Introduction
When one party seeks to compel the other to arbitrate without having filed any suit, Section 20 of the Arbitration Act 1940 provides the legal mechanism that makes such relief possible. This guide is prepared from the perspective of practice before the Karachi District Courts and the Sindh High Court, offering advocates and law students a practical, court-ready understanding of the provision and its application in arbitration proceedings.
What Is Section 20? (Statutory Meaning)
Chapter III of the Arbitration Act 1940 is titled “Arbitration with Intervention of a Court where there is no Suit Pending,” and this title itself explains the context of Section 20. It applies where:
- A valid, written arbitration agreement already exists between the parties, and
- No civil suit is currently pending before any court in respect of that subject-matter.
In such a situation, any party (or the parties jointly) can apply to the court to have that arbitration agreement “filed,” after which the court files the agreement and refers the matter to an arbitrator. For this reason, Section 20 is often described in practice as the “trigger mechanism” for arbitration when the other party is refusing or delaying the appointment of an arbitrator.
The Two Categories of Arbitration | Statutory Scheme
The Arbitration Act 1940 divides the entire scheme into two broad categories:
| Without the Intervention of the Court | With Intervention of Court |
|---|---|
| Proceedings are commenced by the parties themselves, without court involvement (Chapter II — Sections 3 to 19) | Proceedings are commenced with the assistance of the court (Chapters III & IV) |
| — | Where no suit is pending → Section 20 applies |
| — | Where arbitration arises within a pending suit → Sections 21–25 apply |
This distinction matters because if a suit is already pending, a Section 20 application is not maintainable in that situation; the correct remedy is Section 34 (stay of suit) or the procedure under Sections 21–25.
When Does Section 20 Apply? (Conditions)
In practice, courts apply a core test built around the following essential conditions:
- Valid arbitration agreement: A written arbitration agreement must exist between the parties, executed by or binding on the applicant.
- No suit instituted: No civil suit should have been instituted in respect of the subject matter of that agreement.
- Agreement must relate to the subject-matter: The dispute for which reference is sought must fall within the subject-matter covered by the agreement.
- Arbitration proceedings must not have already commenced: If arbitration proceedings have already begun (without the court), a Section 20 application will not be maintainable.
- Existence of a genuine dispute: The Sindh High Court has consistently held that “existence of a difference or dispute is an essential condition”; without an actual dispute, a Section 20 application cannot be sustained (1986 CLC 2630; PLD 1954 Sindh 56).
- The court must have jurisdiction: The application must be filed before a court that has territorial and pecuniary jurisdiction over the subject matter under Section 2(c). “Court” means the civil court that would have jurisdiction to try the dispute had it been the subject matter of a suit.
Practice Tip: Courts do not go into the merits of the dispute. The Lahore High Court clarified in PLD 2024 Lahore 1 that the court exercises only “limited jurisdiction” under Section 20; it must simply ascertain (a) the existence of a valid arbitration agreement, and (b) the existence of a genuine dispute arising under it. The merits of the underlying dispute are for the arbitrator to decide, not the court.
Who Can File the Application?
- Any party to the arbitration agreement; a single party can apply alone.
- Where more than one party wishes to apply, they may join together as applicants.
- All other parties to the agreement must be given notice under Section 20(3). The court issues a show-cause notice to them, asking why the agreement should not be filed.
Procedure From Application to Reference Order
- The applicant files a written application before the competent Civil Court.
- The application is numbered and registered as a suit; the applicant is treated as plaintiff, and the other parties as defendants.
- The court issues notice to the other party/parties requiring them to show cause, within the time specified, why the agreement should not be filed.
- If no sufficient cause is shown, the court orders the agreement to be filed and refers the matter to the arbitrator named in the agreement, or to an arbitrator agreed upon by the parties, or, where the parties cannot agree on an arbitrator, to an arbitrator appointed by the court itself [Section 20(4)].
- Thereafter, the arbitration proceeds in accordance with the remaining provisions of the Act (award, filing, objections, decree, etc.) [Section 20(5)].
Limitation Period
The Arbitration Act itself does not prescribe a specific limitation article for Section 20 applications. In practice, the residuary provision under the Limitation Act 1908, Article 181 (three years), is applied, unless the agreement itself specifies a shorter contractual timeline. Courts have also clarified (2014 CLC 466, Islamabad High Court) that Section 20 does not impose any rigid time-frame within which the other party must respond; the only requirement is that the party be given a reasonable opportunity to do so.
When Section 20 Does Not Apply
- Where a civil suit on the subject matter has already been instituted.
- Where arbitration proceedings have already commenced without the court’s involvement.
- Where the dispute is simply not “arbitrable,” for example, matters falling within the exclusive jurisdiction of specialised tribunals, or matters involving public policy considerations (though the Supreme Court clarified in Hub Power Co. v. WAPDA, PLD 2000 SC 841 that a mere allegation that the agreement is void ab initio does not automatically bar reference to arbitration).
- Where no genuine, live dispute actually exists, the mere existence of an agreement is not sufficient on its own.
Advantages of Section 20 of the Arbitration Act 1940
Before filing an application, it helps to understand exactly why Section 20 of the Arbitration Act 1940 is such a widely used remedy in commercial and contractual disputes across Pakistan. Some of the practical advantages of invoking Section 20 of the Arbitration Act 1940 include:
| Advantage | Why It Matters in Practice |
|---|---|
| Forces an unwilling party to arbitrate | Where a party ignores the arbitration clause, Section 20 of the Arbitration Act 1940 gives the other party a direct route to court-ordered reference, rather than being stuck in limbo. |
| Faster than a full civil suit | Because the court’s inquiry under Section 20 of the Arbitration Act 1940 is limited to the existence of the agreement and the dispute, proceedings are generally quicker than a full trial on the merits. |
| Preserves the parties’ original bargain | An application under Section 20 of the Arbitration Act 1940 enforces the parties’ own choice of forum (arbitration), rather than allowing one side to unilaterally abandon it by simply not cooperating. |
| Court supervision without full litigation | The court remains involved enough to appoint an arbitrator and later supervise the award, while the substantive dispute stays out of the ordinary civil court docket. |
| Useful leverage tool | Even the filing of a Section 20 of the Arbitration Act 1940 application often prompts a reluctant party to cooperate, since it signals the applicant’s seriousness about pursuing the matter. |
Disadvantages and Practical Limitations of Section 20 of the Arbitration Act 1940
Section 20 of the Arbitration Act 1940 is not without its drawbacks, and advocates should set realistic expectations with clients before filing:
- Not available once a suit is pending: If the other party moves first and institutes a civil suit, the window to invoke Section 20 of the Arbitration Act 1940 closes, and the applicant is pushed toward the Section 34 stay route instead.
- Delay through objections: Respondents frequently contest the existence of a “genuine dispute” or challenge jurisdiction, which can turn what should be a summary proceeding under Section 20 of the Arbitration Act 1940 into a mini-trial.
- Old statute, old drafting: Because the Arbitration Act 1940 predates modern arbitration practice (including the UNCITRAL Model Law framework that later influenced the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011 for international awards), Section 20 of the Arbitration Act 1940 is considered slow and court-heavy compared to more modern arbitration regimes.
- No fixed timeline for court response: Since the Act does not prescribe strict timelines for disposal, a Section 20 application under the Arbitration Act 1940 can still take months, depending on the court’s docket.
- Appointment disputes can arise later: Even after a reference order is passed under Section 20 of the Arbitration Act 1940, disagreements over the identity or neutrality of the arbitrator can lead to further applications and delay.
Practical takeaway: Section 20 of the Arbitration Act 1940 works best when the arbitration clause is clearly drafted, the dispute is well-documented, and the applicant is prepared for the respondent to contest jurisdiction or the existence of a dispute. Weak or vague agreements are the single biggest reason these applications get delayed or dismissed.
Other Relevant Information About Section 20 of the Arbitration Act 1940
- Appealability: An order passed under Section 20 of the Arbitration Act 1940 refusing to file the agreement or refusing reference is generally appealable under Section 39 of the Act, since it falls within the categories of appealable orders listed there.
- Court fee: Applications under Section 20 of the Arbitration Act 1940 are typically valued, and the court fee is affixed based on the value of the subject matter in dispute, similar to an ordinary suit.
- Interim relief: Parties are not left without protection while a Section 20 of the Arbitration Act 1940 application is pending; interim measures can separately be sought under Section 41 read with the Second Schedule of the Act.
- Consent orders: In practice, many Section 20 of the Arbitration Act 1940 applications are disposed of by consent, with both parties agreeing on the arbitrator at the first or second hearing, once the application makes clear that the matter will otherwise proceed to a contested reference.
Relevant Reading
Since limitation issues frequently arise alongside Section 20 of the Arbitration Act 1940, particularly around how long a party can wait before applying for reference, readers dealing with a Section 20 of the Arbitration Act 1940 matter may also find it useful to review our Limitation Act 1908 series, including the post on Article 120 and accrual-based limitation principles, and the companion piece on Section 12 computation rules. Together, these posts explain how limitation is calculated for civil applications generally, which directly affects the timeline for filing under Section 20 of the Arbitration Act 1940.
Application Under Section 20 Arbitration Act 1940 Professional Draft Format
Below is a court-ready template structured in line with the practice before the Karachi District Courts. Customise it according to your facts, and be sure to replace all placeholders.
IN THE COURT OF THE SENIOR CIVIL JUDGE, KARACHI [SOUTH/EAST/WEST/CENTRAL/MALIR/KORANGI]
Civil Miscellaneous Application No. _____ of 20____
[Name of Applicant]
S/o _____________, [Occupation], R/o _____________________
………. APPLICANT
VERSUS
[Name of Respondent]
S/o _____________, [Occupation], R/o _____________________
………. RESPONDENT
Application Under Section 20 of the Arbitration Act, 1940 for Filing of Arbitration Agreement and Reference of Dispute to Arbitration
Respectfully Sheweth:
1. That the Applicant and the Respondent entered into a written agreement dated ___________ (“the Agreement”), a true copy whereof is annexed hereto as Annexure “A”, containing a valid arbitration clause at Clause No. ____ thereof, whereby the parties agreed to refer any dispute or difference arising out of or in connection with the said Agreement to arbitration under the Arbitration Act, 1940.
2. That a dispute/difference has arisen between the parties in relation to the subject matter of the Agreement, particulars whereof are as follows: [brief, factual statement of the dispute dates, amounts, breach, correspondence exchanged].
3. That the Applicant, vide letter/notice dated ___________ (Annexure “B”), called upon the Respondent to appoint an arbitrator / to proceed to arbitration in terms of the arbitration clause, but the Respondent has failed and/or neglected to respond, or has refused to cooperate, despite the lapse of a reasonable period.
4. That no suit in respect of the subject-matter of the said Agreement, or any part thereof, is pending before this Hon’ble Court or any other Court of competent jurisdiction, nor have any arbitration proceedings commenced between the parties otherwise than through this Hon’ble Court.
5. That this Hon’ble Court has the jurisdiction to entertain and adjudicate upon the present Application as the cause of action arose within its territorial limits / the Agreement was executed within its jurisdiction / the Respondent resides and carries on business within its jurisdiction [state applicable ground].
6. That the value of the subject-matter for court fee and jurisdiction is fixed at Rs. ___________, and court fee of Rs. ___________ has been affixed on this Application accordingly.
7. That it is just, fair and necessary, in the interest of justice, that the arbitration agreement between the parties be ordered to be filed in this Hon’ble Court and the dispute referred to arbitration in terms of the Agreement.
PRAYER:
It is, therefore, respectfully prayed that this Hon’ble Court may graciously be pleased to:
(a) Order that the arbitration agreement dated ___________ annexed as Annexure “A” be filed in this Hon’ble Court;
(b) Refer the dispute between the parties, as stated above, to the arbitrator named in the Agreement / to an arbitrator to be appointed by consent of the parties / to an arbitrator to be appointed by this Hon’ble Court in terms of Section 20(4) of the Arbitration Act, 1940;
(c) Grant any other relief which this Hon’ble Court may deem fit and proper in the circumstances of the case.
Applicant
Through Counsel
VERIFICATION
Verified at Karachi on this _____ day of ___________, 20____, that the contents of the above Application are true and correct to the best of my knowledge and belief, and nothing has been concealed therefrom.
Deponent
Drafting note:
The application should be accompanied by the original or a certified copy of the arbitration agreement, court-fee stamps, and, where available, correspondence (notices/emails) establishing the dispute and the other party’s non-cooperation. A separate verified affidavit is also required.
Practical Notes From General Practice
Objections in Section 20 applications typically centre on two points: (1) whether the applicant genuinely has a “dispute” at all, as opposed to merely invoking the arbitration clause without any real difference having arisen, and (2) whether the particular court seized of the matter actually has jurisdiction. Establishing both points clearly and factually in the pleadings is usually the most important part of drafting a Section 20 application; vague or generic averments are routinely held to be non-maintainable.
A second recurring issue concerns the wording of the arbitration clause itself. Where a clause does not expressly refer to the “Arbitration Act, 1940,” opposing counsel may argue that it is not a valid arbitration agreement at all. For this reason, it is good practice to expressly name the statute whenever drafting arbitration clauses in commercial agreements.
Frequently Asked Questions
1. What is the difference between Section 20 and Section 34 of the Arbitration Act?
Section 20 applies where no suit is pending, and a party wants the court to file the arbitration agreement and refer the matter to arbitration. Section 34 applies where a suit is already pending, and the defendant wants that suit stayed so the matter can proceed to arbitration instead.
2. Is prior notice required before filing a Section 20 application?
The statute itself does not make prior notice mandatory, but in practice, it is advisable to first give the other party notice, calling upon them to arbitrate. This helps establish both the existence of a dispute and the other party’s non-cooperation.
3. What happens if the other party refuses to appoint an arbitrator?
Under Section 20(4), if no sufficient cause is shown, the court itself orders the agreement to be filed and refers the matter to the arbitrator named in the agreement, or to an arbitrator agreed upon by the parties, or failing agreement to an arbitrator appointed by the court.
4. Which court should a Section 20 application be filed in?
The application must be filed before the civil court that would have jurisdiction to decide the subject matter, had it been raised as a suit. Small Cause Courts are excluded from this definition, except for proceedings under Section 21.
5. Is every contractual dispute “arbitrable”?
No. Certain matters falling within the exclusive jurisdiction of specialised tribunals, or involving public policy considerations, are generally not considered arbitrable. However, a mere allegation that the agreement is void ab initio does not automatically bar arbitration (PLD 2000 SC 841).
6. Does Section 20 apply if arbitration proceedings have already commenced?
No. If arbitration proceedings have already commenced without court involvement, a Section 20 application will not be maintainable; this is one of the core conditions for invoking the provision.
7. What is the limitation period for a Section 20 application?
The Arbitration Act does not prescribe a specific article; in practice, the residuary limitation period under the Limitation Act 1908 (Article 181 — three years) applies, unless the agreement itself specifies a shorter timeline.
8. Does the court decide the merits of the dispute in Section 20 proceedings?
No. The court’s role is limited to ascertaining the existence of a valid arbitration agreement and a genuine dispute. The actual merits of the dispute are decided by the arbitrator, not the court.
Disclaimer
This article is for general legal information and educational purposes only. It does not constitute legal advice. The facts of every case differ, so please consult a qualified advocate for guidance on your specific matter.