A pilot court-referred mediation centre will be established in Karachi, a hub for business investors and industry, by the International Finance Corporation (IFC), the private sector arm of the World Bank group.
The IFC is promoting the institutionalisation of mediation as an alternative dispute resolution (ADR) mechanism for the private sector.
The project's goals are to mitigate expensive and lengthy court procedures faced by the private sector and help extricate small and medium businesses from litigation and further to help release assets caught up in legal disputes.
A memorandum of understanding (MoU) was signed by the IFC with the Sindh High Court (SHC) here on Saturday.
The pilot centre is expected to serve as a model for Pakistan.
According to IFC, Pakistan's commercial dispute settlement processes are generally considered discouraging to market-based growth as well as to domestic and foreign investment.
The small and medium businesses commonly face five to 10 years litigation processes, and courts are backlogged with cases. One-third of the cases is commercial in nature, many of which go to trial.
Individuals and businesses have little alternative recourse in the event of a contract breach, which creates a disincentive for foreign and local investors to do business in Pakistan.
The IFC project will work with the SHC to support the pilot mediation centre. The Sindh High Court and the selected district and sessions court will provide the pipeline of cases to the mediation centre where the cases will be handled by trained mediators following the international best practice.
The project will also help professionalise mediation through the training, monitoring, certification, and registration of mediators, and it will campaign to raise awareness and promote mediation among the country's practitioners, end-users, and general public.
In August last, the IFC and the government convened a workshop in Karachi on the institutionalising mediation in Pakistan. The workshop was supported by the Law, Justice, and Human Rights Ministry as well as the country's judiciary, bar and the private sector. Participants, including chief justices of the Supreme Court of Pakistan and the Sindh High Court, the Minister of Law, Justice, and Human Rights and the Attorney General.
IFC Acting Director Michael Essex, for the Middle East and North Africa, said: "We believe that the establishment of a pilot mediation centre, the first of its kind in Pakistan, will demonstrate the effectiveness of mediation in resolving small and medium enterprises' commercial disputes speedily and cost-effectively."