A company wins in London, Dubai or New York. The defendant's assets are in Karachi. The natural assumption is that the judgment travels with the winner.

It largely does not — and the difference between holding a judgment and holding an arbitral award is one of the most consequential facts in cross-border contracting with Pakistani counterparties. It is decided years earlier, by one clause.

Foreign judgments: the hard road

Pakistani law, following the Code of Civil Procedure, treats a foreign judgment as conclusive only in defined circumstances, and it is not conclusive where — among other things — it was not pronounced by a court of competent jurisdiction, was not given on the merits, was obtained by fraud, was given in breach of natural justice, or sustains a claim founded on a breach of law in force in Pakistan.

Two practical consequences.

Direct execution is available only in limited cases, essentially where the judgment comes from a court in a territory that has been formally reciprocated for these purposes. That list is narrow, and it does not include most of the jurisdictions where Pakistani businesses are sued.

Otherwise, you sue again in Pakistan — a fresh suit, in which the foreign judgment is evidence rather than a decree to be executed. The defendant can reopen the very defences the foreign court rejected, subject to the statutory grounds. That is expensive, slow, and uncertain.

Foreign arbitral awards: the workable road

Pakistan is a party to the New York Convention, given effect by the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011.

A foreign arbitral award made in a Convention country is recognised and enforced by the High Court, on application with the award and the arbitration agreement, and enforced as if it were a decree of that court.

The court does not rehear the merits. Recognition may be refused only on the narrow Convention grounds, essentially:

  • The arbitration agreement was invalid or a party was under incapacity
  • A party was not given proper notice or was unable to present its case
  • The award goes beyond the scope of what was submitted
  • The tribunal or procedure did not accord with the agreement or the seat's law
  • The award is not yet binding, or has been set aside at the seat
  • The subject matter is not arbitrable in Pakistan
  • Enforcement would be contrary to the public policy of Pakistan

Those grounds are argued, and public policy in particular is invariably raised. But the framework is genuinely one of enforcement, and that is a different world from re-litigating a claim.

What this means at contract stage

If you are contracting with a Pakistani counterparty and its assets are in Pakistan, this is the decision that determines whether your remedy is real:

Choose arbitration, and draft the clause properly. Name the seat, the rules, the number of arbitrators, the language, and the governing law. An unclear clause produces satellite litigation about the clause itself before anyone reaches the dispute. See drafting an arbitration clause.

Check the seat is in a Convention country, and that any relevant reservation does not defeat you.

Take security you can actually reach — a Pakistani bank guarantee, a parent guarantee, a charge over local assets, or payment terms that leave you exposed for less. A guarantee callable in Pakistan is often worth more than any award. See bank guarantees and letters of credit.

Identify where the assets are before you sue anywhere. Winning in a forum that cannot reach the money is the most common and most expensive strategic error in cross-border disputes.

Domestic arbitration is a separate regime

Awards made in Pakistan are governed by the Arbitration Act 1940, which is a materially different — and older — framework, involving filing the award in court and objections against it. Do not assume the Convention route applies to a domestic award; it does not.

Enforcing a Pakistani judgment abroad

The mirror problem, and one overseas clients frequently face: a decree obtained here against a person who has since moved to the UK, Gulf or North America. Whether it can be enforced there depends on that country's law — some jurisdictions recognise Pakistani judgments under reciprocal arrangements, others require a fresh action. Advice must come from a lawyer qualified there, and we coordinate with counsel abroad routinely.

Practical points on execution here

Recognition is only half the exercise. Once the award is enforceable as a decree, you still have to execute it — locating assets, attachment, and dealing with the familiar tactics of transferred property and dissipated accounts. Applications to restrain dealings with assets should be considered early, not after the judgment debtor has had notice and time. See stay orders and injunctions and recovering money owed.

Where the debtor is a company with nothing left, insolvency may be the route — see when a company owes you money and cannot pay.

For foreign investors and international counterparties

The enforcement question sits alongside the other issues foreign parties should resolve before committing: the structure through which you invest, how profits and capital come out, and what happens if the local partner relationship fails. See foreign company setup, joint ventures with a Pakistani partner and repatriating profits and capital.

How the firm can help

We apply to the High Court for recognition and enforcement of foreign arbitral awards, resist enforcement where there are proper grounds, bring suits on foreign judgments where that is the only available route, and execute against assets in Pakistan.

We also draft dispute resolution clauses for cross-border contracts — the stage at which this problem is cheapest to solve by a very wide margin.

See arbitration and ADR, or contact the firm with the award or judgment and details of where the assets are.