1. SAJJAD ALI SHAH, C.J.---Through instant appeal, the Appellant has impugned order dated 13.02.2015 passed by the learned Single Judge of this Court in Suit No, 133 of 2011, whereby, the Appellant's suit seeking enforcement of a "Foreign Arbitral Award" under the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 ("the 2011 Act") was dismissed on the principle of res-judicata.
2. Mr. Zahid F. Ebrahim, learned counsel appearing for the Appellant while giving the facts submitted that a dispute between the Appellant and the Respondent was taken by the Respondent to International Chambers of Commerce at Singapore which on 09.09.2011 resulted in a Foreign Arbitral Award in favour of the Appellant. The Respondent on 22.09.2011 filed an application under Section 14 of the Arbitration Act, 1940 ("the 1940 Act") before the Civil Judge at Lahore with the objective that the instant Award be adjudicated under the 1940 Act as a domestic award. The Appellant, after acquiring knowledge on 22.10.2011 of the said act of the Respondent, moved an application under Order VII, Rule 10, C.P.C. inter-alia alleging want of jurisdiction of the Civil Judge at Lahore for the reason that under the 2011 Act only High Court, had the sole jurisdiction in respect of foreign awards. The Appellant further, on 01.11.2011, filed an application under Section 6 of the 2011 Act, seeking enforcement of the said Award (as a foreign award) before this Court. In the meanwhile, learned Civil Judge at Lahore on 28.01.2012 while rejecting the Appellant's plea under Order VII, Rule 10, C.P.C., held the Award was domestic and the 1940 Act was applicable thereto. The Appellant challenged the said order of the Civil Court before the Lahore High Court by filing a Revision Application. However, the Lahore High Court maintained the order of the Civil Judge, which resulted the Appellant to approach the Hon'ble Supreme Court.
3. On 08.08.2012, the Apex Court after hearing the learned counsel for the respective parties granted Leave to Appeal in order to examine whether the award in question is a foreign or a domestic award. The record further reflects that after the grant of Leave the Apex Court vide its Order dated 18.03.2014 while keeping the appeal pending (before the Supreme Court) desired that the application pending before this Court be decided. The order of the Apex Court, in the interest of comprehensiveness is reproduced herein below:-- The Appellant has impugned the judgment of the Lahore High Court, Lahore, regarding the Arbitration Award made by the International Chambers of Commerce at Singapore. By the said impugned judgment, on the application of respondent, the High Court had maintained the order of the Civil Judge, Lahore, declaring that the award was to he implemented in accordance with the provisions of the Arbitration Act, 1940 and further that the Civil Judge had territorial jurisdiction to entertain the application. The appellant has simultaneously moved an application before the High Court of Sindh under Section 6 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, regarding the same award, stating that the it may be implemented under the said Act and further that since the contract/agreement was signed between the parties at Karachi where the appellant has its registered office, the High Court of Sindh has territorial jurisdiction to entertain and decide the application.
2. We are informed that the said application before the High Court of Sindh is still pending disposal and an application has been moved by the respondent under Section 10, C. P.C. praying far stay of the proceedings pending decision by the Lahore High Court. However, meanwhile, the Lahore High Court has delivered the impugned judgment. Thus it would be appropriate that let the application of the Appellant pending before the High Court of Sindh be disposed of and thereafter the present appeal be fixed for hearing along with petition, if any, filed by either of the parties, against the judgment of the High Court of Sindh.
3. Since the appellant's application under Section 6 of the said Act was filed way back on 1st November 2011 and this matter is to be kept pending on account of pendency of the application before the High Court of Sindh, the same shall be disposed of within a period of three months. The Application be fixed for hearing on any day of the week other than Monday.
4. Mr. Zahid F. Ebrahim while inviting our attention to the last portion of para-5 of the impugned order contended that the learned Judge has passed the impugned order on the premises that no appeal is pending before the Supreme Court and obviously on this premises the only logical conclusion would have been to dismiss the Appellant's suit by allowing the Respondent's Application under Order X read with Order VII, Rule 11, C.P.C. on the principles of res-judicata.
5. On the other hand, the learned counsel for the Respondent submitted that the impugned order, on account of the decision of the Lahore High Court, would rightly operate as res-judicata, and the application/suit of the Appellant was rightly dismissed through the impugned order.
6. We have heard the learned counsel for the respective parties and perused the record very carefully.
7. The primary question appears to be of the jurisdiction of the court taking cognizance of the Award, which has been so eloquently addressed in the impugned order. The learned Judge has framed various questions in para-9 of the impugned order which, inter alia, include (a) whether the Civil Court had jurisdiction over the award, and (b). did the decision of the learned Civil Judge, considered of itself, operate as res judicata.
8. Question regarding the jurisdiction of the Civil Court was answered in negative by the learned Judge by giving the following reasons:-- "In order to address the first question, I must set out my own views on whether a civil court has the jurisdiction to determine whether an award placed (or sought to be placed) before it is a foreign award, or whether this can only be determined by the Court referred in the 2011 Act i,e, the High Court. I am of course acutely aware of the appeal pending before the Supreme Court and do not intend for a moment to trespass on those proceedings. But I am also bound to comply with the directions given in the order of 18.03.2014 as completely and effectively as possible. Obviously, if I agree with what has been held by the learned Civil Judge and the Lahore High Court, I would myself dismiss the present Suit. It is only if, which indeed is the case, my view is to the contrary that the question arises whether, notwithstanding those decisions, it is still possible for me to continue with the Suit. For this purpose, it is necessary to refer to sections 2 and 3 of the 2011 Act: "2. Definitions.---In this Act, unless there is anything repugnant in the subject or context,- "
(a) "Contracting State" means a State which is Party to the Convention;
(b) "Convention" means the United Nations Convention on the Recognition and enforcement of Foreign Arbitral Awards, done at New York ... set forth in the Schedule to this Ordinance;
(c) "Court" means a High Court ....; and
(d) "foreign arbitral award" means a foreign arbitral award made in a Contracting State ...
3. Jurisdiction of Court.---(1) Notwithstanding anything contained in any other law for the time being in force, the Court shall exercise exclusive jurisdiction to adjudicate and settle matters related to or arising from this Act."
9. The facts relevant for present purposes are not in dispute and can be stated quite shortly; the present award was made in Singapore, which is a Contracting State. It will be seen that subsection
(1) of section 3 opens with a strong non obstante clause, displacing any other law for the time being in force. That obviously includes the 1940 Act. The High Court has been conferred exclusively jurisdiction to adjudicate and settle matters relating.to or arising from the 2011 Act. These words are, on the face of it, clear and broad enough to encompass the question whether an award is a foreign arbitral award or not. Since the jurisdiction of the High Court is exclusive, it alone is the Court that can determine such question. It necessarily follows that the jurisdiction of the civil courts stands ousted and excluded. In my view, if it is shown that an award was made in a State that is party to the New York Convention, then the question whether the award falls within the scope of the 2011 Act can only be determined by the High Court. That is precisely the situation here, and therefore, the civil court had no jurisdiction. In my view, and with respect to the civil court and the Lahore High Court decisions, the learned Civil Judge assumed a jurisdiction that vested in the High Court alone. The civil court ought to have stayed its hand; and either returned the defendant's application for presentation before the Lahore High Court, or stayed the proceedings pending a decision from that High Court (or possibly this Court) on the status of the award".
10. After giving its finding on the question that the award being a foreign award could only have been adjudicated by the High Court (i,e, executable under the 2011 Act and not under the 1940 Act), the learned Judge proceeded with the second portion of the controversy as to whether the decision of the Civil Judge would operate as res-judicata or not. The said question, again was very eloquently, addressed in the impugned order starting from para-11 to para-20 with the following conclusion:-- "Having considered the cases cited by learned counsel for the defendant, I am of the view that there does not appear to be anything in the Pakistani authorities as negates the principle derived from the decision of Indian Supreme Court in Mathura Prasad (set out in para 12 herein above). In my respectful view, that principle can and ought to apply as the rule for the relevant circumstances under our law as well. It is fully attracted in the present case to the decision of the learned Civil Judge: the question of jurisdiction decided by him was a pure question of law involving no factual controversy, and was unrelated to the rights of the parties. The decision is therefore not res judicata and I would accordingly answer the first question (posted in para above) in negative".
11. The learned Judge next proceeded to consider and held that since the Lahore High Court which was the competent court under the 2011 Act in fact examined the controversy and thereafter concluded affirming the decision of the Civil Court, Lahore that the award was domestic (and the applicable law was the 1940 Act) and such decision of Lahore High Court would operate as res judicata and dismissed the suit notwithstanding its own finding that the award was a foreign award and the law applicable was 2011 Act merely restricted by the principle of res-judicata.
12. As it can be seen, that the learned Judge has completely discarded the arguments and case-law cited by the Appellant's counsel that on account of the pendency of appeal before the Supreme Court, the principle of res-judicata was inapplicable in the instant case. The reasons to discard such arguments and the case-law are given in para-5 of the impugned order. The relevant portion whereof is reproduced below:-- "Although the Supreme Court has referred to the defendant's application under section 10, C.P.C., the present application is under section 11 read with Order VII, Rule 11, C.P.C. read with section 3(3) of the 2011 Act. As explained by learned counsel for the defendant, although the application was originally conceived of as one under section 10, C.P.C., events, in the shape of the decision of the Lahore High Court, overtook that scenario. It is the defendant's case that the decision of the Lahore High Court, being inter partes, operates as res judicata and the present suit ought therefore to be dismissed. This is opposed by learned counsel for the plaintiff on the basis of the appeal pending in the Supreme Court against the said decision. Ordinarily in such circumstances the present proceedings would have been stayed to await the outcome of the appeal. However, the Supreme Court itself has given directions as noted above. Having considered the matter, I have proceeded on the basis that the Supreme Court has desired that the present Suit be heard and decided on the basis of litigation between the parties other than the appeal before the Supreme Court itself. In other words, as I understand it, this Court is directed to proceed with the Suit taking only the decision of the learned Civil Judge and the learned single Judge of the Lahore High Court into consideration. On the basis, the present application becomes a preliminary objection taken by the defendant to the effect that the Suit ought to be dismissed as being hit by res judicata. I have so heard the matter and now proceed to note the submissions made by learned counsel".
13. We are in full agreement with the reasoning detailed by the learned Single Judge for holding the award as a foreign award. We also have no disagreement with the finding of the learned Judge to the effect that the decision of the Lahore High Court would operate as res-judicata in case no appeal was pending before the Apex Court, however, in our opinion the learned Judge erred by putting himself into this self-constraint that the Supreme Court vide its order dated 18.03.2014 did not leave any freedom to him to consider the matter afresh based on the material present before him in the Karachi suit, and if the intention was to restrict the learned Single Judge to the material present before Lahore courts only, since an appeal was already pending before the Supreme Court against the findings of the Lahore High Court, to our mind there was no necessity to the Supreme Court to wait for the outcome from the Sindh High Court. In our view, the Supreme Court's intention was that before adjudicating upon the matter as to domestic or foreignness of the Award, the Apex Court wished the High Court of Sindh to give an independent finding on the application moved before this court under Section 6 of the 2011 Act.
14. While the learned Single Judge very eloquently dilated the first aspect and held that the order of the learned Civil Judge did not constitute res-judicata and the assumption of jurisdiction by the Civil Judge was bad, this can only be true solely on account that the learned Single Judges had already made up his mind that the award was a foreign award and not a domestic award, since only in the case of a foreign award the High Court had the direct jurisdiction, whereas if the award was to be considered as a domestic award, the jurisdiction assumed by the Civil Judge, Lahore would have been rightly exercised.
15. In our view, the learned Single Judge though on one hand rightly deduced that the Civil Judge did not have jurisdiction (as the award was to be dealt under 2011 Act), but having imposed a kind of self-constraint (without taking conscious notice of the fact that an appeal was already pending against the said Lahore High Court order before the Supreme Court) and the matter was not finally decided limited himself to the material present before the Lahore Courts, therefore did not apply independent mind on the application filed under Section 6 of the 2011 Act before this Court.
16. Additionally, in view of the specific direction of the Apex Court to decide the pending application even the principle provided under Section 10, C.P.C. had no application. Resultantly, the impugned order seemingly while on hand accepts that the award was a foreign award (competently falling in the direct jurisdiction of the Lahore High Court under Section 3(1) of the 2011 Act) on the other hand on account of being unwarrantedly restricted to the material present before the Lahore High Court (and the Civil Judge, Lahore) ends with a divergent outcome. If the material present before the learned Single Judge had been independently viewed with consciousness that an appeal against the order of the Lahore High Court is already before the Apex Court, the mandate given by the Supreme Court offered ample room to reach to a just conclusion (not bound by the principle of res-judicata) that the Appellant had a fit case for its award to be conclusively declared as a foreign award to be completely dealt with the 2011 Act.
17. Also it is pertinent to mention that the 2011 Act is primarily a procedural law and it has not repealed the 1940 Act, rather it has repealed the Arbitration (Protocol and Convention) Act, 1937 therefore even today domestic awards have to follow the 1940 Act path, however, after the enactment of the 2011 Act, all foreign awards have to sail through the waters of the 2011 Act. Thus the 2011 Act merely changed procedures applicable to a certain kind of arbitral awards, and it is well established legal proposition that the procedural laws are always retrospective, ready reference can be made to the cases of (Air League of PIAC Employees v. Federation of Pakistan 2012 PLC (C.S. 89, Rehan Saeed Khan v. Federation of Pakistan 2001 PLC (C.S.) 1275 SC and Muhammad Amin Qamar v. Bank of Punjab - 2013 PLC 291 Islamabad) holdings that all procedural laws have retrospective applicability (unless something to the contrary was provided expressly or impliedly - which is not the case), therefore notwithstanding that the arbitration commenced before the enactment of the 2011 Act and the award was announced after the said enactment, provisions of the 2011 Act will be applicable to the instant Award.
18. For the reasons mentioned hereinabove, in the light of the orders of the Hon'ble Supreme Court which clearly mandated this court to announce its decision on Section 6 application of the Appellant, in our view the bar assumed by the learned Single Judge resulting him to treat the Respondent's application as a preliminary objection to the suit on account of res-judicta arising out of the decision of the Lahore High Court was unfounded, and we, while allowing the instant appeal dismiss the Respondent's C.M.A. 1727/2012 and direct the trial court to proceed with the Appellant's Section 6 application / suit in accordance with the 2011 Act.