2003 PLP 1666 (CLD)

(a) in pursuance of an agreement for arbitration to which the Protocol set forth in the First Schedule applies, and (b) between persons of whom one is subject to the jurisdiction of some one of such powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the official Gazette, declare to be parties to the Convention set forth in the Second Schedule; and of whom the other is subject to the jurisdiction of some other of the powers aforesaid, and (c) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Act and award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made. (2) For the removal of doubt it is hereby declared that any notification issued under this section by the late Government of India before the fifteenth day of August, 1947, and in force on that day for the purpose of enforcement of Foreign awards in British India, declaring any. Power to be a party‑to the said Convention or any territory to be the territory to which the Convention applies, shall be deemed to be a notification issued by the Central Government for the purpose of enforcement of Foreign awards in Pakistan."

22. The first argument of Mr. Rasheed Akhund that the Honourable Supreme Court in the case of Yangtze has held that a Foreign award was not enforceable for want of ratification. With profound respect, the referred judgment of the Honourable Supreme Court would be inapplicable as subsequently by Ordinance LIII of 1962 which is reproduced hereinunder, section 2 of the Act was amended which cured the defects pointed out by the Honourable Supreme Court in order to make the Foreign award enforceable by the Courts in Pakistan: "ORDINANCE LIII OF 1962 FOREIGN AWARDS AND MAINTENANCE ORDERS ENFORCEMENT (AMENDMENT) ORDINANCE, 1962

1. Short title and commencement.‑‑‑(1) This Ordinance may be called the Foreign Awards and Maintenance Order Enforcement (Amendment) Ordinance, 1962. (2) It shall come into force at once and shall be deemed to have taken effect on the fifteenth day of August, 1947.

2. Amendment of section

2. Act VI of 1937.‑‑‑In the Arbitration (Protocol and Convention) Act, 1937 (VI of 1937), section 2 shall be renumbered as subsection (1) of that section, and after subsection (1) as so renumbered the following shall be added as subsection (2) of that section and shall be deemed to have been so added on the 15th August, 1947, namely:‑‑ (2) For the removal of doubt it is hereby declared that any notification issued under this section by the late Government of India before the fifteenth day of August, 1947, and in force on that day for the purpose of enforcement of Foreign awards in British India, declaring any power to be a party to the said Convention or any territory to be the territory to which the Convention applies, shall be deemed to be a notification issued by the Central Government for the purpose of enforcement of Foreign awards in Pakistan."

23. It may be observed that after the judgment of the Honourable Supreme Court in the case of Yangtze Ordinance LIII of 1962 was promulgated on 6‑6‑1962 whereby, inter alia, section 2 of the Act was amended retrospectively with effect from 15‑8‑1947 which provided that for removal of doubt, it was declared that any notification issued under section 6 by the late Government of India before 15th August, 1947, and notified on that date for the‑ purpose of enforcement of Foreign awards in' British India, declaring any party to the said Convention or any territory to be the territory to which the Convention applied, shall be deemed to be a notification by the Central Government for the purpose of enforcing Foreign awards in Pakistan. In view of the Amending Ordinance the effect of the judgment of the Honourable Supreme Court in the case of Yangtze was nullified, inasmuch as the notification which was issued by the late Government of India before partition, was made operative with retrospective effect through legislation. There can be no exceptions to Ordinance LIII of 1962 as it does not violate any constitutional provision or enacted by the authority not competent to enact. It is the privileged or prerogative of Government of Pakistan to decide as to whether the Awara given in a particular foreign country should be enforced in Pakistan or not notwithstanding that the country in which the Award has been given has not made any reciprocal arrangement for the enforcement of Pakistan Awards as contemplated in section 2 of the Act. The Government of Pakistan has expressed its intention not through a notification but it. has been manifested through an enactment and, therefore, this Court would not decline to enforce the present award on the ground urged before me. I am in respectful agreement with the observations made by the Honourable Judges in both the cases reported in PLD 1979 Karachi 762 and 1987 CLC 83 and hold that a Foreign Award is enforceable by this Court as there could hardly be an exception to be taken to the Ordinance LIII of 1962 which has been competently enacted by which the Government of Pakistan has cured the defects pin‑pointer by the Honourable Supreme Court in the case of Yangtze.

24. Mr. Rasheed Akhund while arguing has submitted that the amendment in section 2 does not speak of the territories and according to him the Government was required to issue separate notification for every country to fulfill the requirement of section 2 (1) (c) of the Act. The word `territory' used in the said section refers to the country and in the same provision the word may has been used. Once the law has been amended by introducing subsection (2), which covers all the Conventions entered into or issued by notification in British India, no further notification was required in terms of section 2(1)(c). Even otherwise, Mr. Rasheed Akhund has not challenged the vires of the amendment nor could he challenge the same otherwise in these proceedings, therefore, this argument of Mr. Rasheed Akhund that notification in regard to territories was also necessary in addition to amendment was misconceived.

25. In addition to the amendment in section 2 the Government of Pakistan has also issued a notification on 20‑4‑1960 which is reproduced as under:‑‑ "Ministry of Law Karachi, the 20th April, 1960 S.R.O.481(K).‑‑‑In pursuance of section 2 of the Arbitration (Protocol and Convention) Act, 1937 (VI of 1937), the Central Government, being satisfied that reciprocal provisions as stated in that section have been made in relation to Pakistan by the Federal Republic of Germany with effect from the 22nd day of April, 1954, is pleased to declare the Federal Republic of Germany to be a party to the Convention set forth in the Second Schedule to the said Act as from that date. [No.F.7(12)/60‑Law] (Sd.) A.G. Kazi, Deputy Secretary." In the above notification it has been specifically mentioned that Federal Republic of Germany would be a party to the Convention set forth in the Second Schedule to the Act with effect from April, 1954. Admittedly, the plaintiff, was incorporated in Germany and was covered by the said, notification. It is inconceivable that the law bars parties to consent to arbitration to a third place. In the instant case, both the parties have consented to the arbitration in London under the GAFTA Rules. The arbitration proceedings could not be defeated merely on the ground that the arbitration has not taken place either in Germany or in Pakistan. There is no rule under which a bar of the nature has been created.

26. Mr. Rasheed Akhund has pointed that rule 4:7 of GAFTA Rules was violative of public policy as it deprives a party to be represented through a solicitor/ Barrister. Rule 4:7 of the Arbitration Rules of the GAFTA No. 125 read as under:‑‑ "4:

7. If any party to the arbitration wishes to attend the arbitration hearing he should notify the Association who shall, after consultation with the arbitrators, on receipt of such, notice, inform the parties of the expected date, the and place of the arbitration hearing. Any party or his representative (not being a solicitor or barrister, or other legally qualified Advocate, wholly: or principally engaged in private practice) shall be entitled to make further submissions orally or in writing in addition to those made under this rule. No person (including any solicitor/ barrister or other legally qualified advocate or advisor wholly or principally engaged in private practice) other than the parties and witnesses shall be permitted to attend the arbitration hearing, which shall be in private, unless the arbitrator(s) otherwise decide(s)." In commercial disputes based on documentary evidence, the GAFTA Rules provide appointment of arbitrator by each party and the arbitrators so appointed c by the parties in turn were required to appoint third arbitrator. Rule 4:7 in no way could be treated as against the public policy. The disputes of the nature are commercial disputes and once the parties agree to and consented to arbitration under the GAFTA Rules, participated in the proceedings after appointing arbitrator but when as a result of such arrangement an award was made against them they raise frivolous objections. In the present case, the defendant did not prefer appeal against the award but the plaintiff did prefer appeal against the award before Appellate Board of GAFTA and subsequent thereto the defendants have filed proceedings in the High Court of. London impugning award. In the present proceedings this Court would only confine to examine the award within the provisions of section 7(1) of the Act and the interference, if any, could only be warranted if the condition under section 7(2) of the Act surface. This Court would not to sit as an Appellate Court nor would it go behind the award to reappraise the, evidence. This Court exercising powers under section 7 of the Act acts as an executing Court which could not travel beyond the award save as expressly provided for under section 7(2) of the Act. I, therefore, could not find any force in the arguments of Mr. Rasheed Akhund that in view of Rule 4:7 contained in GAFTA Rules this Court should refuse to enforce the award under the pretext that the enforcement of the award would be contrary to public policy or to the principles of law of Pakistan terms of Articles of the Second Schedule of the Act. Mr. Rashid Akhund has failed to place any law to show that the GAFTA Rules under which the Arbitrators have conducted the proceedings were in any way contrary to the public policy of this country or in any way gave a party a right to challenge them being inconsistence with the laws of Pakistan. The provisions of the Act and the Schedules appended thereto could not be opposed to on the grounds raised by Mr. Rashid Akhund. There is no statute in Pakistan which restrains this Court from enforcing the Foreign award except the grounds detailed in section 7(2) of the Act. Under section 7(2)(b) it is provided that the party against whom the award is sought to be enforced must be given notice of arbitration proceedings in sufficient time to enable him to present his case. This condition has been fulfilled and the parties were given notice and in turn the parties have appointed Arbitrators. The other disjunctive condition under the same provision was that in the event if the party was under some "legal incapacity" and was not properly represented then a Foreign award shall not, be enforced by this Court. The other condition in the same clause (b) appears after the word "or" which ex facie indicates the condition was disjunctive. The defendants were under no legal incapacity and has participated in arbitration proceedings by appointing arbitrator pursuant to the contract which provided that the GAFTA Rules would apply, the matter went in appeal before the Board to which the defendant was a party who did not prefer appeal, and whereafter both the orders were challenged by the defendants before the High Court of London. In view of this the objection of the nature was hardly sustainable in law. I have also noticed that the order in appeal by the GAFTA Board clearly mentions that the original order of Award and order in appeal were based on the material placed before the forums and the facts were not in dispute nor were they disputed before both these forums, therefore, the arguments in regard to the payment of demurrage on the basis of documentary evidence produced before the arbitrators or before the Appellate Forum and the conclusion reached by these two forums could not be examined by this Court in view of the limitation placed under section 7(1) of the Act.

27. I am also not impressed by the argument of Mr. Rasheed Akhund that award sought to be filed can be set aside on the grounds mentioned in sections 30 and 33 or the Arbitration Act, 1940. Section 7(1) of the Act provides that the foreign Award may be enforceable if made in pursuance of an agreement for arbitration valid under the law by which it was governed and has been made by a Tribunal provided in the agreement or constituted in the manner agreed upon by the party in conformity with the law governing the arbitration procedure in respect of a matter which may lawfully be referred to arbitration under the law of Pakistan and then award has become final in the country in which it was made. Section 7(2) of the Act, however, provides the ground rendering a foreign Award unenforceable. Section 7 of the Act reads as under:‑‑ "

7. Condition for enforcement of foreign Awards.‑‑ (1) In order that a foreign Award may be enforceable under this Act it must have‑‑ (a) been made in pursuance of an agreement for arbitration which was valid under the taw by which it was governed; (b) been made by the Tribunal provided for in the agreement or constituted in manner agreed upon by the parties; (c) been made in conformity with the law governing the arbitration procedure; (d) become final in the country in which it was made; (e) been in respect of a matter which may lawfully be referred to arbitration under the law of Pakistan and the enforcement thereof must not be contrary to the public policy or the law of Pakistan. (2) A foreign Award shall not be enforceable under this Act if the Court dealing with the case is satisfied that‑‑ (a) the award has been annulled in the country in which it was made, or (b) the party against whom it is sought to enforce the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case, or was under some legal incapacity and was not properly represented; or (c) the Award does not deal with all the questions referred or contains decisions on matter beyond the scope of the agreement for arbitration: Provided that if the Award does not deal with all questions referred the Court may, if it thinks fit, either postpone the enforcement of the award or order its enforcement subject to the giving of such security by the person seeking to enforce it as the Court may think fit. (3) If a party seeking to resist the enforcement of a foreign Award proves that there is any ground other than the non‑existence of the conditions specified in clauses (a), (b) and (c) of subsection (1), or the existence of the conditions specified in clauses (b) and (c) of subsection (2), entitling him to contest the validity of the award, the Court may, if it thinks fit, either refuse to enforce the award or adjourn the hearing until after the expiration of such period as appears to the Court to be reasonably sufficient to enable that party to take the necessary steps to have, the award annulled by the competent Tribunal." As against this section 30 of the Arbitration Act, 1940, provides the following grounds on which a Pakistani award can be set aside:‑‑ "

30. Grounds for setting aside award.‑‑‑An award shall not be set aside except on one or more the following grounds, namely:‑‑ (a) that an arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35; and (c) that an award has been improperly procured or is otherwise invalid."

28. The language of both the statutes referred to hereinabove is different. Pakistani award can be set aside on the ground that an arbitrator or an umpire has misconducted himself or that the award has been improperly procured or was otherwise invalid whereas these grounds do not find place in section 7(2) of the Act. Even another ground for setting aside a Pakistani Award under section 30 of the Arbitration Act, 1940, is that an award has been made after issuance of an order by the Court superseding the arbitration or after the arbitration proceedings have become invalid pursuant to section 35 of the Arbitration Act', 1940. This condition is not available under, section 7(2) of the Act. Once the law under which the award has been given in conformity with the procedure laid down therein, this Court in exercise of powers under section 5 of the Act would not travel beyond the award to examine and scrutinize either the evidence or the material once it has attained finality subject to however, the grounds provided under section 7(2) of the Act. For the aforesaid reasons by my short order dated 26‑2‑2003 had ordered the award to be filed in Court suit in terms of the award dated 7‑2‑1994 granting demurrage against the defendants by the Chairman of the Board passed in appeal modifying earlier award dated 14‑7‑1993 is decreed. M.B.A./A‑465/K Suit decreed.