This petition has been filed under section 33 read with sections 5 and 9 ,of the Arbitration Act, 1940 seeking a declaration to the effect that no valid arbitration agreement exists between the applicant and respondent No. 1 and that the authority of the sole arbitrator i. e. respondent No. 2 be revoked. Alternatively it has been prayed that if it is held that the arbitration agreement exists then the petitioner may be allowed to appoint his arbitrator.
2. The admitted position is that the applicants under a written contract dated 27th May, 1968 with National Institute of Cardiovascular Diseases were to construct a hospital. Under a separate agreement the applicants engaged respondent No. 1 as a sub-contractor for execution of only electrical works in connection with the main contract. Unfortunately a copy of this agreement has not been filed by either parties. The applicants have stated that all the terms and conditions of the main contract with regard to the execution of the electrical works, specifications, measurements; certification, quantity and mode of payment were applicable to the sub-contract. It is further averred that any dispute between the applicant and respondent No. 1 under the sub-contract was to be referred to the Director of applicants for decision. The respondent No. 1 had denied this position and has asserted that the agreement between the applicants and respondent No. 1 was subject to all the terms and conditions of the main contract. In support of this contention the respondent No. 1 has relied upon a letter of applicants dated 6th August, 1979 addressed to the advocate for the respondent No. 1 relevant portion of which is repro--duced hereunder :- "That even otherwise whatever amounts remained unpaid were on account of the fact that the sub-contract agreement with your clients was supplemental and consequential to the Main Contract entered into by us with our clients and all the terms and conditions of the main contract applied mutatis mutandis to your clients under the sub-contract as you have rightly yourself contended in para. 3 of your notice under reply and as our final bill including our retention has not been released by the owner, your clients, therefore, had also to stand in the que."
3. As stated earlier both the parties have admitted the existence of sub-contract but have not produced it without any sufficient reason. There--fore, the existence or nun-existence of the arbitration agreement has to be decided on the basis of the averments made in the petition, affidavits and the documents filed by the parties. The parties have admitted that the arbitration clause in the main contract was in the following terms :-.
"38. Arbitration.--If any dispute, question or controversy shall arise between the Owner and the Contractor concerning this Contract which is not specifically provided for herein, the matter in dispute shall be referred to two Arbitrators, one to be nominated by .The Owner and the other by the Contractor, or in the case of disagreement between the Arbitrators, to an Umpire appointed by the Arbitrators, and the decision of the Arbitrators or Umpire shall be final and binding on both the Owner and the Contractor. Any such reference shall conform to the statutory enactment or regulation governing arbitrations as may be in force in Pakistan at the time. The assessment of cots incidental to the reference and award respectively shall be at the discretion of the Arbitrators or, in the event of their not agreeing, of the Umpire appointed by them. Work under this contract, notwithstanding the existence of any such dispute, question or controversy, shall continue during the arbitration proceedings."
4. The respondent No. 1 has contended that as all terms and conditions of the main contract were made applicable to sub-contract the arbitration clause as reproduced above was applicable to the present case.
5. Mr. Samiuddin Sami, the learned counsel for the applicant has contended that unless reference to arbitration clause is express and unambi--guous it should not be incorporated in the agreement by reference only. The applicants have contended that in fact there was a standard form of agreement for sub-contractors which provided for arbitration and the general manager of the applicant was the agreed arbitrator. Copy of such agreement or even a standard form has not been produced. In the face of the applicant's letter quoted above and express denial by the respondents it is not possible to accept this contention. During the correspondence the applicants have not referred to such an arbitration clause as contended on their behalf. In the facts and circumstances of the case the only question that requires considera--tion is whether the parties had by reference as contained in the letter of the applicants reproduced above agreed to refer the matter to arbitration.
6. To establish the existence of the arbitration agreement the respondent No. 1 has relied on the letter of the applicant dated 6th August, 1979 which states that the terms and conditions of the agreement between the applicant and their principals shall apply to the agreement between the applicant and respon--dent No. 1 mutatis mutandis. This in my opinion be Mutatis Mutandis and not mutatis mutan . The word mutatis mutandis according to Black's Law Dictionary means "with the necessary changes in points of detail, meaning that matters or things are generally the same, but to be altered when necessary, as to names, offices and the like". It therefore, follows that although the arbitration clause in the main agreement, if applicable, contemplates dispute between owners and the contractors (applicants) but in view of the incorporat--ing clause these words are liable to be altered and substituted by suitable words according to necessity. It has now to be seen whether the arbitration clause in the principal contract stands incorporated in the agreement between the contesting parties.
7. The parties can incorporated an arbitration clause from another agreement in their own agreement provided it is so mentioned expressly. A mere reference that the terms and conditions of a certain agreement will apply to the agreement between the parties will not import the arbitration clause into the agreement. A reference to the arbitration clause should be specific so that there may not be any ambiguity and the intention of the parties be made clear. In the case of An Nefield ((1971) Loyd's. L R 1a dispute arose between the owner and the endorsee of bill of lading issued under a charter party. The bill of lading provided that all terms and conditions and exceptions of the charter-party including the negligence clause are incorporated herewith. The owner applied for stay of action on the ground that the bill of lading incorporated all the terms and condi--tions of charter-party which contain an arbitration clause therefore the matter may be referred to arbitration. Lord Denning , M. R. Observed that "i would take the clauses in the charter- party and apply them to the bill of lading in so far they are reasonably applicable to it ; and I would reject the othersI would say that a clause which is directly germane to the subject- matter of the bill of lading (that is, to the shipment, carriage and delivery of goods) can and should be incorporated into the bill of lading contract, even though it may involve a degree of manipulation of the words in order to fit exactly the bill of lading. But, if the clause is one which is not thus directly germane, it should not be incorporated into the bill of lading contract unless it is down explicity in clear words either in the bill of ,or lading or in the charter-party".
Lord Denning placed reliance upon the decision of House of Lords in T . W. Thompson & Co. Ltd. v.
Portsea Steamship Co. Ltd. (1912 A C 1where it has held that an arbitration clause cannot be incorporated by general words.
8. By general words of incorporation, there must be incorporated in the agreement only such terms as are directly relevant to the work to be performed under the clause which purports to under the agreement. The rule for interpreting incorporate an arbitration clause of another instrument into the agreement is that such arbitration clause by explicit reference, either in the incorporating clause or in the main instrument should be clearly intended to be incorporated. C The learned counsel for the applicants referred to AIR 1956 Cal. 280,1 PLD 1967 Azad J & K 4 ; PLD 1960 Dacca 255 ; AIR 19(?) Cal. 168 ; AIR 1930 Sind 202 and 1912 A C 1. All these cases except the last case lay down general principles of law which are not directly relevant to the present controversy. The last case but it has thoroughly been discussed in (1971) 1 Lloyd's L R 1, referred by me earlier and I need not dialate upon it here.
9. Applying the above test to the present case it seems that the arbitration clause is not directly germane to the execution of the work under the sub-contract which was only in respect of electrical work. Therefore, only such terms and conditions of the contract which related to the specification of the electrical work and other allied matters necessary for execution of the work shall be deemed to have been incorporated. I hold that there is no valid arbitration clause in the agreement between the applicants and respondent No. 1 and the respondent No. 2 has no authority to proceed with the arbitration.
10. Before parting with the judgment I may observe that the learned counsel for the applicants has also contended that the alleged arbitration agreement has not been properly stamped and that the claim of the respondent No. 1 is barred by time and hence these is nothing to refer to arbitration. In view of my aforestated findings that the arbitration clause is not applicable to the sub-contract I need not express any views on these points. The petition is, therefore, allowed to the extent mentioned above with no order as to costs. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.