Contract Enforcement and Commercial Mediation: Pakistan's EU Gateway Preparedness

Abstract

Pakistan’s aspirations to deepen trade ties with the European Union (EU) hinge on strengthening its contract enforcement and commercial mediation frameworks. Despite being a strategic trade partner under the EU’s Generalized Scheme of Preferences Plus (GSP+), Pakistan faces significant challenges in resolving commercial disputes efficiently, deterring EU investors and limiting export competitiveness. This article examines Pakistan’s preparedness to meet EU standards in contract enforcement and mediation, critical for securing long-term market access under potential EU Gateway initiatives. The study identifies systemic inefficiencies in Pakistan’s judicial system, including protracted litigation, enforcement delays, and a lack of specialized commercial courts, which undermine contractual certainty. While traditional litigation remains dominant, the underutilization of Alternative Dispute Resolution (ADR) mechanisms, such as mediation, exacerbates these challenges. Comparative analysis reveals gaps between Pakistan’s current mediation landscape and EU best practices, particularly in institutional support, mediator accreditation, and enforcement of mediated settlements. Recent reforms, including the Draft Mediation Bill 2023 and initiatives by the Pakistan Business Council, signal progress but fall short of EU Directive 2008/52/EC benchmarks. Through case studies of EU-Pakistan trade disputes and successful domestic mediation examples, the article highlights the economic costs of weak dispute resolution and the potential of mediation to enhance Pakistan’s EU Gateway readiness. Recommendations include legal reforms to align mediation frameworks with UNCITRAL standards, establishment of EU-compliant mediation centers, and capacity-building for judges and mediators. A multi-stakeholder approach engaging policymakers, the private sector, and international partners is proposed to foster a culture of ADR and restore investor confidence. The findings underscore that robust contract enforcement and mediation mechanisms are not merely legal imperatives but economic necessities for Pakistan to leverage its GSP+ status and attract EU investment. By addressing these gaps, Pakistan can position itself as a reliable trade partner and accelerate integration into global value chains.

Keywords: Contract enforcement, commercial mediation, EU-Pakistan trade, GSP+, Alternative Dispute Resolution (ADR), judicial reforms, UNCITRAL, investor confidence, trade compliance, legal harmonization