The Arbitration Gap: What Pakistan Can Learn from Astana

Summary

Pakistan has spent much of the past decade reforming its arbitration law without building the institution needed to give that reform practical effect. Kazakhstan faced a similar credibility problem and answered it by establishing a dedicated international court and arbitration centre in Astana, later folded into its wider investment and financial centre proposition. This Insight examines why Pakistan, despite costly investor state disputes and repeated proposals for reform, still lacks a comparable forum for resolving complex international disputes.

Its argument is that the gap is institutional as much as legislative. A modern statute alone is unlikely to persuade an investor that a dispute lodged in Karachi or Islamabad will be resolved efficiently and impartially rather than drawn into prolonged court proceedings and appeals, which is why Pakistan’s most consequential disputes continue to be resolved in arbitration seated abroad.

Key findings

1. The exposure is large and recurring. In 2019 an ICSID tribunal awarded about USD 4.087 billion plus interest against Pakistan in the Tethyan Copper case over Reko Diq, before a negotiated resolution in 2022. In January 2026 investors holding an indirect interest in K-Electric served a Notice of Arbitration under the OIC Investment Agreement.
2. Reform is still on paper. Domestic arbitration remains governed by the Arbitration Act 1940. The Arbitration Bill 2024, which would align Pakistani law with the UNCITRAL Model Law, has cabinet approval in principle, and a 2026 proposal for an International Commercial Court would need a constitutional amendment. Both remain proposals.
3. Astana built the institution. The AIFC Court began operating on 1 January 2018 alongside its International Arbitration Centre, under rules based on English common law. By the end of 2024 the two had completed and enforced more than 3,400 cases, with lawyers from 34 countries taking part.
4. Law alone cannot bridge federal and provincial conduct. Reko Diq arose from provincial action, while the K-Electric claim points to federal agencies and regulators, so any forum must reach both.
5. The gap has a fiscal and professional cost: expensive proceedings abroad, heavy reliance on foreign counsel, little domestic arbitration capacity or institutional memory, and weak incentives to manage disputes early.

The way forward

The Insight proposes two steps. First, the Federal Government should prioritise enactment of the Arbitration Bill 2024, giving Pakistan the legal foundation to become a viable seat of international arbitration rather than only a respondent in cases seated abroad.

Second, it should attach a concrete institutional design to the proposed International Commercial Court at an early stage: a physical seat, a standing roster of arbitrators and judges selected through transparent and independent processes, clearly defined enforcement powers informed by international practice including the AIFC experience, and arrangements covering provincial governments and regulators such as NEPRA. Legislation without institutional capacity will have limited practical effect, and an institution cannot work without a legal foundation; Pakistan needs both.

Inside the Insight

1. Context
2. Analysis
3. Implications
4. The Way Forward
5. References
6. About the Authors

About the authors

How to cite

Aman, S. and Khan, R. (2026). The Arbitration Gap: What Pakistan Can Learn from Astana. Ardent Research Solutions. https://arspakistan.pk/insights/astana-arbitration.html

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This summary is drawn from the full publication, which should be read for the sources, qualifications and method behind each finding. It reflects the views of the authors and not necessarily those of ARS or its affiliates.