Arbitration in Pakistan Under Islamic Jurisprudence: A Comprehensive Legal Analysis

Abstract

Arbitration (taḥkīm) has deep roots in Islamic jurisprudence, where amicable settlement (sulḥ) and conflict resolution are strongly encouraged by the Qur’an and the Sunnah of the Prophet Muhammad (peace be upon him). In modern Pakistan, arbitration is regulated primarily by the colonial-era Arbitration Act of 1940 and the recent Alternative Dispute Resolution Act of 2017. These laws operate within a constitutional framework that declares Islam to be the state religion and mandates that no law shall be repugnant to the injunctions of Islam. This article explores (1) the Islamic foundations for arbitration, including the Qur’anic texts and Hadith references in both Arabic and English translations; (2) the evolution of Pakistan’s arbitration landscape, highlighting key legislation; (3) pertinent case law reflecting the judiciary’s efforts to reconcile statutory arbitration with Islamic principles; and (4) a comparative overview of how other Muslim-majority jurisdictions, such as Saudi Arabia, the UAE, and Malaysia, approach arbitration under Islamic law. Central to this discussion is the ongoing tension between conventional arbitration practices—particularly the enforcement of interest (riba)—and the prohibition against riba in Islamic jurisprudence. The Federal Shariat Court’s rulings on interest, the role of the Council of Islamic Ideology, and higher courts’ interpretations all underscore the challenges in harmonizing modern commercial arbitration with the teachings of Islam. Through a case law analysis and a robust theoretical framework, the study delves into topics such as arbitrator qualifications in Islamic law, public policy exceptions based on Shariah, and the cultural dynamics of jirga-style dispute resolution. The conclusion offers recommendations for legislative reforms, institutional capacity building, and policy interventions to foster a more coherent, Islamic-law-compliant arbitration system in Pakistan.