Find a Lawyer

versus

EUROPEAN GRAIN AND SHIPPING LTD.‑Respondent

Civil Petitions for Special Leave to Appeal Nos. 648, 51, 52, 53, 54 of 1978 and 139‑R, 140‑8, 141‑R, 142‑R and 143‑R of 1978, decided on 12th June, 1982.

Constitution of Pakistan (1973)‑

Art. 185 (3)‑Leave to appeal‑Granted to consider whether in case in hand only evidence that could be recorded against enforcement of a foreign award is that which relates to proving all or any of grounds mentioned in S. 7 (1) (2) of Arbitration (Protocol and Convention) Act, 1937; whether evidence relating to misconduct in proceedings under Act of 1937 could only be confined to that kind of misconduct by Arbitrators which is, also regarded as. breach of rules of natural justice by said Arbitrators in arbitration proceedings and not mis conduct of general nature envisaged under S. 10 Of Arbitration Act, 1940, etc. etc.‑Arbitration Act (X of 1940)‑Arbitration (Protocol and Convention) Act (VI of 1937).

Malik Muhammad Qayyum, Advocate Supreme Court with Naeemur Rehman, Advocate Supreme Court and Sh. Abdul Karim, Advocate‑on‑Record for Petitioner.

Abid Hassan Mlnto, Advocate Supreme Court with' Sh. Masud Akhtar, Advocate‑on‑Record for Respondent.

Date of hearing : 12th June, 1982.

ASLAM

RIAZ HUSSAIN, J.‑The petitioner‑Company seeks Leave to Appeal against the judgment of the Karachi High Court, dated 22‑11‑1978, dismissing its civil revision in an arbitration case.

2. The facts giving rise to the petition are, briefly, that the petitioner is a Company incorporated in England‑while the respondent Company. is incor porated under the Companies Act, 1913, carrying on its business at Faisalabad. The parties entered into a contract whereby the Company at Faisalabad (respondent herein) was to supply rapeseed to the petitioner Company. The contract contained an arbitration clause which provided that any dispute arising between the parties shall be referred to Grain and Food Trade Associa tion in London for arbitration. A dispute arose between the parties and the matter was accordingly referred to the aforementioned Association in England which made an award in favour of the petitioner‑Company._ Respondent filed an appeal before the Board of Appeal of the said Association which was dismissed and the award was upheld making the respondent liable to Rs. 62,273.12. The petitioner Company thereafter applied under section 5 of the Arbitration (Protocol and Convention) Act, 1937 (hereinafter called the Arbitration Act, 1937) for passing the judgment and decree in terms of the award. The same was, however, resisted by the respondent Company and as many as 17 issues were struck out of which only two namely issues Nos. 7 and 8 are relevant for the purposes of this case. They read as follows

"(7) Whether the arbitrators have misconducted themselves, if so to what effect 7 OPR

(8) Whether the Board of appeal has also acted illegally and the decision of the Board of Appeal is of no legal consequence " OPR

In the list of witnesses submitted by the respondent Company it prayed for the examination of two witnesses residing in London on commission. But the request was opposed by the petitioner Company which also made an application praying therein that the respondent be directed to confine itself producing such evidence as was envisaged by sections 7 and 8 of the Act of 1937. The reason for this was that whereas misconduct as defined in the Arbitration Act (No. X) of 1940, is wide and section 30 of the said Act provides, inter alia, that an award can be got set aside on the ground that the arbitrator or the umpire has misconducted himself. A number of acts could be proved to show misconduct' under the Arbitration Act, 1940, while according to section 7 (2) of the Arbitration Act, 1937 :‑

"7.‑(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 matters beyond.

Provided that if the award does not deal with all questions referred the Court may, if it thanks fit, either postpone the enforcement of the award or order its enforcement subject to the giving of such security by the person socking to enforce it as the Court may think fit.

In other words the petitioner‑Company wanted that the respondent should "not be allowed to prove any misconduct other than the one mentioned in clause (b) of section 7 (2) of the Arbitration Act, 1937. In support of his contention that the award in the present case was governed by Arbitration Act, 1937 and cannot be challenged on an unnecessary ground mentioned in section 7 of the said Act, the learned counsel relied on section 47 of the Arbitration Act, 1940, relevant portion whereof reads as follows :‑‑‑

"47. Subject to the provisions of section 46 and save in so far as is otherwise provided 6y any law for the time being in force, the provisions of this Act shall apply to ail arbitrations and to all proceedings there. under."

The petitioner's contention that the Arbitration Act, 1937 being a "law for the time being in force", would govern the situation notwithstanding the provisions of section 30 of the Arbitration Act, 1940.

As against this the respondent had relied, before the High Court, on the concluding portion of subsection (1) of section 7 of the Arbitration Act, 193 7, which after laying down condition for enforcement of foreign award provided as the cud that :‑‑

"Enforcement thereunder must not be contrary to public policy or the law of Pakistan."

and contended that the situation was governed by the law of Pakistan as contained in section 30 of the Arbitration Act, 1940.

It was further contended by. the petitioner Company: that the learned High Court had directed that the evidence with regard to, misconduct sought to be produced by the respondent should be first recorded and it would be subsequently decided that any portion of the same would be relevant under the law applicable to the case.

The matter needs consideration. Leave is therefore granted to consider ; whether in such a case the only evidence that can be recorded against the enforcement of a foreign award are that which relate to proving all or any o the grounds mentioned in sections 7 (1) and (2) of the Arbitration (Protocol and Convention) Act of 1937 ; Whether evidence relating to misconduct in proceedings under Act of 1973 can only be confined to that king of misconduct by the Arbitrators which is also

regarded as breach of rules of natural justice by the said Arbitrators in the Arbitration proceedings and not misconduct' of general nature envisaged under section 30 of the Arbitration Act of 1940. Whether it is not duty of the Court to first determine which evidence is relevant in the case, before it is recorded and that the question of the relevance of evidence in a case cannot be left to be decided at the final stage in view of the provisions of section 136 of the Evidence Act, 1872 ;. and finally whether the Arbitration Act of 1937, being a Special Statute relating to enforce ment of foreign award, would not prevail over the Arbitration Act, 1940, which is a General Act relating to Arbitrations and awards arising therefrom.

Let security in the sum of Rs. 2,500 be deposited in each case.

The appeals may be heard on the same record with permission to file additional documents.

S. A. H. Leave granted.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.