The legal system of any state is of fundamental importance. Legal system not only provides justice, but also enhance the opportunities of FDI in its state. In Pakistan’s legal system the parliament has a prominent role. The law making institutions of parliaments are the senate and national assembly. The parliament is responsible to make laws for foreign investment and foreign investors’ protection. The Judiciary and courts are other prominent elements of legal system. The parliament has a supportive role for foreign investors to provide appropriate law regarding their protection, whereas judiciary has an opposite role in providing benefits to foreign investors.In the past foreign investors have to face challenges by the judicial system.The intervention by the courts of Pakistan in Steel Mill’s privatization case as well as the intervention by the Supreme Court in various other foreign investment projects have been observed. The rental power case in which the Supreme Court terminated the agreement between Pakistan government and a foreign company is a renowned case in the past. To pursue a Foreign direct investment in Pakistan it is crucial to revise state’s judicial laws regarding FDI. This would be beneficial for both the foreign investor and the host state(Pakistan) to get the mutual benefit in the form of a stable investment project. China is investing a number of projects in Pakistan under CPEC, the stable and fair laws for FDI would be a favorable step to establish successful investment projects.
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