The Peshawar High Court (PHC) has set aside orders of a subordinate court that appointed a sole arbitrator without the consent of the University of Engineering and Technology (UET) Peshawar in a monetary dispute with a construction company. The ruling came after the court accepted an appeal filed by the university.
Justice Dr Khurshid Iqbal, heading a single-member bench, declared illegal the orders passed on May 6 and November 14, 2025, by an additional district judge. The trial court had first appointed a sole arbitrator and later dismissed UET’s request for the appointment of a second arbitrator.
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While disposing of the appeal, the bench directed the trial court to provide all relevant parties a fair opportunity to present their arguments on the appointment of arbitrators. It ordered that the process be conducted strictly in accordance with Clause 67.3 of the contract and Section 20(4) of the Arbitration Act, 1940.
The respondent, Hidayatullah Construction Company, had approached the district court under Section 20 of the Arbitration Act, seeking referral of the dispute to arbitration. The company claimed that despite completion of work at UET’s Jalozai Campus, payments and final price adjustments amounting to approximately Rs445 million remained unsettled.
UET contested the claim, arguing that the contractor had completed the project in 42 months instead of the stipulated 18 months. It maintained that the delay significantly affected the project and financial obligations.
On May 6, 2025, the trial court ruled that a prima facie dispute existed and referred the matter to arbitration, appointing a sole arbitrator. UET later challenged this decision, asserting that the appointment violated mandatory provisions of the Arbitration Act.
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The high court observed that under both the contract and the International Chamber of Commerce arbitration rules, arbitrator appointments must follow a structured and consensual process. It ruled that the trial court exceeded its authority by bypassing the agreed mechanism and imposing its own discretion.