59b3d01c162adc8c351c441e465d2f8e233d20788c5ca03", "quality_flags": [], "encoding": "UTF-8", "text": "THE ARBITRATION ACT, 1940 \r\n(X of 1940) \r\nCONTENTS \r\n1. Short title, extent and commencement \r\n2. Definitions \r\n3. Provisions implied in arbitration agreement \r\n4. Agreement that arbitrators be appointed by third party \r\n5. Authority of appointed arbitrator or umpire irrevocable except by leave \r\nof Court \r\n6. Arbitration agreement not to be discharged by death of party thereto \r\n7. Provisions in case of insolvency \r\n8. Power of Court to appoint arbitrator or umpire \r\n9. Power to party to appoint new arbitrator or, in certain cases, a sole \r\narbitrator \r\n10. Provisions as to appointment of three or more arbitrators \r\n11. Power to Court to remove arbitrators or umpire in certain circumstances \r\n12. Power of Court where arbitrator is removed or his authority revoked \r\n13. Powers of arbitrator \r\n14. Award to be signed and filed \r\n15. Power of Courts to modify award \r\n16. Power to remit award \r\n17. Judgment in terms of award \r\n18. Power of Court to pass interim orders \r\n19. Power to supersede arbitration whe n award becomes void or is set \r\naside \r\n20. Application to file in Court arbitration agreement \r\n21. Parties to suit may apply for order of reference \r\n22. Appointment of arbitrator \r\n \r\n23. Order of reference \r\n24. Reference to arbitration by some of the parties \r\n25. Provisions applicable to arbitrations under this Chapter \r\n26. Application of Chapter \r\n26-A. Award to set out reasons \r\n27. Power of arbitrators to make an interim award \r\n28. Power to Court only to enlarge time for making award \r\n29. Interest on awards \r\n30. Grounds for setting aside award \r\n31. Jurisdiction \r\n32. Bar to suits contesting arbitration agreement or award \r\n33. Arbitration agreement or award to be contested by application \r\n34. Power to stay legal proceedings where there is an arbitration agreement \r\n35. Effect of legal proceedings on arbitration \r\n36. Power of Court where arbitration agreement is ordered not to apply to a \r\nparticular diffe rence, to order that a provision making an award a \r\ncondition precedent to an action shall not apply to such difference \r\n37. Limitations \r\n38. Disputes as to arbitrator’s remuneration or costs \r\n39. Appealable orders \r\n40. Small Cause Court not to have jurisdiction over arbitration save \r\narbitrations in suits before it \r\n41. Procedure and powers of Court \r\n42. Service of notice by party or arbitrator \r\n43. Power of Court to issue processes for appearance before arbitrator \r\n44. Power of High Court to make rules \r\n45. Government to be bound \r\n46. Application of Act to statutory arbitrations \r\n \r\n47. Act to apply to all arbitrations \r\n48. Saving for pending references \r\n49. [Omitted ] \r\nTHE FIRST SCHEDULE \r\nTHE SECOND SCHEDULE \r\nTHE THIRD AND FOURTH SCHEDULES \r\n \r\nTEXT \r\nTHE ARBITRATION ACT, 1940 \r\n1\r\n(X of 1940) \r\n[16th March, 1940] \r\nAn \r\nAct \r\nto consolidate and amend the law relating to Arbitration. \r\nWHEREAS it is expedient to consolidate and amend the law relating to \r\narbitration in \r\n2\r\n[Pakistan]; \r\nIt is hereby enacted as follows:– \r\nCHAPTER I \r\nINTRODUCTORY \r\n1. Short title, extent and commencement .– (1) This Act may be called the \r\nArbitration Act, 1940. \r\n3\r\n[(2) It extends to the whole of Pakistan.] \r\n(3) It shall come into force on the 1st day of July, 1940. \r\n2. Definitions.– In this Act, unless there is any thing repugnant in the subject or \r\ncontext,– \r\n(a) “arbitration agreement” means a written agreement to submit present \r\nor future differences to arbitration, whether an arbitrator is named \r\ntherein or not; \r\n(b) “award” means an arbitration award; \r\n(c) “Court” means a Civil Court having jurisdiction to decide the question s \r\nforming the subject -matter of the reference if the same had been the \r\n \r\n1For statement of Objects and Reasons, see Gazette of India, 1939, Pt. V, p. 142; for the Report of Select Committee, see ibid., \r\n1940, Pt. V, p. 35. \r\nThis Act has been applied to __ \r\nBaluchistan, see Notification No. 168- N., dated the 17th October, 1940, Gazette of India, 1940, Pt. I, p. 1478; \r\nPhulera in the Excluded Area of Upper Tanawal to the extent the Act is applicable in the N. W. F. P., s ubject to certain \r\nmodifications- see N.W.F..P (Upper Tananwal) (Excluded Area) Laws Regulation, 1950; and also extended to the Excluded \r\nArea 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 \r\neffect from the 1st June, 1951, see N.W.F.P. Gazette, Ext., dated the 1st June, 1951. \r\nIt has been extended to the Leased Areas of Baluchistan by the Leased Areas (Laws) Order, 1950 (G. G. O. 3 of 1950). \r\nThis Act has been published in the Gazette of India, Part IV, dated 16.3.1940, pages 41-52. \r\n2Substituted for the words “the Provinces and the Capital of the Federation” by the Central Laws (Statue Reform) Ordinance, \r\n1960 (XXI of 1960); and published in the Gazette of Pakistan (Extraordinary), dated 9. 6.1960, pages 725 -845, s. 3 and 2nd \r\nSchedule (with effect from the 14 th October, 1955), which had been substituted for the words “British India” by the Adaptation \r\nof Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in the Gazette of Pakistan (Extraordinary), \r\ndated 28.3.1949, pages 223-283, Article 3 & 4. \r\n3Substituted by the Central Laws (Statue Reform) Ordinance, 1960 (XXI of 1960); and published in the Gazette of Pakistan \r\n(Extraordinary), dated 9.6.1960, pages 725 -845, s. 3 and 2n d Schedule ( with effect from the 14 th October, 1955 ) , for the \r\noriginal sub-section (2) as amended by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and \r\npublished in the Gazette of Pakistan (Extraordinary), dated 28.3.1949, pages 223-283, Article 3 & 4. \r\n \r\nsubject-matter of a suit, but does not, except for the purpose of \r\narbitration proceedings under section 21, include a Small Cause Court; \r\n(d) “legal representative” means a person who in law represents the estate \r\nof a deceased person, and includes any person who intermeddles with \r\nthe estate of the deceased, and, where a party acts in representative \r\ncharacter, the person on whom the estate devolves on the death of the \r\nparty so acting; \r\n(e) “reference” means reference to arbitration. \r\nCHAPTER II \r\nARBITRATION WITHOUT INTERVENTION OF A COURT \r\n3. Provisions implied in arbitration agreement. – An arbitration agreement, \r\nunless a different intention is expressed therein, shall be deemed to include the \r\nprovisions set out in the First Schedule in so far as they are applicable to the \r\nreference. \r\n4. Agreement that arbitrators be appointed by third party.– The parties to an \r\narbitration agreement may agree that any reference there under shall be to an \r\narbitrator or arbitrators to be appointed by a person d esignated in the agreement \r\neither by name or as the holder for the time being of any office or appointment. \r\n5. Authority of appointed arbitrator or umpire irrevocable except by leave \r\nof Court.– The authority of an appointed arbitrator or umpire shall not a revocable \r\nexcept with the leave of the Court , unless a contrary intention is expressed in the \r\narbitration agreement. \r\n6. Arbitration agreement not to be discharged by death of party thereto .– \r\n(1) An arbitration agreement shall not be discharged by the de ath of any party \r\nthereto, either as respects the deceased or any other party, but shall in such event \r\nbe enforceable by or against the legal representative of the deceased. \r\n(2) The authority of an arbitrator shall not be revoked by the death of any \r\nparty by whom he was appointed. \r\n(3) Nothing in this section shall affect the operation of any law by virtue of \r\nwhich any right of action is extinguished by the death of a person. \r\n7. Provisions in case of insolvency .– (1) Where it is provided by a term in a \r\ncontract to which an insolvent is a party that any differences arising thereout or in \r\nconnection therewith shall be referred to arbitration, the said term shall, if the \r\nreceiver adopts the contract, be enforceable by or against him so far as it relates to \r\nany such differences. \r\n(2) Where a person who has been adjudged an insolvent had, before the \r\ncommencement of the insolvency proceedings, become a party to an arbitration \r\nagreement, and any matter to which the agreement applies is required to be \r\ndetermined in connection with, or for the purposes of , the insolvency proceedings, \r\nthen, if the case is one to which sub -section (1) does not apply, any other party to \r\nthe agreement or the receiver may apply to the Court having jurisdiction in the \r\ninsolvency proceedings for an order directing that the matter in question shall be \r\nreferred to arbitration in accordance with the agreement, and the Court may, if it is of \r\n \r\nopinion that, having regard to all the circumstances of the case, the matter ought to \r\nbe determined by arbitration, make an order accordingly. \r\n(3) In this section the expression “receiver” includes an Official Assignee. \r\n8. Power of Court to appoint arbitrator or umpire .– (1) In any of the following \r\ncases:– \r\n(a) where an arbitration agreement provides that the reference shall be to \r\none or more arbitrators to be appointed by consent of the parties, and \r\nall the parties do not, after differences have arisen, concur in the \r\nappointment or appointments; or \r\n(b) if any appointed arbitrator or umpire neglects or refuses to act, or is \r\nincapable of acting, or dies, and the arbitration agreement does not \r\nshow that it was intended that the vacancy should not be supplied, and \r\nthe parties or the arbitrators, as the case may be, do not supply the \r\nvacancy; or \r\n(c) where the parti es or the arbitrators are required to appoint an umpire \r\nand do not appoint him; \r\nany party may serve the other parties or the arbitrators, as the case may be, \r\nwith a written notice to concur in the appointment or appointments or in supplying the \r\nvacancy. \r\n(2) If the appointment is not made within fifteen clear days after the service \r\nof the said notice, the Court may, on the application of the party who gave notice and \r\nafter giving the other parties an opportunity of being heard, appoint an arbitrator or \r\narbitrators or umpire, as the case may be, who shall have like power to act in the \r\nreference and to make an award as if he or they had been appointed by consent of \r\nall parties. \r\n9. Power to party to appoint new arbitrator or, in certain cases, a sole \r\narbitrator.– Where an arbitrations agreement provides that a reference shall be to \r\ntwo arbitrators, one to be appointed by each party, then, unless a different intention \r\nis expressed in the agreement,– \r\n(a) if either of the appointed arbitrators, neglects or refuses to act, or is \r\nincapable of acting, or dies, the party who appointed him may appoint a \r\nnew arbitrator in his place; \r\n(b) if one party fails to appoint an arbitrator, either originally or by way of \r\nsubstitution as aforesaid, for fifteen clear days after the service by the \r\nother party of a notice in writing to make the appointment, such other \r\nparty having appointed his arbitrator before giving the notice, the party \r\nwho has appointed an arbitrator may appoint that arbitrator to act as \r\nsole arbitrator in the ref erence, and his award shall be binding on both \r\nparties as if he had been appointed by consent: \r\nProvided that the Court may set aside any appointment as sole \r\narbitrators made under clause (b) and either, on sufficient cause being \r\nshown, allow further time to the defaulting party to appoint an arbitrator \r\nor pas such other order as it thinks fit. \r\n \r\nExplanation.– The fact that an arbitrator or umpire, after request by either party to \r\nenter on and proceed with the reference, does not within one month comply with t he \r\nrequest may constitute a neglect or refusal to act within the meaning of section 8 and \r\nthis section. \r\n10. Provisions as to appointment of three or more arbitrators .– (1) Where an \r\narbitration agreement provides that a reference shall be to three arbitrat ors, one to \r\nbe appointed by each party and the third by the two appointed arbitrators, the \r\nagreement shall have effect as if it provided for the appointment of an umpire, and \r\nnot for the appointment of a third arbitrator, by the two arbitrators appointed b y the \r\nparties. \r\n(2) Where an arbitration agreement provides that a reference shall be to \r\nthree arbitrators to be appointed otherwise than as mentioned in sub -section (1), the \r\naward of the majority shall, unless the arbitration agreement otherwise provides, \r\nprevail. \r\n(3) Where an arbitration agreement provides for the appointment of more \r\narbitrators than three, the award of the majority, or if the arbitrators are equally \r\ndivided in their opinions, the award of the umpire shall, unless the arbitration \r\nagreement otherwise provides, prevail. \r\n11. Power to Court to remove arbitrators or umpire in certain \r\ncircumstances.– (1) The Court may, on the application of any party to reference, \r\nremove an arbitrator or umpire who fails to use all reasonable dispatch in entering on \r\nand proceeding with the reference and making an award. \r\n(2) The Court may remove an arbitrator or umpire who has misconduct \r\nhimself or the proceedings. \r\n(3) Where an arbitrator or umpire is removed under this section, he shall \r\nnot be entitled to receive any remuneration in respect of his services. \r\n(4) For the purposes of this section the expression “proceeding with the \r\nreference” includes, in a case where reference to the umpire becomes necessary, \r\ngiving notice of that fact to the parties and to the umpire. \r\n12. Power of Court where arbitrator is removed or his authority revoked.– (1) \r\nWhere the Court removes an umpire who has not entered on the reference or one or \r\nmore arbitrators (not being all the arbitrators), the Court may, on the application of \r\nany party to the arbitration agreement, appoint persons to fill the vacancies. \r\n(2) Where the authority of an arbitrator or arbitrators or an umpire is \r\nrevoked by leave of the Court, or where the Court removes an umpire who has \r\nentered on the reference or a sole arbitrator or all the arbitrators, the Court may, on \r\nthe application of any party to the arbitration agreement, either– \r\n(a) appoint a person to act as sole arbitrator in the place of the person or \r\npersons displaced, or \r\n(b) order that the arbitration agreement shall cease to have effect with \r\nrespect to the difference referred. \r\n(3) A person appointed under this section as an arbitrator or umpire shall \r\nhave the like power to act in the reference and to make an award as if he had been \r\nappointed in accordance with the arbitration agreement. \r\n \r\n13. Powers of arbitrator .– The arbitrators or umpire shall, unless a different \r\nintention is expressed in the agreement, have power to– \r\n(a) administer oath to the parties and witnesses appearing; \r\n(b) state a special case for the opinion of the Court on any question of law \r\ninvolved, or state the award, wholly or in part, in the form of a special \r\ncase of such question for the opinion of the Court; \r\n(c) make the award conditional or in the alternative; \r\n(d) correct in an awa rd any clerical mistake or error arising from any \r\naccidental slip or omission; \r\n(e) administer to any party to the arbitration such interrogatories as may, in \r\nthe opinion of the arbitrators or umpire, be necessary. \r\n14. Award to be signed and filed .– (1) Wh en the arbitrators or umpire have \r\nmade their award, they shall sign it and shall give notice in writing to the parties of \r\nthe making and signing thereof and of the amount of fees and charges payable in \r\nrespect of the arbitration and award. \r\n(2) The arbitra tors or umpire shall, at the request of any party to the \r\narbitration agreement or any person claiming under such party or if so directed by \r\nthe Court and upon payment of the fees and charges due in respect of the arbitration \r\nand award and of the costs and charges of filing the award, cause the award or \r\nsigned copy of it, together with any depositions and documents which may have \r\nbeen taken and proved before them, to be filed in Court, and the Court shall \r\nthereupon give notice to the parties of the filing of the award. \r\n(3) Where the arbitrators or umpire state a special case under clause (b) of \r\nsection 13, the Court, after giving notice to the parties and hearing them, shall \r\npronounce its opinion thereon and such opinion shall be added to, and shall form \r\npart of, the award. \r\n15. Power of Court to modify award.– The Court may by order modify or correct \r\nan award– \r\n(a) where it appears that a part of the award is upon a matter not referred \r\nto arbitration and such part can be separated from the other part and \r\ndoes not affect the decision on the matter referred; or \r\n(b) where the award is imperfect in form, or contains any obvious error \r\nwhich can be amended without effecting such decision; or \r\n(c) where the award contains clerical mistake or an error arising from an \r\naccidental slip or omission. \r\n16. Power to remit award.– (1) The Court may from time to time remit the award \r\nor any matter referred to arbitration to the arbitrators or umpire for reconsideration \r\nupon such terms as it thinks fit– \r\n(a) where the award has lef t undetermined any of the matters referred to \r\narbitration, or where it determines any matter not referred to arbitration \r\nand such matter cannot be separated without affecting the \r\ndetermination of the matters referred; or \r\n \r\n(b) where the award is so indefinite as to be incapable of execution; or \r\n(c) where an objection to the legality of the award is apparent upon the \r\nface of it. \r\n(2) Where an award is remitted under sub -section (1) the Court shall fix \r\nthe time within which the arbitrator or umpire shall submit his decision to the Court: \r\nProvided that any time so fixed may be extended by subsequent order of the \r\nCourt. \r\n(3) An award remitted under sub -section (1) shall become void on the \r\nfailure of the arbitrator or umpire to reconsider it and submit his decision within the \r\ntime fixed. \r\n17. Judgment in terms of award .– Where the Court sees no cause to remit the \r\naward or any of the matters referred to arbitration for reconsideration or to set aside \r\nthe award, the Court shall, after the time for making an applicatio n to set aside the \r\naward has expired, or such application having been made, after refusing it, proceed \r\nto pronounce judgment according to the award, and upon the judgment so \r\npronounced a decree shall follow, and no appeal shall lie from such decree except \r\non the ground that it is in excess of, or not otherwise in accordance with, the award. \r\n18. Power of Court to pass interim orders .– (1) Notwithstanding anything \r\ncontained in section 17, at anytime after the filing of the award, whether notice of the \r\nfiling has been served or not, upon being satisfied by affidavit or otherwise that a \r\nparty has taken or is about to take steps to defeat, delay or obstruct the execution of \r\nany decree that may be passed upon the award, or that speedy execution of the \r\naward is ju st and necessary, the Court may pass such interim orders as it deems \r\nnecessary. \r\n(2) Any person against whom such interim orders have been passed may \r\nshow cause against such orders, and the Court, after hearing the parties, may pass \r\nsuch further orders as it deems necessary and just. \r\n19. Power to supersede arbitration when award becomes void or is set \r\naside.– Where an award has become void under sub-section (3) of section 16 or has \r\nbeen set aside, the Court may by order supersede the reference and shall th ereupon \r\norder that the arbitration agreement shall cease to have effect with respect to the \r\ndifference referred. \r\nCHAPTER III \r\nARBITRATION WITH INTERVENTION OF A COURT WHERE \r\nTHERE IS NO SUIT PENDING. \r\n20. Application to file in Court arbitration agreement. – (1) Where any persons \r\nhave entered into an arbitration agreement before the institution of any suit with \r\nrespect to the subject -matter of the agreement or any part of it, and where a \r\ndifference has arisen to which the agreement applies, they or any of them , instead of \r\nproceeding under Chapter II, may apply to a Court having jurisdiction in the matter to \r\nwhich the agreement relates, that the agreement be filed in the Court. \r\n(2) The application shall be in writing and shall be numbered and \r\nregistered as a su it between one or more of the parties interested or claiming to be \r\n \r\ninterested as plaintiff or plaintiffs and the remainder as defendant or defendants, if \r\nthe application has been presented by all the parties, or, if otherwise, between the \r\napplicant as plaintiff and the other parties as defendants. \r\n(3) On such application being made, the Court shall direct notice thereof to \r\nbe given to all parties to the agreement other than the applicants, requiring them to \r\nshow cause within the time specified in the notic e why the agreement should not be \r\nfiled. \r\n(4) Where no sufficient cause is shown, the Court shall order the \r\nagreement to be filed, and shall make an order of reference to the arbitrator \r\nappointed by the parties, whether in the agreement or otherwise, or, w here the \r\nparties cannot agree upon an arbitrator, to an arbitrator appointed by the Court. \r\n(5) Thereafter the arbitration shall proceed in accordance with, and shall \r\nbe governed by, the other provisions of this Act so far as they can be made \r\napplicable. \r\nCHAPTER IV \r\nARBITRATION IN SUITS \r\n21. Parties to suit may apply for order of reference.– Where in any suit all the \r\nparties interested agree that any matter in difference between them in the suit shall \r\nbe referred to arbitration, they may at any time before j udgment is pronounced apply \r\nin writing to the Court for an order or reference. \r\n22. Appointment of arbitrator .– The arbitrator shall be appointed in such \r\nmanner as may be agreed upon between the parties. \r\n23. Order of reference. – (1) The Court shall, by or der, refer to the arbitrator the \r\nmatter in difference which he is required to determine, and shall in the order specify \r\nsuch time as it thinks reasonable for the making of the award. \r\n(2) Where a matter is referred to arbitration, the Court shall not, save in the \r\nmanner and to the extent provided in this Act, deal with such matter in the suit. \r\n24. Reference to arbitration by some of the parties .– Where some only of the \r\nparties to a suit apply to have the matters in difference between them referred to \r\narbitration in accordance with, and in the manner provided by section 21, the Court \r\nmay, if it thinks fit, so refer such matters to arbitration (provided that the same can be \r\nseparated from the rest of the subject -matter of the suit) in the manner provided in \r\nthat section, but the suits shall continue so far as it relates to the parties who have \r\nnot joined in the said application and to matters not contained in the said reference \r\nas if no such application had been made, and an award made in pursuance of such \r\na reference shall be binding only on the parties who have joined in the application. \r\n25. Provisions applicable to arbitrations under this Chapter .– The provisions \r\nof the other Chapters shall, so far as they can be made applicable, apply to \r\narbitrations under this Chapter: \r\nProvided that the Court may, in any of the circumstances mentioned in \r\nsections 8, 10, 11 and 12, instead of filing up the vacancies or making the \r\nappointments, make an order superseding the arbitration and proceed with the suit, \r\n \r\nand where the Court makes an order superseding the arbitration under section 19, it \r\nshall proceed with the suit. \r\nCHAPTER V \r\nGENERAL \r\n26. Application of Chapter .– Save as otherwise provided in this Act, the \r\nprovisions of this Chapter shall apply to all arbitrations. \r\n4\r\n[26-A. Award to set out reasons. – (1) The arbitrators or umpire shall state in the \r\naward the reasons for the award in sufficient detail to enable the Court to consider \r\nany question of law arising out of the award. \r\n(2) Where the award does not state the reas ons in sufficient detail, the \r\nCourt shall remit the award to the arbitrators or umpire and fix the time within which \r\nthe arbitrator or umpire shall submit the award together with the reasons in sufficient \r\ndetail: \r\nProvided that any time so fixed may be exte nded by subsequent order of the \r\nCourt. \r\n(3) An award remitted under sub -section (2) shall become void on the \r\nfailure of the arbitrators or umpire to submit it in accordance with the direction of the \r\nCourt.] \r\n27. Power of arbitrators to make an interim awa rd.– (1) Unless a different \r\nintention appears in the arbitration agreement, the arbitrators or umpire may, if they \r\nthink fit, make an interim award. \r\n(2) All references in this Act to an award shall include references to an \r\ninterim award made under sub-section (1). \r\n28. Power to Court only to enlarge time for making award. – (1) The Court \r\nmay, if it thinks fit, whether the time for making the award has expired or not and \r\nwhether the award has been made or not, enlarge from time to time the time for \r\nmaking the award. \r\n(2) Any provisions in an arbitration agreement whereby the arbitrators or \r\numpire may, except with the consent of all the parties to the agreement, enlarge the \r\ntime for making the award, shall be void and of no effect. \r\n29. Interest on awards.– Where and in so far as an award is for the payment of \r\nmoney the Court may in the decree order interest, from the date of the decree at \r\nsuch rate as the Court deems reasonable, to be paid on the principal sum as \r\nadjusted by the award and confirmed by the decree. \r\n30. Grounds for setting aside award .– An award shall not be set aside except \r\non one or more of the following grounds, namely:– \r\n(a) that an arbitrator or umpire has misconducted himself or the \r\nproceedings; \r\n \r\n4Section 26A inserted by the Arbitration (Amendment) Ordinance, 1981 (XV of 1981); and published in the Gazette of Pakistan \r\n(Extraordinary), dated 11.5.1981, pages 87-88, s.2. \r\n \r\n(b) that an award has been made after the issu e of an order by the Court \r\nsuperseding the arbitration or after arbitration proceedings have \r\nbecome invalid under section 35; \r\n(c) that an award has been improperly procured or is otherwise invalid. \r\n31. Jurisdiction.– (1) Subject to the provisions of this Act, an award may be filed \r\nin any Court having jurisdiction in the matter to which the reference relates. \r\n(2) Notwithstanding anything contained in any other law for the time being \r\nin force and save as otherwise provided in his Act, all questions regardi ng the \r\nvalidity, effect or existence of an award or an arbitration agreement between the \r\nparties to the agreement or persons claiming under them sh all be decided by the \r\nCourt in which the award under the agreement has been, or may be, filed, and by no \r\nother Court. \r\n(3) All applications regarding the conduct of arbitration proceedings or \r\notherwise arising out of such proceedings shall be made to the Court where the \r\naward has been, or may be, filed, and to no other Court. \r\n(4) Notwithstanding anything contain ed elsewhere in this Act or in any \r\nother law for the time being in force, where in any reference any application under \r\nthis Act has been made in a Court competent to entertain it, that Court alone shall \r\nhave jurisdiction over the arbitration proceedings an d all subsequent application s \r\narising out of that reference and the arbitration proceeding shall be made in that \r\nCourts in no other Court. \r\n32. Bar to suit contesting arbitration agreement or award .– Notwithstanding \r\nany law for the time being in force, no suit shall lie on any ground whatsoever for a \r\ndecision upon the existence, effect or validity of an arbitration agreement or award, \r\nnor shall any arbitration agreement or award be set aside, amended, modified or in \r\nany way affected otherwise than as provided in this Act. \r\n33. Arbitration agreement or award to be contested by application .– Any \r\nparty to an arbitration agreement or any person claiming under him desiring to \r\nchallenge the existence or validity of an arbitration agreement or an award or to have \r\nthe effect of either determined shall apply to the Court and the Court shall decide the \r\nquestion on affidavits: \r\nProvided that where the Court deems it just and expedient, it may set down \r\nthe application for hearing on other evidence also , and it may pass su ch orders for \r\nthe discovery and particulars as it may do in a suit \r\n5\r\n[.] \r\n6\r\n[* * * * * * * * * * * * ] \r\n34. Power to stay legal proceedings where there is an arbitration \r\nagreement.– Where any party to an arbitration agreement or any person claiming \r\nunder hi m commences any legal proceedings against any other party to the \r\nagreement or any person claiming under him in respect of any matter agreed to be \r\n \r\n5Substituted for colon by the Arbitration (Amendmen t) Ordinance, 1977 (XXVII of 1977); and published in the Gazette of \r\nPakistan (Extraordinary), Part I, dated 24.7.1977, s. 2. \r\n6Omitted by the Arbitration (Amendment) Ordinance, 1977 (XXVII of 1977); and published in the Gazette of Pakistan \r\n(Extraordinary), Part I, dated 24.7.1977, s. 2. \r\n \r\nreferred, any party to such legal proceedings may, at any time before filing a written \r\nstatement or taking any other steps in the proceedings, apply to the judicial authority \r\nbefore which the proceedings are pending to stay the proceedings; and if satisfied \r\nthat there in no sufficient reason why the matter should not be referred in \r\naccordance with the arbitration agreement and that the applicant was, at the time \r\nwhen the proceedings were commenced, and still remains, ready and willing to do all \r\nthings necessary to the proper conduct of the arbitration , such authority may make \r\nan order staying the proceedings. \r\n35. Effect of legal proceedings on arbitration .– (1) No reference nor award \r\nshall be rendered invalid by reasons only of the commencement of legal proceedings \r\nupon the subject-matter of the reference, but when legal proceedings upon the whole \r\nof the subject - matter of the reference have been commenced between all the \r\nparties to the reference and a notice thereof has been given to the arbitrators or \r\numpire, all further proceedings in a pending reference shall, unless a stay of \r\nproceedings is granted under section 34, be invalid. \r\n(2) In this section the expression “parties to the reference” includes any \r\npersons claiming under any of the parties and litigating under the same title. \r\n36. Power of Court where arbitration agreement is ordered not to apply to a \r\nparticular difference , to order that a provision making an award a condition \r\nprecedent to an action shall not apply to such difference.– Where it is provided \r\n(whether in the arbitration agreement or otherwise) that an award under an \r\narbitration agreement shall be a condition precedent to the bringing of an action with \r\nrespect to any matter to which the agreement applies, the Court, if it orders (whether \r\nunder this Act or any other law) that the agreement shall cease to have effect as \r\nregards any particular differ ence, may further order that the said provision shall also \r\ncease to have effect as regards that difference. \r\n37. Limitations.– (1) All the provisions of the \r\n7\r\n[**** ] Limitation Act, 1908\r\n8\r\n, shall \r\napply to arbitrations as they apply to proceedings in Court. \r\n(2) Notwithstanding any term in an arbitration agreement to the effect that \r\nno cause of action shall accrue in respect of any matter required by the agreement to \r\nbe referred until an award is made under the agreement, a cause of action shall, for \r\nthe purpose of limitation, be deemed to have accrued in respect of any such matter \r\nat the time when it would have accrued but for that term in the agreement. \r\n(3) For the purposes of this section and of the \r\n9\r\n[**** ] Limitation Act, 1908\r\n10\r\n, \r\nan arbitration shall be d eemed to be commenced when one party to the arbitration \r\nagreement serves on the other parties thereto a notice requiring the appointment of \r\nan arbitrator, or where the arbitration agreement provides that the reference shall be \r\nto a person named or designat ed in the agreement, requiring that the difference be \r\nsubmitted to the person so named or designated. \r\n \r\n7The word “Indian” omitted by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in \r\nthe Gazette of Pakistan (Extraordinary), dated 25.3.1949, pages 223-283, Article 2 and Schedule. \r\n8IX of 1908 \r\n9The word “Indian” omitted by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in \r\nthe Gazette of Pakistan (Extraordinary), dated 25.3.1949, pages 223-283, Article 2 and Schedule. \r\n10IX of 1908 \r\n \r\n(4) Where the terms of an agreement to refer future differences to \r\narbitration provide that any claims to which the agreement applies shall be barred \r\nunless notice to appoint an arbitrator is given or an arbitrator is appointed or some \r\nother step to commence arbitration proceedings is taken within a trine fixed by the \r\nagreement, and a difference arises to which the agreement applies, the Court, if it is \r\nof opinion that in the circumstances of the case undue hardship would otherwise be \r\ncaused, and notwithstanding that the time so fixed has expired, may on such terms, \r\nif any, as the justice of the case may require, extend the time for such period as it \r\nthinks proper. \r\n(5) Where the Court orders that an award be set aside or orders, after the \r\ncommencement of an arbitration that the arbitration agreement shall cease to have \r\neffect with respect to the difference referred, the period between the commencement \r\nof th e arbitration and the date of the order of the Court shall be excluded in \r\ncomputing the time prescribed by the \r\n11\r\n[****] Limitation Act, 1908\r\n12\r\n, for the \r\ncommencement of the proceedings (including arbitration) with respect to the \r\ndifference referred. \r\n38. Disputes as to arbitrator’s remuneration or costs. – (1) If in any case an \r\narbitrator or umpire refuses to deliver his award except on payment of the fees \r\ndemanded by him, the Court may, on an application in this behalf, order that the \r\narbitrator or umpire shall deliver the award to the applicant on payment into Court by \r\nthe applicant of the fees demanded, and shall, after such inquiry, if any, as it thinks \r\nfit, further order that out of the money so paid into Court there shall be paid to the \r\narbitrator or umpire by way of fees such sum as the Court may consider reasonable \r\nand that the balance of the money, if any, shall be refunded to the applicant. \r\n(2) An application under sub -section (1) may be made by any party to the \r\nreference unless the fees demanded have been fixed by written agreement between \r\nhim and the arbitrator or umpire, and the arbitrator or umpire shall be entitled to \r\nappear and be heard on any such application. \r\n(3) The Court may make such orders as it thinks fit respecting the costs of \r\nan arbitra tion where any question arises respecting such costs and the award \r\ncontains no sufficient provision concerning them. \r\nCHAPTER VI \r\nAPPEALS \r\n39. Appealable orders.– (1) An appeal shall lie from the following orders passed \r\nunder this Act (and from no others) to the Court authorized by law to hear appeals \r\nfrom original decrees of the Court passing the order:– \r\nAn order– \r\n(i) superseding an arbitration; \r\n(ii) on an award stated in the form of a special case; \r\n(iii) modifying or correcting an award; \r\n \r\n11The word “Indian” omitted by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in \r\nthe Gazette of Pakistan (Extraordinary), dated 25.3.1949, pages 223-283, Article 2 and Schedule. \r\n12IX of 1908 \r\n \r\n(iv) filing or refusing to file an arbitration agreement; \r\n(v) staying or refusing to stay legal proceedings where there is an \r\narbitration agreement; \r\n(vi) setting aside or refusing to set aside an award: \r\nProvided that the provisions of this section shall not apply to a ny order \r\npassed by a Small Cause Court. \r\n(2) No second appeal shall lie from an order passed in appeal under this \r\nsection, but nothing in this section shall affect or take away any right to appeal to \r\n13\r\n[the Supreme Court]. \r\nCHAPTER VII \r\nMISCELLANEOUS \r\n40. Small Cause Court not to have jurisdiction over arbitration save \r\narbitrations in suits before it.– A Small Cause Court shall have no jurisdiction over \r\nany arbitration proceedings or over any application arising there out save on \r\napplication made under section 21. \r\n41. Procedure and powers of Court .– Subject to the provisions of this Act and \r\nof rules made there under– \r\n(a) the provisions of the Code of Civil Procedure, 1908\r\n14\r\n, shall apply to all \r\nproceedings before the Court, and to all appeals, under this Act, and \r\n(b) the Court shall have, fo r the purpose of, and in relation to arbitration \r\nproceedings, the same power of making orders in respect of any of the \r\nmatters set out in the Second Schedule as it has for the purpose of, \r\nand in relation to, any proceedings before the Court: \r\nProvided that nothing in clause (b) shall be taken to prejudice any \r\npower which may be vested in an arbitrator or umpire for making \r\norders with respect to any of such matters. \r\n42. Service of notice by party or arbitrator .– Any notice required by this Act to \r\nbe served otherwise than through the Court by a party to an arbitration agreement or \r\nby an arbitrator or umpire shall be served in the manner provided in the arbitration \r\nagreement, or if there is no such provision, either– \r\n(a) by delivering it to the person on whom it is to be served, or \r\n(b) by sending it by post in a letter addressed to that person at his usual or \r\nlast known place of abode or business in \r\n15\r\n[Pakistan] and registered \r\nunder Chapter VI of the \r\n16\r\n[****] Post Officer Act, 1898\r\n17\r\n. \r\n \r\n13Substituted for the words “His Majesty in Council” by the Central Laws Adaptation Order, 1961, (1 of 1961); and published in \r\nthe Gazette of Pakistan (Extraordinary), dated 24.1.1961, pages 102 -176, Article 2 and Schedule ( with effect from the 23rd \r\nMarch, 1956). \r\n14V of 1908 \r\n15Substituted for the words “the Provinces and the Capital of the Federation” by the Central Laws (Statue Reform) Ordinance, \r\n1960 (XXI of 1960); and published in the Gazette of Pakistan (Extraordinary), dated 9.6.1960, pages 725 -845, s. 3 and 2nd \r\nSchedule (with effect from the 14 th October, 1955), which had been substituted for the words “British India” by the Adaptation \r\nof Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in the Gazette of Pakistan (Extraordinary), \r\ndated 28.3.1949, pages 223-283, Article 3 & 4. \r\n \r\n43. Power of Court to issue processes for appearance before arbitrator. – (1) \r\nThe Court shall issue the same processes to the parties and witnesses whom the \r\narbitrator or umpire desires to examine as the Court may issue in suits tried before it. \r\n(2) Persons failing to attend in accordance with such process, or making \r\nany other default, or refusing to give their evidence, of guilty o f any contempt to the \r\narbitrator or umpire during the investigation of the reference, shall be subject to the \r\nlike disadvantag es, penalties and punishments by order of the Court on the \r\nrepresentation of the arbitrator or umpire as they would incur for the like offices in \r\nsuits tried before the Court. \r\n(3) In this section the expression “processes” includes summonses and \r\ncommissions for the examination of witnesses and summonses to produce \r\ndocuments. \r\n44. Power of High Court to make rules .– The High Court may make rules \r\nconsistent with this Act as to– \r\n(a) the filing of awards and all proceedings consequent thereon or \r\nincidental thereto; \r\n(b) the filing and hearing of special cases and all proceedings consequent \r\nthereon or incidental thereto; \r\n(c) the staying of any suit or proceeding in contravention of an arbitration \r\nagreement; \r\n(d) the forms to be used for the purposes of this Act; \r\n(e) generally, all proceedings in Court under this Act. \r\n45. \r\n18\r\n[Government] to be bound.– The provisions of this Act shall be binding on \r\nthe \r\n19\r\n[Government]. \r\n46. Application of Act to statutory arbitrations .– The provisions of this Act, \r\nexcept sub-section (1) of section 6 and section 7, 12, \r\n20\r\n[,36] and 37, shall apply to \r\nevery arbitration under any other enactment for the time being in force, as if the \r\narbitration were pursuant to an arbitration agreement and as if that other enactment \r\nwere an arbitration agre ement, except in so far as this Act is inconsistent with that \r\nother enactment or with any rules made thereunder. \r\n47. Act to apply to all arbitrations.– Subject to the provisions of section 46, and \r\nsave in so far as is otherwise provided by any law for th e time being in force, the \r\nprovisions of this Act shall apply to all arbitrations and to all proceedings thereunder: \r\n \r\n16The word “Indian” omitted by the Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O.4 of 1949); and published in \r\nthe Gazette of Pakistan (Extraordinary), dated 25.3.1949, pages 223-283, Article 2 and Schedule. \r\n17VI of 1898 \r\n18Substituted for the word “Crown” by the Central Laws Adaptation Order, 1961, (1 of 1961); and published in the Gazette of \r\nPakistan (Extraordinary), dated 24.1.1961, pages 102-176, Article 2 and Schedule (with effect from the 23rd March, 1956). \r\n19Substituted for the word “Crown” by the Central Laws Adaptation Order, 1961, (1 of 1961); and published in the Gazette of \r\nPakistan (Extraordinary), dated 24.1.1961, pages 102-176, Article 2 and Schedule (with effect from the 23rd March, 1956). \r\n20Inserted by the Repealing and Amending Act, 1942 (XXV of 1942), received the assent of Governor General on 1.10.1942, s. \r\n3 and the Second Schedule. \r\n \r\nProvided that an arbitration award otherwise obtained may with the consent of \r\nall the parties interested be taken into consideration as a c ompromise or adjustment \r\nof a suit by any Court before which the suit is pending. \r\n48. Saving for pending references.– The provisions of this Act shall not apply to \r\nany reference pending at the commencement of this Act, to which the law in force \r\nimmediately before the commencement of this Act shall, notwithstanding any repeal \r\neffected by this Act, continue to apply. \r\n49. \r\n21\r\n[Repeals and amendments.– * * * * * * * ] \r\n \r\n \r\n21Repealed by the Repealing and Amending Act, 1945 (VI of 1945) ; and published in the Gazette of India, Part IV, dated \r\n21.4.1945, pages 8-17, s. 2 and First Schedule \r\n \r\nTHE FIRST SCHEDULE \r\n(See section 3) \r\nIMPLIED CONDITIONS OF ARBITRATION AGREEMENTS \r\n1. Unless o therwise expressly provided, the reference shall be to a sole \r\narbitrator. \r\n2. If the reference is to an even number of arbitrators, the arbitrators shall \r\nappoint an umpire not later than one month from the latest date of their respective \r\nappointments. \r\n3. The arbitrators shall make their award within four months after entering on the \r\nreference or after having been called upon to act by notice in writing from any party \r\nto the arbitration agreement or within such extended time as the Court may allow. \r\n4. If the arbitrators have allowed their time to expire without making an award or \r\nhave delivered to any party to the arbitration agreement or to the umpire a notice in \r\nwriting stating that they cannot agree, the umpire shall forthwith enter on the \r\nreference in lieu of the arbitrators. \r\n5. The umpire shall make his award within two months of entering on the \r\nreference or within such extended time as the Court may allow. \r\n6. The parties to the reference and all persons claiming under them shall , \r\nsubject to the provi sions of any law for the time being in force, submit to be \r\nexamined by the arbitrators or umpire on oath or affirmation in relation to the matters \r\nin difference and shall, subject as aforesaid, produce before the arbitrators or umpire \r\nall books, deeds, pap ers, accounts, writings and documents within their possession \r\nor power respectively, which may be required or called for, and do all other things \r\nwhich, during the proceedings on the reference, the arbitrators, or umpire may \r\nrequire. \r\n7. The award shall be final and binding on the parties and persons claiming \r\nunder them respectively. \r\n8. The cost of the reference and award shall be in the discretion of the \r\narbitrators or umpire who may direct to, and by whom, and in what manner, such \r\ncosts or any part there of shall be paid, and may tax or settle the amount of costs to \r\nbe so paid or any part thereof and may award costs to be paid as between legal \r\npractitioner and client. \r\n \r\nTHE SECOND SCHEDULE \r\n(See section 41) \r\nPOWERS OF COURT \r\n1. The preservation, interim custo dy or sale of any goods which are the subject-\r\nmatter of the reference. \r\n2. Securing the amount in difference in the reference. \r\n3. The detention, preservation or inspection of any property or thing which is the \r\nsubject of the reference or as to which any q uestion may arise therein and \r\nauthorizing for any of the aforesaid purposes any person to enter upon or into any \r\nland or building in the possession o f any party to the reference, or authorizing any \r\nsamples to be taken or any observation to be made, or expe riment to be tried, which \r\nmay be necessary or expedient for the purpose of obtaining full information or \r\nevidence. \r\n4. Interim injunctions or the appointment of a receiver. \r\n5. The appointment of a guardian for a minor or person of unsound mind for the \r\npurposes of arbitration proceedings. \r\n____ \r\n22\r\nTHE THIRD AND FOURTH SCHEDULES. \r\n[ENACTMENTS REPEALED. 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