ISLAMABAD: Commerce Ministry’s Trade Dispute Resolution Organisation (TDRO) is said to have failed to provide any relief to the exporters or importers in disputes with their foreign counterparts despite passage of years of its establishment.
Pakistan’s foreign trade is being expanded due to liberalisation, leading to increased number of disputes, and if not resolved efficiently, could damage Pakistan economically, as well as, its image. Trade dispute resolution system is one of the key requirements of business enabling environment (BEE.)
In order to overcome this, a dedicated government agency known as TDRO under MoC was established under STPF 2012-2015 in 2013-2014, for settlement of private foreign trade disputes through ADR. However, its law is still waiting for approval.
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During interaction with stakeholders, it was revealed that there is no law in Pakistan which settles the disputes of Pakistani exporters with their foreign buyers. The Imports & Exports Control Act 1950 addresses the disputes of foreign buyers only with Pakistani exporters. But even this law has many flaws/ issues, like dispute settlement under this law is through litigation, which is time consuming and costly and not secretive, “whereas, the best global practice for trade dispute settlement is ADR, having relatively, much less decision time/ cost and is also secretive in mediation,” said one of the stakeholders.
This law attempts to settle the claims of only foreign buyers/ importers against Pakistani exporters.
No relief, whatsoever, can be provided to Pakistani exporters against their foreign buyers and to foreign exporters against Pakistani importers.
According to the stakeholders, foreign traders would be reluctant to do trade with Pakistan in the absence of ADR system and there is a bias of the foreign courts in favour of its citizens. It was generally observed that whenever there was litigation between a Pakistani trader and his foreign counterpart in his country, the decision normally did not come in favour of the Pakistani trader which necessitates that exporter needs to be given a level-playing field.
Under the Act, a Commercial Court cannot take cognisance of an offence except upon a complaint made by an officer of the TDAP authorised by its Chief Executive (CE), or Secretary State Bank of Pakistan prosecutes exporters for non-repatriation of exports proceeds in its special court known as Foreign Exchange Adjudicating Officer under section 12 (1) of the Foreign Exchange Regulation Act 1947. Those exporters, who genuinely face default or even fraud, have to face these legal proceedings, which is a major de-motivating factor for them.
Talking about benefits of a new ADR system to Pakistan’s foreign trade if the draft law is passed, exporters would be able to file claim or complaint in Pakistan against their foreign respondent. Arbitral award obtained in Pakistan will be enforceable in any member country (167) which has ratified UN Arbitration convention as it is swift, relatively inexpensive, expeditious and secretive.
The new ADR system will improve the level of trust of foreign buyers of Pakistan. Through ADR system contract enforcement position will improve. Pakistani exporters will have level playing field. Unlike litigation, arbitration and mediation could be devolved to traders’ associations. Burden on the courts would be lessened.
Alternate Dispute Resolution (ADR) mechanism to replace Litigation: Section 63 of TDR Bill 2023, once enacted will repeal section 5 of I&E Control Act 1950, which deals with export trade dispute and will introduce ADR system of a UN standard.
UN & ADR: Different legal and judicial systems in UN member states were identified as one of the main hurdles in world trade expansion. In order to harmonise, unify and modernize legal and judicial systems of member states pertaining to foreign trade, UN, General Assembly in 1966, established, The United Nations Commission on International Trade Law (UNCITRAL), a 60 members (States) permanent body, with H/Qs in Vienna, which formulates new international conventions, model laws and uniform laws on various subjects of international trade.
Pakistan’s proposed ADR system Section 5 & 8 of the TDR Bill 2023 proposes independent five members TDRC, Commission to be headed by a Chairman to be appointed by the Division concerned from among its members. Both qualification & disqualification are given in Section 9 & 10 of the draft Bill. However, no Commission has been set up so far.
The sources said Commerce Ministry has not appointed any Director General of TDRP after retirement of its Director Umar Dad Afridi. The Organisation is almost dormant as neither Commission has been appointed nor the DG.
Copyright Business Recorder, 2024
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