The Securities and Exchange Commission of Pakistan has issued a concept paper proposing a specialised alternate dispute resolution (ADR) mechanism for Islamic finance contracts in SECP-regulated sectors, with a focus on out-of-court settlement through mediation, arbitration and neutral evaluation in line with Shariah principles. The proposal would integrate Islamic finance-related principles and conditions into a dedicated ADR framework for contracts such as Musharakah, Modaraba, Murabaha, Ijarah, Wakala and Istisna, and connect it to existing mechanisms including section 276 of the Companies Act, 2017, the Arbitration Act, 1940 and the Alternative Dispute Resolution Act, 2017. Key design elements include ADR guidelines specific to Islamic finance contracts, the scope and mandate of a mediation and conciliation panel, eligibility criteria for arbitrators and mediators, how matters are referred to mediation and or arbitration, confidentiality provisions, and integration with other frameworks to streamline processes and support awareness. Feedback on the concept paper is due by April 11, 2025.

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