ABS & Co has secured a significant appellate victory before the Lahore High Court, successfully setting aside an order that referred disputes exceeding PKR 2 billion to a composite arbitration proceeding across multiple contracts.
The firm acted for Habib Construction Services Limited in FAO No. 72813 of 2025, where the appeal arose from an order of the Civil Court allowing a Section 20 application under the Arbitration Act, 1940 and directing a consolidated reference of disputes spanning ten separate projects. The impugned order had effectively compelled arbitration across a matrix of contracts, joint venture arrangements, and project-specific engagements, notwithstanding the absence of uniform arbitration agreements.
ABS & Co.’s case on appeal was anchored in three principal jurisdictional challenges.
First, statutory requirement of a written arbitration agreement had not been satisfied in respect of the majority of the disputes. Of the ten projects in issue, only three contained arbitration clauses, while the remaining arrangements were governed by documents that did not incorporate any agreement to arbitrate.
Second, the trial court’s reliance on “without prejudice” correspondence to infer the existence of an arbitration agreement was misplaced. Such communications, exchanged in the course of settlement discussions, were privileged in nature and could not constitute or evidence a binding arbitration agreement in the absence of formal consensus reduced to writing. We relied on the judgment of the Supreme Court of Pakistan in Muhammad Hanif Abbasi v. Jahangir Khan Tareen (PLD 2018 SC 114), which affirms that without-prejudice communications are legally insulated and inadmissible for establishing rights.
Third, a composite reference could not be made under the existing facts as the ten projects were independent in nature, involving distinct scopes of work, separate contractual frameworks, and, in certain instances, different parties, including third-party joint venture partners.
The High Court accepted our submissions and held that “without prejudice” communications cannot be relied upon to create arbitration rights or satisfy statutory requirements.
In addition, the High Court found that the trial court had failed to discharge its judicial function by deferring foundational questions—including the existence and scope of arbitration agreements—to the arbitral tribunal, rather than determining these issues as jurisdictional prerequisites. In light of these findings, the High Court set aside the impugned order and remanded the matter for fresh determination in accordance with law, directing the trial court to examine each agreement independently and proceed strictly within the confines of the statutory framework.
This decision constitutes an important reaffirmation of the principle that arbitration is a matter of consent, not convenience, and that courts must rigorously scrutinize the existence and scope of arbitration agreements before making any reference. It provides timely guidance on the limits of composite arbitration in Pakistan, particularly in the context of multi-project and joint venture arrangements.
The ABS & Co team was led by Bakhtawar Bilal Soofi before the High Court, along with Anza Mahmood Lilla and Ahtesham Toor.
