Taking a major step towards reduction in lengthy litigation process, the Securities and Exchange Commission of Pakistan (SECP) has signed a Memorandum of Understanding (MoU) with Karachi Centre for Dispute Resolution (KCDR) to encourage settlement of conflicts through 'alternate dispute resolution mechanism' among the regulated enterprises and companies.
To facilitate the entities, the SECP has resorted to this mechanism Thursday for the benefit of all companies falling within the regulatory ambit of the SECP. The MOU was signed by the Chairman SECP, Muhammad Ali and President KCDR former Justice Saiduzzaman Siddiqui, which will encourage the warring parties to opt for the mediation saving precious time instead of moving to the court of law.
The SECP will refer inter-party disputes among the relevant persons to an accredited mediator for amicable settlement through mediation, and the KCDR will train the relevant SECP officers in effectively discharging this function. The two organisations will establish and maintain effective consultation, co-operation and regular exchange of information on mediation. Both organisations will jointly hold awareness events in the form of seminars, workshops, and conferences for the stakeholders.
Chairman SECP termed the signing of MOU as a paradigm shift, which would have a positive impact on investor confidence as disputes will be resolved in a timely manner. He said that it will also reduce the direct and indirect cost of dispute resolution, and the MOU will allow SECP to better handle investors' complaints thus reducing the number of pending litigations in courts.
Chairman SECP further said that the SECP appellate bench can handle a maximum of 15-20 cases in a day, when it sits therefore we can imagine the stress on the high courts. At present, there are more than 1,000 court cases involving the SECP directly or indirectly, besides, a large number of cases pending in courts across the country where the SECP is a secondary party.
These are the cases in which two investors were involved in litigation, but the court calls SECP for comments as it is the corporate sector regulator. Muhammad Ali said that the SECP was the largest regulatory body in country covering key sectors including the insurance, capital markets, non -banking financial companies and the corporate sector. Therefore, huge business losses are being faced by the parties under litigation and under the current globalisation scenario the investors shift their focus to other lucrative markets rather than wait for the result of the case, he added.
Meanwhile, the Attorney General of Pakistan, Irfan Qadir informed the audience that in three years the pending court cases have increased from 1.7 million to 3.2 million. "We have to keep in mind two things - Justice delayed is justice denied and Justice rushed is justice crushed," Irfan Qadir said and added that Alternative Dispute Resolution (ADR) mechanism is a viable solution to provide relief in the present the scenario.
Former Justice Saiduzzaman Siddiqui, President KCDR said that arbitration was the main source of resolving disputes in the subcontinent prior to the establishment of formal judicial system. "The panchayat and Jirga systems are still effective in many areas and arbitration is similar to that system," he said adding that many successful lawyers in the US were now shifting to become mediators as it is more financially rewarding and time saving.
"Some countries have even made mediation mandatory before the court proceedings to reduce the burden on the judicial system," president KCDR said. Dr Zafar Sherwani, Director KCDR in his detailed presentation on ADR said that around 70 percent cases in advanced countries are settled through mediation however certain legal support was needed for ADRs in the country. "The main point is that mediation can be done through trust only and the court cannot ask the mediator to tell the confidential discussions made separately with the parties in disagreement," Dr Sherwani said and added, however if the mediation fails both the parties can continue with the legal proceedings. During 2007 and 2012 KCDR has resolved 1,516 cases out of 2,049 filed saving around $34 million.
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