1. Facts leading to present order are that on 31-10-1993 China National -Machinery Import and Export Corporation a company incorporated under the law of the People's Republic of China having. its office located at West Wing. Sichuan Mansion No. I, Fuwaldajie St. Xichcng Dist. Beijing. Peoples Republic of China 100037 and respondent Tufail Chemical Industries Ltd. incorporated under the Companies Ordinance, 1984 having its office at second Floor Noorani Centre - 543 Adamjee Dawood Road, Karachi entered into a Contract No. M(53)PK-53780 whereby plaintiff agreed to sell and the respondent agreed to purchase machinery/ equipment, know-how and design as per terms and conditions of the same contract. Article 18 the contract provides for arbitration in Beijing Peoples Republic of China in English to be conducted by China International Economic and Trade Arbitration Commission in accordance with the letter, rules and procedure in case of any or all disputes from the execution of or in connection with the same contract. It also provides that the arbitration f the Commission will be final and binding upon both the parties.
2. As dispute arose between the parties regarding the execution of the contract the plaintiff applied to the CIETAC on 25-5-1999 for arbitration. The Chairman of CIETAC appointed an Arbitrator in accordance with its arbitration rules and procedure and an Arbitral Tribunal was constituted on 29-7-1999. The respondent were given notice and on the first date of hearing i.e. 12-10-1999 the matter was adjourned to 8-11-1999 at their request. On that date they were absent. However, on 19- 11-1999 the Secretariat of CIETAC received their written statement, objections defence and counter- claim after the expiry of time limit prescribed by the Arbitration Rules of CIETAC. After considering the material produced before the Tribunal it rendered its Award No.120 of 2000 within the prescribed time limit as per its Arbitration Rules. The award was as follows:--
(1) The respondent is ordered to, pay USD 820.000 and USD 50,000 as price of the goods under the contract to the claimant;
(2) The respondent is ordered to pay USD 45,500 as technical service fees to the claimant:
(3) The respondent is ordered to pay USD 16,000 as interests to the claimant:
(4) The respondent Is ordered to pay to the Claimant interests at the rate of 6% per annum calculated worn the date of April 21. 1997 to the date of the Award;
(5) The respondent is ordered to pay RMB 150,000 as lawyer expenses incurred by the claimant in the arbitration:
(6) The arbitration fee is determined to be RMB 230,912 which should be borne by the respondent.
3. The fee has been deposited with CIETAC in advance by the claimant. Accordingly, the respondent shall reimburse the Claimant RMB 230,912 for a refund of the arbitration fee.
4. The respondent shall make payments aforementioned within 45 days of this award, after which date an interest at the rate 6% in USD per annum and 8% in RMB per annum shall be calculated.
5. The Award is final and binding upon both parties.
6. (The Award and Record of Arbitration in original is attached as Annexures "A and B") On 24-3-2001 the plaintiff/claimant filed present suit for judgment and decree. At the same time they also prayed for making the award rule of this Court together with the suit. The copy of award and documents placed as evidence before the Tribunal were annexed.
7. After service of notice upon them the defendant filed objections to the award. pleading therein that award cannot be treated a foreign award under the provisions of the Arbitration (Protocol and Convention) Act. 1937. According to them, it can, at the most, be treated as domestic award under the provision of the Arbitration Act, 1940 but the same cannot be made rule of the Court firstly the suit has been filed after expiry of the period of limitation and secondly the award is liable to be set aside on account of the legal misconduct on the part of the Tribunal. According to them. the Arbitral Tribunal failed to consider their counter claim which, at the same time was defence against the claim set up by the plaintiff. They further pleaded that the claimant suppressed the attachment to the acceptance of the certificate. The plaintiff had only produced the acceptance certificate suppressing the attachment of the acceptance certificate. They further alleged that the Arbitral Tribunal misconducted itself as it failed to appoint an expert under Articles 38 and 41 of the CIETAC Arbitration Rules.On 9-3-2005 the arguments were heard on the question of maintainability of the suit.
8. Both of the.learned counsel expressed that the award in suit is not to be treated as foreign award under the provisions of the Arbitration (Protocol and Convention) Act, 1937 as necessary notification as required under section 2(b) and (c) of the said Act was never issued by Central Government of Republic in respect of the Peoples Republic of China.
9. Mr. Munir A. Malik further argued that although clause (18) of the contract provides for arbitration in Beijing Peoples Republic of China to be conducted by China International Economic and Trade Arbitration Commission in accordance with its rules and procedure. and the matter was referred to the arbitration accordingly yet the award rendered by the Arbitral Tribunal is to be considered as "domestic award". As Pakistan is the country most closely connected with the contract for the reason that the machinery was to be supplied at Pakistan and then commissioned there and breach alleged to have been committed in Pakistan and one of the parties resides and carries on business in Pakistan. In support of his view point Mr. Munir A. Malik referred to a decision of the Honourable Supreme Court in case of Hitachi v. Rupali Polyester 1998 SCMR 1618.
10. Mr. Munir A. Malik further contended that the award being domestic one could be filed under section 14(2) of the Arbitration Act, 1940 but where it has been filed does not specify the mandatory requirement of the provisions of the said section. According to him the provisions require the award to be filed by the arbitrator before the Arbitral Tribunal along with the evidence produced before it, but here the same has been filed by the claimant themselves. Moreover. the award has to be filed within 90 days of notice of the passing thereof but here it has been filed about one year after the date when the same had been rendered.
11. According to the learned Advocate, the present suit deserves to be dismissed at preliminary stage as not maintainable.
12. Against the arguments of Mr. Munir A. Malik the learned Advocate representing the plaintiffs contended that if the award in question is treated as "domestic one" and the prayer for making it rule of Court is found barred by limitation then also the plaintiffs are entitled to recover the claim awarded to them by the Arbitral Tribunal through this award. by filing a suit. He further contended that present suit is based upon the award and can be treated as a regular suit for enforcement of the award. According to him, for the simple reason that the provisions of the Arbitration (Protocol and Convention) Act. 1937 and Arbitration Act. 1940 are mentioned in the body of the suit, it cannot be dismissed. It is the substance which is looked at and not a form of the suit. He also contended that he intends to alter and amend the plaint, for which permission may be granted to him.
13. First of all, I deal with the question of the status of the award. "Foreign Award" is defined by section 2 of the Arbitration (Protocol'and Convention) Act, 1937, as under:-- "2. In this Act "foreign award" means an award on differences relating to matters considered as commercial under the law in force in Pakistan made after the 28th day of July, 1924:---
(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 Power 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 some other of the Power aforesaid, and
(c) In one 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 an 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."
14. The above reveals that before treating an award as a foreign award under the said Act it must be shown:
(i) to have been made in respect of differences between persons who are subject to the jurisdiction of powers which have been declared by notification published in the Official Gazette by the Central Government to be parties to the Convention mentioned in the Act, and
(ii) to have been made in a territory which has been similarly declared to be a territory to which the said convention applies.
15. Since notification as required by clauses (a) and (b) of k) section 2 of the Act of 1937 has not been issued by the Central Government of Pakistan the award cannot acquire the status of foreign award.
16. After this it is to be seen as to whether this award can be treated as domestic award. In that respect it has to be seen that what law was chosen for governing the contract. Neither the contract itself speaks anything about the law to govern it nor parties counsel claim presence of any such clause in it.
17. No indication appears even in the arbitration clause of the contract that law of Pakistan was to govern the contract. Clause (18) in the contract provides for arbitration in Beijing, Peoples Republic of China, in English, to be conducted by China International Economic and Trade Arbitration Commission, in accordance with its rule and procedure in case of any and all disputes arising from the execution of or in connection with the same contract. It is also expressly mentioned in the same clause that such an award shall be final and binding upon both the parties. Thus under the international contract an Arbitral Tribunal was to be constituted by CIETAC according to its rules and procedure and the proceedings were also to be governed by its rules. In presence of that and in absence of any clause in the contract about the law to govern it an award passed in foreign arbitration proceedings is not to be treated as domestic award simply for the reason that Pakistan is the country having closest nexus with the dispute in issue. Had the parties chosen and agreed to the applicability of the law of Pakistan to the contract then only the award be treated as domestic one. In absence of any agreement in that respect the award is not to be treated as domestic one.
18. The case of Rupali Polyster PLD 1998 SC 1618 referred to by Mr. Munir A. Malik is clear on the point.
19. Award in that case was treated as domestic one not only for the reason that Pakistan had close nexus with the dispute in issue but at the same time the parties had chosen the law of Pakistan to govern the contract which included the arbitration clauses.
20. True that the award not being foreign award or domestic award, is not enforceable in Pakistan in the manner as an award is to be enforced under the Arbitration (Protocol and Convention) Act.
21. 1937 or under the Arbitration Act, 1940 yet it can be enforced the way which the awards made by foreign arbitrators were being enforced before the said Acts. The point had been dealt with by the Honourable Supreme Court in the case of Messrs Yangtze (London) Ltd. v. Messrs Barlas Brothers reported in PLD 1961 SC 573.
22. The plaint and the objections/applications filed by the defendants under sections 5, 6 and 7 of the Arbitration (Protocol and Convention) Act, 1937 read with sections 15, 16 and 33 of the Arbitration Act. 1940 are silent regarding the place or country where the contract had been signed but it had been expressly pleaded by the defendant in Annexure 'M' to their objections to the jurisdiction of the Arbitral Tribunal that the contract was signed in Pakistan. The plaintiff has not disputed that position claiming the contract to have been signed elsewhere. Thus, it is an accepted position that the contract had been signed in Pakistan. Additionally, the defendants reside and carry on business here, therefore, the plaintiff can enforce the award by filing the suit in Pakistan. The point had been dealt with to some extent by this Court in case Province of West Pakistan v. Mustafa R.C.C.
23. Works PLD 1977 Karachi 397 and by full Fench of Andhra Pradesh India in case of Sait Pamandas Singaram reported in AIR 1960 Andhra Pradesh 59.
24. Although the present suit is under special enactment but substantially it is suit for enforcement of an award. In other words, it is for recovery of the claim awarded in the arbitration proceedings. It does not seem proper to non-suit the plaintiffs hitting them for technical reason that the award cannot be enforced under the provisions of the Acts of 1937 and 1940. It will be proper to treat this as a regular suit exercising powers under section 151, C.P.C. Such an order is not barred by any provisions of law. Suit is therefore, hereby treated as regular suit for enforcement of the award. The Court has powers even to convert the proceedings of one kind to the proceedings of another kind when necessary for doing justice between parties. Pronouncement of the Honourable Supreme Court in case of Ahmedullah Malik reported in PLD 1964 SC 236 is clear on the point of powers of the Court in that area.
25. As regard the request for permission to alter/amend the plaint it has to be made through regular application, proposing the amendments and such request is to be considered in accordance with law after providing the other side with an opportunity of being heard.
26. With this order the objection about the maintainability of the suit stands disposed of. Office to fix the date for written statement by the defendants.