PUBLIC POLICY EXCEPTION IN INTERNATIONAL COMMERCIAL ARBITRATION AND APPROACH OF PAKISTAN COURTS

Abstract

The public policy exception in international commercial arbitration has been a controversial and inconsistently applied defense against the recognition and enforcement of foreign arbitral awards. This article examines the approaches of various jurisdictions, including the United Kingdom, United States, Germany, Australia, Hong Kong, Canada, China, and Pakistan, in interpreting and applying the public policy exception under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The article traces the historical development of the regulatory framework for international commercial arbitration and the adoption of the New York Convention, which aimed to facilitate the recognition and enforcement of foreign arbitral awards with limited grounds for refusal. The article discusses the pro-enforcement policy of the Convention and the challenges posed by the public policy exception. It analyzes the different interpretations of public policy across jurisdictions, ranging from narrow and restrictive to broad and expansive. The article focuses on the approach of Pakistani courts, which have shifted towards a pro-enforcement stance in recent years, emphasizing the importance of upholding the finality and enforceability of arbitral awards. The article concludes that respect for party autonomy, the pro-enforcement policy, and the desire for finality should guide courts in applying a restrictive interpretation of the public policy exception, limiting its application to cases where the fundamental principles of morality and justice would be contravened.