BUSINESS &

CORPORATE LAW
AN INTRODUCTION
What is Law?
• Several different definitions have been thought of Law over the past several years:
• “A law is a rule of conduct imposed and enforced by the sovereign”
(John Austin, English legal theorist, 1790 – 1859)

• “Law is the body of principles recognized and applied by the State in the administration of
justice” (Sir John William Salmond, New Zealand’s legal scholar & judge, 1862 – 1924)

• “Law is the body of principles recognized or enforced by public and regular tribunals in the
administration of justice.” (Nathan Roscoe Pound, American legal scholar, 1870 – 1964 )

• “Law is the system of rights and obligations which the state enforces.”
(Thomas Hill Green, English philosopher,Business
1836 –&1882 ) Law: An Introduction
Corporate 2
What is Law?
• A set of rules or a system of rules of conduct designed and enforced
by the state to control and regulate the conduct of people
• Rules establish rights, obligations, and privileges that are consistent
with the values and beliefs of the society they are part of
• Laws change as per the requirements of the society
• Both natural persons (human beings) and legal persons (companies)
are bound by laws of the country they reside in

Business & Corporate Law: An Introduction 3

Why business people need to know law?
• Laws and government regulations affect all business activities;
• hiring, firing and compensation of employees,
• purchasing of raw materials,
• manufacturing of products,
• sales and marketing of products,
• business financing,
• purchasing land, buildings, and equipment etc.,
• disposing of waste products,
• product liability (i.e. warranties)
• intellectual property of the organization.

Business & Corporate Law: An Introduction 4

Sources of Law in Pakistan
• Derived from English Common Law (Equity)
• Based on constitution of Pakistan 1973 and Shariah (Islamic Law)
• 4 main legal sources of law in Pakistan:
• Legislation
• Precedent
• Customs (Traditions)
• Agreement

Business & Corporate Law: An Introduction 5

Types of Precedent
• Original Precedent

• Binding Precedent

• Persuasive Precedent

• Declaratory Precedent

Business & Corporate Law: An Introduction 6

Doctrine of Binding Precedent
• A judge is bound to apply the law decided by earlier cases, if & only if:
• Those earlier cases were heard in a court of superior (or one of equal) status,
• Those earlier cases have involved similar facts in that area of the law.
• Judicial decision creating the precedent must be based on a
proposition of law of principle of law
• Proposition or principle of law must have been used by the judge as
‘ratio decidendi’ in a given case
• Judgment may also include related, but not strictly relevant,
comments on a given case as ‘obiter dicta’

Business & Corporate Law: An Introduction 7

Doctrine of Binding Precedent
• Ratio Decidendi:
• Latin phrase meaning “reasons for deciding”
• These are the legal reasons vital to the judge’s decision on a given case

• Obiter Dicta:
• Comments on the law which are related, but not necessarily relevant, to the
case before the judge
• Judges in later cases may be influenced by these statements but are not bound
to follow them
• If these comments are stated by a court of high standing, such as Supreme
Court, then they are usually followed in subsequent cases
Business & Corporate Law: An Introduction 8
Advantages of Binding Precedent
• Save Time & Expense

• Consistency & Certainty

• Flexibility

• Precision

• Development
Business & Corporate Law: An Introduction 9
Disadvantages of Binding Precedent
• Large number of precedents

• Slow & Random Development

• Uncertainty

• Complexity

• Unjust Precedents
Business & Corporate Law: An Introduction 10
 Types of Laws
EMPLOYMENT FAMILY PROPERTY

CIVIL CRIMINAL

BUSINESS TRAFFIC PEOPLE

Business & Corporate Law: An Introduction 11

 Civil Law vs Criminal Law
C I V I L L A W C R I M I N A L L A W
Purpose is to provide a remedy for a civil wrong or tort Purpose is to determine the guilt of the defendant.
& not to punish the person who loses the action. Sentences such as imprisonment or fines may be
Remedies include court orders that the losing party pays imposed on conviction.
damages to the other party or carries out the contract as
previously agreed.
Disputes between persons. Offences committed by persons.
Action taken by the claimant (one of the parties) Action taken by the State
Action is first heard either in the Civil Court or District Trial of the defendant is heard in either the Magistrates’
Court Court or the Session Court
Claimant must prove his case on the balance of State (prosecutor) must prove the defendant is guilty
probabilities, i.e. he must show that he has a greater beyond all reasonable doubts. The defendant does not
right than the defendant have to prove his innocence.
Judgement is entered either for the claimant (if Defendant must be convicted if he is found guilty &
defendant is found liable) or for the defendant (if acquitted if found not guilty
defendant is found not liable)

Business & Corporate Law: An Introduction 12

Examples of Civil Law
• Property disputes
• Work-related disputes
• Accusations of negligence
• Copyright disputes
• Claims of defamation of character
• Claims by consumers against manufacturers (warranties)
• Alleged breach of contract

Business & Corporate Law: An Introduction 13

Civil Law or Criminal Law?
• Most of the commercial & business activities come under Civil Law
• Criminal Law can also apply in some cases, though:
• Fraud,
• Money Laundering,
• Theft of Intellectual Property,
• Theft of physical goods,
• Arson,
• Accidents due to negligent behaviour, &
• Bribery.

Business & Corporate Law: An Introduction 14

Shariah or Islamic Law
• Based on teaching of Holy Qur’an & the Sunnah of Prophet
Muhammad (Peace Be Upon Him)
• Includes both criminal & civil laws
• Provided in the constitution of Pakistan that all existing laws shall be
brought in conformity with the Holy Qur’an & Sunnah

• Shariah Ordinance 1988: - attempt to declare Shariah as supreme

source of law in the country & grand norms of guidance for policy &
law making by the state

Business & Corporate Law: An Introduction 15

Some Legal Terminology
• Claimant / Plaintiff

• Defendant

• Appellant

• Respondent

Business & Corporate Law: An Introduction 16

Legislation Process in Pakistan

Business & Corporate Law: An Introduction 17

Legislation Process in Pakistan
• Federal Parliamentary system of Government
• Head of State: President
• Head of Government: Prime Minister
• Parliament (Majlis-e-Shoora) is the supreme legislative body &
consists of:
• National Assembly (Lower House)
• Senate (Upper House)
• President of Pakistan is also a component of the Parliament

Business & Corporate Law: An Introduction 18

Legislation Process in Pakistan
• President:
• Head of State
• Elected for a 5-year term by Senate, National Assembly, & Members of
Provincial Assemblies
• Eligible for re-election, but cannot hold the office for more than 2 consecutive
terms
• Approves the statutes passed by the National Assembly & thereafter by
Senate
• Majority party in the National Assembly usually nominates & elects a person
as the President

http://president.gov.pk/
Business & Corporate Law: An Introduction 19
Legislation Process in Pakistan
• Senate:
• Permanent legislative body with equal representation from each of the 4
provinces
• Senators are elected by member of their respective Provincial Assemblies
• A permanent institution; senators are elected at different times & hence,
always present on a permanent basis
• All statutes passed by the National Assembly are also approved by the Senate
EXCEPT money bills

http://www.senate.gov.pk/en/index.php

Business & Corporate Law: An Introduction 20

Legislation Process in Pakistan
• National Assembly:
• Important function is to make laws & formulate policies
• Members are elected for a period of 5 years through national elections & by
voting of the general public
• Seats of the national assembly are determined on the basis of population of
provinces
• Members elect from themselves:
• Speaker
• Deputy Speaker
• Prime Minister https://pmo.gov.pk/

http://www.na.gov.pk/en/index.php
Business & Corporate Law: An Introduction 21
Legislation Process in Pakistan
• Money Bill:
• Proposed legislation that only concerns taxation or government spending
(also known as appropriation of money)
• Originates in National Assembly
• After being passed in National Assembly, goes directly to the President for
assent to act / law

Business & Corporate Law: An Introduction 22

Legislation Process in Pakistan
• Ordinance:
• Only when National Assembly is not in session & the President deems it
necessary to take immediate action
• Has the same force & effect as Act of the Parliament
• Can be repealed after 120 days if it is not presented or passed:
• By the National Assembly in case of a Money Bill, or
• By both National Assembly & Senate, in case of anything other than Money Bill

Business & Corporate Law: An Introduction 23

Structure of Courts in Pakistan

SUPREME COURT
FEDERAL SHARIAH
HIGH COURTS COURT

CRIMINAL CIVIL
COURTS COURTS

MAGIST-
SESSION DISTRICT CIVIL
RATE
COURT COURT COURT
COURT

Business & Corporate Law: An Introduction 24

Structure of Courts in Pakistan
• Supreme Court of Pakistan:
• Highest appellate court of the country & court of last resort
• Final arbiter of law & the Constitution
• Its orders / decisions are binding on all other courts in the country
• Exercises original, appellate, & review jurisdiction
• Original jurisdiction:
• For settlement of intergovernmental & interprovincial disputes
• With respect to the enforcement of fundamental rights, if the case is of public importance
• Appellate jurisdiction:
• Hears appeals against orders & decisions of High Courts & other special courts / tribunals
• Review / Advisory jurisdiction:
• President may obtain its opinion on a question of law
https://www.supremecourt.gov.pk/
Business & Corporate Law: An Introduction 25
Structure of Courts in Pakistan
• High Courts:
• 5 High courts in Pakistan:
• 1 in each province & 1 in the federal capital, Islamabad
• Supervisory role over other courts subordinate to it
• Jurisdiction areas:
• Original jurisdiction Province Weblink
• Appellate civil jurisdiction High Court of Sindh https://www.sindhhighcourt.gov.pk/
• Appellate criminal jurisdiction Lahore High Court https://www.lhc.gov.pk/
• Supervisory jurisdiction High Court of Balochistan https://bhc.gov.pk/
• Constitutional jurisdiction Peshawar High Court https://peshawarhighcourt.gov.pk/
Islamabad High Court http://www.ihc.gov.pk/

Business & Corporate Law: An Introduction 26

Structure of Courts in Pakistan
• Criminal Courts:

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Structure of Courts in Pakistan
• Civil Courts:

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Structure of Courts in Pakistan
• Courts of 1st Instance:
• Small jurisdiction, consisting of a small area
• Hears cases which are of ordinary nature
• Presided over by:
• Judicial Magistrate – criminal cases
• Civil Judge – civil cases

Business & Corporate Law: An Introduction 29

Structure of Courts in Pakistan
• Courts of 2nd Instance:
• Above the court of 1st instance
• Has wider jurisdiction spread out over the whole district
• Criminal & Civil cases are more serious & important than court of 1st instance
• Hears the appeals against decision of lower courts
• Presided over by:
• Session Judge – criminal cases
• District Judge – civil cases

Business & Corporate Law: An Introduction 30

Structure of Courts in Pakistan
• Company Courts:
• High court, under the Companies Act 2017, has jurisdiction in the place where
the registered office of the company is located

• In each of the 5 high courts, one or more benches, also known as the company
bench, are constituted by the chief justice of High Court

• All cases coming before the court under Companies Act 2017 are disposed off
within 120 days from the date of presentation
(increased from 90 days – Companies Ordinance 1984)

Business & Corporate Law: An Introduction 31

Structure of Courts in Pakistan
• Industrial Tribunal:
• Established by the Industrial Relations Act of 2008
• Functions similarly to a court, except the decision maker is a specialist in a
particular field
• Has jurisdiction over most labour-related disputes:
• Redress of individual grievances
• Complaints of unfair dismissal
• Pay claims
• Questions regarding terms of employment
• Appeals against health & safety notices

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Alternative Dispute Resolution
• Alternate Dispute Resolution (ADR):
• Any type of procedure or combination of procedures voluntarily used to
resolve issues in controversy, other than court-based adjudication
• Most of the civil lawsuits are settled before trial using some form of ADR.
• 4 types of ADR:
•

Formality &
Negotiation

Complexity
increase
• Conciliation
• Mediation
• Arbitration

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Alternative Dispute Resolution - Negotiation
• Negotiation:
• Simplest & least expensive form of ADR
• Parties attempt to settle their dispute informally & voluntarily
• No involvement of a 3rd party trying to facilitate the resolution process or
imposing a resolution
• Lawyers usually advise their clients to negotiate a settlement voluntarily
before proceeding to trial

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Alternative Dispute Resolution - Negotiation
• Negotiation is useful when:
• Rules are being established for resolving potential conflicts, but no actual
conflict exists
• Both parties are interested in advancing each other’s business interests & are
willing to seek win-win solutions

• Negotiation is not useful when:

• Power balance is tipped unevenly against one party (i.e. one party has less
bargaining power than another)
• One party wants to maintain a business relationship much more than the
other party
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Alternative Dispute Resolution - Conciliation
• Conciliation:
• More complicated than a negotiation
• Involves a neutral 3rd party; a conciliator
• Conciliator attempts to help each party reach a mutually acceptable agreement
• Conciliator cannot suggest a resolution to the dispute
• Conciliator’s duties:
• Improving communications
• Explaining issues
• Scheduling meetings
• Discussing differences of opinion
• Serve as an intermediary between the parties when they are unwilling to meet each other

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Alternative Dispute Resolution - Mediation
• Mediation:
• A neutral 3rd party acts as a mediator & works with both parties in the dispute
to facilitate a resolution
• Mediator is appointed by the parties & is trained as a mediator
• Mediator might not be legally qualified, i.e. might not be a lawyer
• Mediator can come up with a resolution but cannot impose that resolution on
the parties
• If mediation fails in resolving the dispute, then the matters discussed at
mediation cannot be used in later court proceedings
• If mediation succeeds, then parties are likely to commit to the resolution
because they determined their own solution
• If the parties agree, the agreement can be written down & is legally binding
Business & Corporate Law: An Introduction 37
Alternative Dispute Resolution - Mediation
• Mediation is useful when:
• Both parties are prepared to make serious efforts to resolve the issues
• Both parties approach the dispute with a view to exploring mutual interests &
maintaining business relationship

• Mediation is not useful when:

• Either party is entirely focused on power or control
• Legal rights clearly favour one party & that party does not want to compromise
• One of both parties require a public decision to resolve the dispute & to set a
precedent for future disputes

Business & Corporate Law: An Introduction 38

Alternative Dispute Resolution - Arbitration
• Arbitration:
• Both parties appoint a neutral 3rd party to act as an arbitrator who renders a
decision to solve the parties’ dispute
• Resolution an arbitrator comes up with is legally binding
• This method is the most formal of the other 2 ADR options & resembles a
court proceeding due to some rules of evidence being applied
• Common practice for commercial contracts to contain express clauses
referring any future disputes to arbitration
• Arbitrators have specialist knowledge in the particular area & can ensure that
their decisions are in line with accepted practice of the business area
• Award received from the judgement of arbitrators’ decision is known as
“Arbitral Award”
Business & Corporate Law: An Introduction 39
Alternative Dispute Resolution - Arbitration
• Arbitration is useful when:
• Both parties agree on an arbitration system before a conflict develops
• Both parties are concerned about each other’s business interests & about
maintaining a good business relationship
• Balance of power is tipped against one party

• Arbitration is not useful when:

• Business relationship is damaged beyond repair
• Credibility of parties or witnesses is an issue
• Remedy being sought cannot be granted by arbitrators

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Alternative Dispute Resolution - Arbitration
• Advantages of ADR:
• Speedy
• Cheaper
• Flexible
• Privacy
• Appeal
• Experts

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Some More Important Weblinks
• Balochistan Provincial Assembly: pabalochistan.gov.pk/
• KPK Provincial Assembly: https://www.pakp.gov.pk/
• Punjab Provincial Assembly: https://www.pap.gov.pk/
• Sindh Provincial Assembly: http://www.pas.gov.pk/

• Ministry of Law & Justice: http://www.molaw.gov.pk/

• The Pakistan Code: http://pakistancode.gov.pk/

• Securities & Exchange Commission (SECP) of Pakistan:

https://www.secp.gov.pk/
Business & Corporate Law: An Introduction 42