Islamabad High Court Overturns District Court Decision on Arbitration Appointment Dispute --- IHC

Islamabad 21-05-2024: In the recent development on the subject of appointment of arbitrator to resolve the Contractual Dispute, the Islamabad High Court laid down a landmark judgment. The Honourable Judge of Islamabad High Court, Mr. Justice Sardar Ejaz Ishaq Khan, while deciding the case [Civil Revision No. 200 of 2023] has overturned a decision by the learned Additional District Judge (ADJ) regarding the appointment of an arbitrator in a construction contract dispute. The civil revision petition challenged the ADJ's order, which dismissed the petitioner's application under section 8 of the Arbitration Act. 

The dispute arose from a claim for exchange rate uplift in the contract price, which was rejected by the Engineer under the contract's General Conditions. The ADJ's order, influenced by the Engineer's decision, concluded that the dispute couldn't be raised under the terms of the contract. However, the High Court found that the ADJ erred in assessing the arbitrability of the dispute and exceeded the scope of section 8 by delving into the merits of the case. Emphasizing the broad dispute resolution clause in the contract, the High Court ruled that such disputes were referable to arbitration and not for the civil court to interpret. The decision highlights the distinction between disputes arising from changes in legislation and those from market-based currency fluctuations, underscoring the arbitrator's role in determining such matters. Consequently, the High Court allowed the revision petition, setting aside the ADJ's order and restoring the petitioner's application before the District Court for further consideration.

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