P L D 1978 Karachi 273 (PLP)

4. It is now, well settled that this Court has jurisdiction to entertain suits of present nature notwithstanding the exclusive jurisdiction clause contained in the Bill of Lading. I may, however, refer to the decision of the Supreme Court in M. A. Chowdhary v. Messrs Mitsui O. S. K. Ltd. and 3 others P L D 1970 S C 373 and two connected cases wherein his Lordship Hamoodur Rahman, C. J. (as his Lordship then was) at page 393 of the report observed as follows :‑ "My examination of the treatment given to such foreign jurisdiction clauses by Courts in different countries leads me to the irresistible conclusion that nowhere have the Courts gone to the same extent as the Courts in East Pakistan. In no country has any Court accepted that such a foreign jurisdiction clause in a contract can legally oust the jurisdiction of the municipal Courts of the country, but the tendency actually seems to be that such a foreign jurisdiction clause, which is derogatory to the sovereignty of an independent country, should not be recognised. Even in Great Britain the British Maritime Law Association Agreed eat of let August 1950 has now, inter alia, provided that 'in the event of any claim being contested by legal process, the ship owner will not rely on any provision in the contract of carriage stipulating that claims must be referred to tribunals outside the. United Kingdom'. This is a significant change."

5. It is therefore, clear that in view of the above observation this Court has jurisdiction to entertain the suit. However, Mr. eyed Hassan Zafar Advocate, relying on the following passage in the decision cited above at page 394 of the report, submitted that the proceedings should be stayed in order to enable the parties to have resort to the forum of their choice. "Having said this, however, I am of the opinion that in order to preserve the sanctity of contracts I ought also to hold, as clay done in the earlier casks in Great Britain that such foreign jurisdiction clauses, even when they purport to give jurisdiction to a court to a foreign country, are really in the nature of arbitration clauses which come within the exceptions to section 28 of the Contract Act and, therefore, should be dealt with in the same manner as other arbitration clauses. In the case of an arbitration it has to be remembered that the jurisdic tion of the Courts is not altogether ousted, for, the Courts merely stay their hands to allow the parties to resort to the form of adjudication to which they have previously agreed. By only staying the actions before them the Courts still retain to themselves the jurisdiction to resume the case of the arbitration, for any reason, fails or the patties find it impossible to comply with the form of adjudica tion to which they had agreed. This was also the view taken in the case of Malik Ali Akbar, which I approve."

6. The learned Chief Justice in the judgment cited above, also noticed, it appears with approval, the following conclusions drawn by W. Tetley in his book entitled .Marine Cargo Claims' (1965 Edition), page 218, with regard to exclusive jurisdiction clauses :‑ (1) Staying the action is often the most equitable solution, because the Court which is given jurisdiction by the jurisdiction clause may refuse jurisdiction. (2) Reasonableness is the usual criterion used by Courts in deciding whether a jurisdiction clause should be honoured. (3) A jurisdiction clause should designate as clearly as possible the Court given jurisdiction. (4) Jurisdiction clauses are rarely valid against a person not a party to the hill of lading e.g., the stevedore or the charterer who did not issue the bill of lading. Nor are jurisdiction clauses casually valid if they result in a jurisdiction in which other parties who should be party to the action cannot be joined. (5) If the Court referred to in a jurisdiction clause is subject to a different law, which latter will decrease the rights of the parties, the jurisdiction clause is usually held invalid. (6) Jurisdiction clauses are rarely honoured in proceedings in reps. (7) It would seem that the burden of proof in the U. S. is on the person wishing to alter the jurisdiction of the Court, and in Great Britain the burden or proof is on the parson wishing to overcome the jurisdiction clause." And observed as follows :‑ " To this conclusion I would like to add that if a jurisdiction clause will have indirectly the effect of relieving the carrier from tae liability he would normally have incurred under the legislation of the country, then the Courts will not honour such a jurisdiction clause, Again, if the result of the enforcement of the jurisdiction clause will in effect to be to deprive one of the parties to a contract of his right to seek any remedy at all, then too the clause will not be given effect to."

7. Now, therefore, the question that falls for consideration is as to on whom should be the burden to satisfy the Court as to the justification for staying its proceedings. It has been seen from the conclusion drawn by Today with regard to the exclusive jurisdiction clause and, mentioned therein before that the burden of proof in the United States is on the person wishing to alter the jurisdiction of the Court and in Great Britain the burden of proof is on the person wishing to overcome the jurisdiction, clause. The view in the United States is based on "Carbon Black Export v. S. S. Monrosa' (1958) A M C 1335 where the United States Supreme Court is Gulf Oil Corporation v. Gilbert (1946) 330 U S 501 at page 508, is cited t "But unless the balance is strongly in favour of the defendant the plaintiff's choice of forum should rarely be disturbed". As regards the English view it would be useful to reproduce a passage from `Marine Cargo Claims' by W. Tetley (1965 Edition), page 218, which is as follows :‑ "However, in Great Britain, where the Courts seem to be much more willing to recognise the rights of the parties to contract in almost any way they please, the opposite view is taken. There, the burden is on the person wishing to upset the jurisdiction clause" For this view reliance 1s placed on the Fehmarn (1957) 1 Lloyd's Rep. 511 which was upheld on Appeal (1957) 2 Lloyd's Rep. 551, wherein Wilmer, J. at page 522 of the report states as follows :‑ "It is well established that, where there is a provision in a contract providing that disputes are to be referred to a foreign tribunal, then prima facie, this Court will stay proceedings instituted in this country in breach of such agreement and will only allow them to proceed when satisfied that it is just and proper to do so." The view taken by the United States Supreme Court has been followed by the supreme Court of Pakistan in M .A. Choudhri's case wherein Hamoodur Rehman, C. J. (as his Lordship then was) at page 396 of the report observed as follows :‑ "I cannot help feeling that the American view on this subject would be the one that should apply more appropriately in our own country, for, here too a foreign jurisdiction clause, as I have hold, would, unless it came within one of the exceptions to section 28, be void as being opposed to public policy. In such circumstances, the party who seeks to invoke the foreign jurisdiction clause, should ordinarily satisfy the Court that it is just and equitable to bind the parties to their bargain. I feel sure that if there had been a provision similar to that of section 28 of the Contract Act in the law of Great Britain, there too the same view would have been taken. The Courts in Great Britain have taken a different view because of their willingness to recognise, as Tetley has put it "the rights of the parties to contract in almost any way they please." If there was by law any clog on such freedom the result might well have boon different." Examined in the light of the dictum of their Lordships of the Supreme Court, the case put forward by the defendants for staying the proceeding in the suit rests on the plea taken in the written statement filed by the defendants as well as in the application under section 151, C. P. C. that the suit is liable to be stayed pending adjudication in terms of jurisdiction clause contained in the Bill of Lading in a Court in Panama and according to lair of that country as defendants appear to have their place of business there. Since the burden was on the defendants, the aforesaid plea by itself in my opinion, does not discharge the same. Unless the defendants had shown some thing more in terms of conclusions made by Tetlay mentioned herein, before, the proceedings are not liable to be stayed. The learned Advocate for the defendants relying on the provisions of section 34 of the Arbitration Act, submitted that as soon as the application there under is made, showing the dispute raised in the suit is covered by the arbitra tion agreement, Court should stay the proceedings. This submission has no substance in view of rule laid down by their Lordships of the Supreme Court in M. A. Chowdhri's case that the burden is on the person who wishes to alter the jurisdiction of the Court and so long as United States' Supreme Court view is followed here in Pakistan, the plea of defendants does not meet the requirement of the law. On the other hand, since the cargo was shipped from Dubai to Karachi) and the claim has arisen due to short landing of the cargo, therefore, the) main issue which would require decision will be as to what was the quantity of the goods shipped at Dubai and landed or discharged at Karachi for which evidence would in normal course, be available either at Dubai and! or in Karachi, and not in Panama. Indeed, it is the case of the defendants. as stated in their written statement, "that the defendant carriers carried the said goods which were said to be 215 M/tons by the shippers and discharged the said goods as bulk/loose cargo at the past of Karachi. The alleged shortage, if any, after discharge of the goods is not the liability or the responsibility of the defendant carriers. The short landing certificate allegedly issued by tae Karachi Port Trust is neither binding nor does not constitute any liability on the defendants". Therefore, to enforces the exclusive jurisdiction clause would involve the plaintiff into unnecessary expenses and great inconvenience moreso, when defendants No. 1 the carriers, who carried the cargo have their local agent in Karachi and when both are jointly defending the action by filing a joint written statement. The convenience of the patties and witnesses have always been taken into consideration while exercising discretion under section 24 of the Arbitration Act. Reliance is placed on S. E. Asia Co. Ltd., v. H & M (Ind.) P. Ltd. A I R 1962 Cal. 128 which was also a case of short landing of the cargo. IL the cite case reliance was placed on the decision in the case of Serajuddin & Co, v. Michael Colodetz A I R 1960 Cal, 47 where the Court was called upon to consider an arbitration agreement which contained a clause to the effect that any dispute arising out of the contract teas to be settled by arbitration in New York according to the laws of the American Arbitration Association. It was ruled upon a review of the facts of the case, that the agreed forum would not be a safe or convenient forum for a just decision of dispute between the parties ; in such circumstances, to compel a party to seek its remedy in America would practically amount to denial of justice as there was no sufficient reason for referring the dispute to arbitration and staying the suit. I may also refer to M M. Yaseen v. Messrs Iriving R. Boody & Co. P L D 1957 Kar. 755 wherein a Division Bench of this Court consisting of Constantine and Waheeduddin, JJ. had refused to stay the proceedings where among other reasons, parties resided in Karachi and the venue of arbitration proceedings according to arbitration clause was in New York. Significantly the plea raised in the written statement is that the suit is bad for non‑joinder of the necessary parties, namely, Karachi Port Trust and Consigners/Shippers. And in any case the Supreme Court of Pakistan in Sea Farers Inc. v. Province of East Pakistan ; and The New England Industries Inc. v. The Province of East Pakistan 20 D L R 225(S C) had upheld the refusal of stay of the proceedings in suits filed against foreign companies when they were represented by their local agents/defendants who had already filed their written statement. Even otherwise, under the provisions of section 34 of the Arbitration Act, one of the main conditions for stay of proceedings is that the application for stay of the proceedings should be made before filing a written statement or taking any other steps in the proceedings. In this case written statement has already been filed. The proposition needs no authority as the law is clear. However. if any precedent is needed reference may be had to 'G. M. Pfaff A. G. v. Sarta,/ Engineering Co. Ltd., Lahore P L D 1970 Lah. 184 wherein a Division Bench of the Lahore High Court, consisting of Mushtaq Hussain and Shameem Hussain Kadri, 11. observed at page 192 of the report a9 follows :‑ "Learned counsel for the appellant. however, strangely enough, did act advert to the other milestone mentioned in section 3 of the Act of 1937 and section 34 of the Act of 1940 i.e. "or taking any other steps on the proceedings". Not only does a defendant disentitle himself to the protection of these sections if he does not take his stand before filing a written statement, the situation is not any the different if he takes any other step in the proceedings before taking the objection. The intention of the statute is that the defendant wino wants to take advantage of an arbitration clause must without any ado and before submitting to the jurisdiction of the Court inform the Court in unequivocal terms that he is going to insist upon the implementation of the arbitration clause." I, therefore, decide the preliminary issue against the defendants and dismiss the application for stay of the proceedings. In the result the suit will proceed in this Court. S. A. H Orders accordingly