P L D 1970 Karachi 173 (PLP)

6. On the other hand, it is urged on behalf of the applicants that if the terms of the English agreement, namely, to be governed under the English Arbitration Act are to be insisted upon, the opponents have forfeited that right since they entered into the agreement consciously in terms of section 7 of the English Arbitration Act, 1950, whereby on a reference being made to them the opposite‑party should appoint their arbitrator within seven days of the notice given to them.

7. This is essentially a case which, in my opinion, should be decided on equitable grounds for whilst there is no doubt that the opponent cannot resile from the applicant's right of insistence and adherence to the terms of the agreement of 1962, namely, to be governed in case of a dispute by the English Arbitration Act and therefore of the venue of the arbitra tion being in London, the applicants have time and again and indeed in this application reiterated their willingness to participate in arbitration proceedings in Karachi provided they are allowed the facility of nominating their own arbitrator, it is necessary to point out for the benefit of the opponent the observations of Buckland, J. in Sundermull Pereshram v. Tribhuban Hirachand & Co. ((1924) 82 I C 769), a matter in which the parties to a suit had entered into a contract in respect of a quantity of sugar, the contract containing an arbitration clause to the effect that all disputes were to be settled by arbitration under the rules of Bengal Chambers of Commerce or at the option of the seller by the arbitration of two European Sugar Importers of Calcutta, one to be appointed by the sellers and one to be appointed by the buyers. It was held that the plaintiffs sellers having elected to go to the arbitration of two European importers it was not' open to the defendants buyers to have the dispute arbitrated upon by the Tribunal in question, and in the case of failure of the plaintiffs to appoint an Arbitrator within the time fixed, in the absence of a different intention expressed in the submission, the procedure laid down in section 9, subsection (b) of the Arbitration Act should have been followed. It was also urged on behalf of the opponent that this application is not maintainable, that if it is maintainable no sufficient cause has been made out as the applicants had sufficient time to consult their London office and that indeed the time that should normally elapse in the contact between the London office and the Karachi office of the applicants should have been and was envisaged when the agreement was entered into and the time limit of seven days was impliedly agreed upon. I do not consider it necessary to embark upon the techni calities of the matter, suffice it to say that I propose to dispose of this application under the proviso to section 9 of the Arbitration Act, 1940, and the proviso to the corresponding section 7 in the English Arbitration Act, 1950 and on equitable grounds. The former proviso reads as follows: "

9. Where an arbitration agreement provides that a reference shall be to two arbitrators, one to be appointed by each party, then, unless a different intention is expressed in the agreement,‑ (a) if either of the appointed arbitrator neglects or refuses to act, or is incapable of acting, or dies, the party who appointed him may appoint a new arbitrator in his place ; (b) if one party fails to appoint an arbitrator, either originally or by way of substitution as aforesaid, for fifteen clear days after the service by the other party of a notice in writing to make the appointment, such other party having appointed his arbitrator before giving the notice, the party who has appointed an arbitrator may appoint that arbitrator to act as sole arbitrator in the reference, and his award shall be binding on both parties as if he had been appointed by consent ; Provided that the Court may set aside any appointment as sole arbitrator made under clause (b) and either, on sufficient cause being shown, allow further time to the defaulting party to appoint an arbitrator or pass such other order as it thinks fit. Explanation.‑The fact that an arbitrator or umpire, after a request by either party to enter on and proceed with the reference, does not within one month comply with the request may constitute a neglect or refusal to act within the meaning of section 8 and this section." Section 7 of the English Arbitration Act, 1950, reads as under: "

7. Where an arbitration agreement provides that the reference shall be to two arbitrators, one to be appointed by each party, then, unless a contrary intention is expressed therein,‑ (a) if either of the appointed arbitrators refuses to act, or is incapable of acting, or dies, the party who appointed him may appoint a new arbitrator in his place ; (b) if, on such a reference, one party fails to appoint an arbitrator, either originally, or by way of substitution as aforesaid, for seven clear days after the other party, having appointed his arbitrator, has served the party making default with notice to make the appointment, the party who has appointed an 4rbitratormay appoint that arbitrator to act as sole arbitrator in the reference and his award shall be binding on both parties as if he had been appointed by consent: Provided that the High Court or a Judge thereof may set aside any appointment made in pursuance of this section." It appears to me that the object underlying the provisos of both the Acts is the same, namely, that if sufficient cause is shown further time should be allowed to the defaulting party to appoint an arbitrator or pass such other order as this Court thinks fit.

8. As I have previously stated a certain amount of confusion occurred in or about the 13th and 14th of December 1968 of which advantage is sought to be taken by the opponent. The opponent being bound by the terms of his agreement of service cannot on one hand against these terms insist that the venue of the arbitration should be at his option in Karachi and on the other hand take advantage of them for the period in the English Arbitration Act, 1950. In the affidavit of Mr. Garl Heynen, the Manager of the applicant's company in Pakistan it has been satisfactorily explained that the matter of the opponent's transfer was administrative and as he refused to proceed to Chittagong his services were terminated under clause 5(a) of the agreement by letter sent by their London office and delivered to the opponent on 30th November 1968. I do not agree with the contention that the opponent had not earlier raised the contention that he was going to refer the matter to arbitration there is justification in the contention that the applicant's London office would have to be consulted as to the venue of the arbitration proceedings and although the applicants by their letter dated 9th December 1968 exercised their option to hold the arbitration in London, Mr. Garl Heynen signed the letter and left for Chittagong on 10th December 1968 and in his absence his office were not prompt in posting the letter until the 13th December 1968 when it appears to have crossed the opponent's letter of the same date. I am impressed by the fact that the opponent himself time and again in his correspondence with the applicants has stressed "the rules of natural justice and equity" in regard to his case and it is precisely on this ground that the applicants adhered to their undertaking to hold the arbitration proceedings in Karachi if they are given the option of appointing their arbitrator here. This from all points of view is essentially a case, therefore, in which this Court should exercise its option in equity and on the obvious assumptions arising out of the provisos of both the Arbitration Acts that apply in Pakistan and England. 1, therefore, allow the application to the extent that the applicants will be allowed 15. days time from the announcement of this order to appoint their arbitrator in Karachi to adjudicate at Karachi together with Mr. Dingomal Ramchandani, the opponent's arbitrator, the dispute between the parties. The parties must before entering upon the arbitration proceedings nominate to this Court an umpire in case of difference between the arbitrators. There will be no order as to costs. S.A.H. Application allowed