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Suit No. 85 and Civil Miscellaneous Application No.1023 of 1986, decided on 29th April, 1987.

---S.34--Arbitration--Contract entered between parties providing an arbitration clause--Applicant in its application under S.34 of Act and affidavit accompanying therewith merely stating about contract and arbitration clause but failing to state specifically and clearly disputes which had arisen between parties--Such omission, _held, was sufficient for dismissal of said application.

Novelty Cinema's Case P L D 1958 Lah.208 rel.

---S.34--Arbitration--Where arbitration clause from any other agreement is required to be lifted and incorporated in any other agreement, it should then be specifically and clearly stated--Merely by reference to terms of previous agreement, arbitration clause, held; would not automatically stand incorporated in fresh agreement.

McDoland Layton & Co. v. Associated Electrical Enterprises PLD 1982 Kar.786 rel.

---S.34--Application under S.34 for staying of proceedings in suit- Agreement arrived at between parties for supply of goods providing for a foreign arbitration at London, whereas consignment was to be supplied from Karachi to Naples and neither port of shipment nor port of discharge situated at London and entire evidence relating to contract available in Pakistan--Such dispute, held, could not be referred to arbitration and suit could not be stayed in circumstances.

P L D 1985 Kar.613 and P L D 1986 Kar.138 rel.

The Defendant No.1 has filed this application under section 34 of the Arbitration Act for stay of the proceedings and referring the matter to the arbitration as agreed between the parties. The Plaintiff and the Defendant No.1 had entered into an agreement dated 16-5-1985 which provided an arbitration clause. In terms of the arbitration clause one arbitrator was to be appointed by the Plaintiff and the other by the Defendant and the third by the first two appointed or in case of disagreement by the latter on the choice of the third arbitrator, same was to be appointed by the President of the Institute of Chartered Accountants in England. The arbitration was to take place at London in accordance with the provisions of Arbitration Act,1979. The law governing this contract was to be English law. The Defendant No.1 has further stated that it had entered into a contract with the Plaintiff for supply-of 18000 metric tons of sugarcane blackstrap mollasses of Pakistan origin at price of U.S. 65 per metric ton CIP Naples which were to be shipped in three equal shipments of 6,000 metric Ton. This contract was further modified by a con tract -dated 2-8-1985 according to which the Plaintiffs were required to supply other two cargoes of about 6,000 M.T. each at the new price of U.S. 61 per metric ton. The other terms and conditions of the contract dated:16-5-1985 were incorporated in this .agreement it seems that the Plaintiff had . shipped three consignments of 6,000 metric ton but fourth consignment of 6,000 metric ton was not shipped. The Plaintiff has pleaded that in terms of the agreement with the defendant No.1 dated 4-12-1985 it was not required to ship those goods. In pursuance of the .agreement dated 2-8-1985 the Plaintiff urges that under pressure it agreed to establish the insurance guarantee bond covering 10" of the total value of four cargoes, to guarantee due performance 'of the shipment to reach ETA Naples in time, and it was valid upto 31st January, 1986. When the dispute between the parties arose, it seems that the plaintiff apprehending that the insurance guarantee furnished by the defendant No.2 shall be encashed, filed this suit for declaration and injunction that on conclusion of the agreement dated 4-12-1985 the contracts dated 16-5-1985 and 2-8-1985 stand duly performed, and consequently, the performance bond furnished by the Defendant No.2 stood cancelled and is unenforcible. Permanent injunction was also prayed against the defendant No.2 from encashing the performance bond and against the defendant No.1 from collecting the same from defendant No.2.

In its application under section 34 and the affidavit accompanying it, the defendant No.1 has merely stated about the contract and the arbitration clause, but it has not specifically and clearly stated the disputes which have arisen between the parties. This lone ground in itself is sufficient for dismissal of this application. Reference can be made to Novelty Cinema's case P L D 1958 Lah.208. The learned counsel for the defendant No.1 has relied on the: incorporation clause of contract dated 2-8-1985 which reads as follows:-

"Terms and conditions of the fresh contract for the new taco cargoes will be the same as of previous contract."

This incorporation clause by itself is vague and most imperfectly drafted, but it conveys the sense that all the terms and conditions of the previous contract i.e. the contract dated 16-5-1985 shall govern this fresh contract relating to the two consignments, one of which is under dispute. It is well-established principle of law that where arbitration clause from any other agreement is required to be lifted and incorporated in any other agreement, then it should specifically and clearly be so stated. Merely by reference to the terms of the previous agreement arbitration clause does not automatically stand incorporated in the fresh agreement. Reference can be made to Mac Doland Layton & Co. v. Associated Electrical Enterprises, P L D 1982 Kar.786 and T.W.Thompson & Co. Ltd. v. Port Sea Steamship Co. Limited, 1912 A.C.1. In view of this, I find that the arbitration clause of the agreement dated 16-5-1985 does not stand incorporated in fresh agreement dated 2-8-1985 and as the consignment in dispute is governed by the second agreement and not by the first agreement there is no agreement between the parties to refer the dispute to the arbitrator.

Secondly, assuming for the sake of arguments that there is an agreement between the parties, then it provides for a foreign arbitration at London. The consignment was to be shipped from Karachi to Naples. The port of shipment and the port of discharge is not in London. The goods have not been shipped at all. Therefore, the C entire evidence regarding contract shall be available in Pakistan. In these circumstances, in view of the principle laid down in P L D 1985 Kar.613 and P L D 1986 Kar.138 the dispute cannot be referred to arbitration, and the suit cannot be stayed. The application is dismissed.

2. Mr. Noorullah Manji states that in view of the first report made by the Defendants No.2 they claim that they are not bound to pay the defendant No.1 under the performance bond executed by them. In view of this fact Mr. Manji states that instead of enforcing the performance bond by making demand, the defendant No.1 will file a suit against the defendant No.2 and the Plaintiff, and therefore, this application has become infructuous. In view of this statement, the application is dismissed.

M. Y . H . / C-23/ K Petition dismissed.

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