C.M. No, 284/2015 .
ATHAR MINALLAH, J.---Through the instant application, filed under section 34 of the Arbitration Act 1940 (hereinafter referred to as the 'Act of 1940), the applicant seeks an order for staying the proceedings in Suit No,61/2014.
2. The facts, in brief, are that Messrs Imperial Electric Company (Pvt.) Limited (hereinafter referred to as the 'Respondent/Plaintiff' ) filed Suit No,61/2014 relating to disputes arising from or connected with the agreement dated 07-May-2005 executed with Messrs Zhongxing Telecom Pakistan (Pvt.) Limited (hereinafter referred to as the Applicant/ Defendant No,1 ). The latter has filed the instant application for seeking an order to stay proceeding s in the suit pursuant to clause 19.2 of the agreement. The relevant clauses of the agreement for the purposes of deciding the instant application are as follows.- "19.2.1 Amicable Settlement If a dispute of any kind whatsoever arise between the ZTE and the Sub-Contractor in connection with, or arising out of, the Sub-Contractor or the execution of the Works, whether during the execution of the Works or after their Completion and whether before or after repudiation or other termination of the Contract, including any dispute as to any opinion, instruction, determination, the parties shall attempt to settle such dispute amicably within 15 days from the date a dispute actually started and reduced to writing. The decision of Chief Executive Officer PTCL will be the final and be acceptable to both the Parties.
19.2.3 All the disputes will be resolved at Islamabad."
3. The Respondent/Plaintif f filed its written reply to the instant application and has, inter alia, manifestly stated that it has no reservations or objections regarding a reference to be made to the arbitrator for proceeding with the claims/disputes inter se the parties. It has also been stated that the Court has to interpret clause 19.2.1 and decide as to whether it can be treated as an arbitration agreement for the purposes of section 34 of the Act of 1940 . It has been further pointed out that the Applicant/Defendant No,1 may have some reservations on account of its relationship with the Defendant No,2 i,e, Pakistan Telecommunication Company Limited (hereinafter referred to as the 'PTCL'). Therefore it has been asserted that the named arbitrator in clause 19.2.1 may be directed to conduct/conclude the proceedings in accordance with Rule 3 of the First Schedule of the Act of 1940. The Respondent/Plaintif f has prayed that the matter pending adjudication before this Court may be referred to the named arbitrator .
4. The learned counsel appearing on behalf of the Applicant/ Defendant No,1 has not expressed any reservations regarding the disputes being settled pursuant to clause 19.2 of the agreement, rather the application filed under section 34 of the Act of 1940 unambiguou sly acknowledges that all disputes are to be settled/decided through the process of arbitration and by the arbitrator named in clause 19.2.1.
5. The learned counsel for the Respondent/Plaintif f has stressed that the latter agrees to the disputes being referred to the authority named in clause 19.2.1. He has, however , reiterated that this Court may conclusively declare that clause 19.2.1 is an arbitration agreement.
6. The learned counsel have been heard and the record perused with their able assistance.
7. The Applicant/Defendant No,1 unequivocally acknowledges clause 19.1.2 of the agreement to be an arbitration agreement. Neither in the application, nor during the arguments advanced by the learned counsel, has any reservation been expressed regarding the disputes being decided by the Chief Executive Officer of PTCL, who has been specifically named in clause 19.2.1 of the agreement. Section 2(a) of the Act of 1940 has defined an "arbitration agreement" as meaning a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. Arbitration is that category of dispu te resolution process where the parties make a voluntary choice to have their disputes resolved by an arbitrator rather than through the Courts. It is the submission of a dispute to be decided by a third person. The mechanism for selection of the arbitrator is invariably mentioned in the arbitration clause. Either the parties agree to nominate and appoint an arbitrator , or the arbitrator is named in the agreement. The parties may even agree to name an authority or person from amongst their own officers/of ficials, and this would not render such an arbitration agreement illegal or against public policy , as held by the august Supreme Court in "Dar Okaz Printing and Publishing Ltd. Liability Company v. Printing Corporation of Pakistan Pvt. Ltd." [PLD 2003 SC 808). In the latter case it has also been observed and held that the consideration of facts and circumstances leading to the execution of the agreement, as well as the phraseology employed in the arbitration clause would be the crucial factors to determine the intention of the parties.
8. The august Supreme Court in the case of 'Ch. Muhammad Saleem v. Muhammad Akram and others' [PLD 1971 SC 516 ) has discussed the characteristics of an arbitrator in the following words.- "If a dispute is referred to a person and if that person decides that dispute by holding an enquiry and coming to a decision then undoubtedly what that person decides would constitute an award. On the other hand, if a matter is referred to a person and he is not called upon either to hold an enquiry or to give a decision but by the exercise of his sagacity , knowledge or experience to bring about merely an understanding between the parties and resorting peace between them then he would only be discharging functions other than those of an arbitrator . But in order to determine this question one must not look merely at the form adopted or the expression employed but rather at the substance of what the parties to the dispute really intended the person approached in that behalf to do and how that person acted in that particular matter ."
9. It is, therefore; obvious that there is a difference between 'arbitration' and 'mediation'. The latter merely endeavours to facilitate the settling of disputes between the parties through the tools of mediation, while the former , after holding an inquiry , decides the dispute and the parties accept the decision of their chosen person as binding upon them. The facts and circumstances leading to the execution of the agreement, the language or expressions used therein, or the conduct of the parties comprises the elements of the test to determine the intention of the parties.
10. In the case of 'The Province of the Punjab v. Messrs Wan and Co.' [PLD 1956 (W.P.) Lahore 442], the Court was examining a clause which did not mention the expression 'arbitrator' or 'arbitration'. The Court, however , held that the clause was not bad for being treated as an arbitration clause for mere want of mentioning that a named person would act as an arbitrator . It was further held that the absence of the expression 'arbitrator' or 'arbitration' would not vitiate the arbitration agreement on this ground.
11. The Lahore High Court in the case of 'Governor -General in Council - Defendan t -- Appellant v. Simla Banking and Industrial Co., Ltd., New Delhi and another Plaintiffs - Respondents' [AIR (34) 1947 Lahore 215] while examining a clause in an agreement which provided that matters would be decided by a person of the parties' selection, held that the clause amounted to an arbitration agreement though the word 'arbitration', 'arbitrator' or 'arbitration agreement' did not appear therein.
12. Likewise, the Sindh High Court in the case of 'Shaikh Muhammad Umer v. Zakaria Adamjee Charitable Corporation and another' [1988 MLD 1131] was examining a clause which had used the word 'referee', and it was held that as the plain reading of the clause showed that a dispute was to be referred for decision and that the decision was to be binding upon the parties, therefore, it was an arbitration agreement. It was further held that an arbitration agreement was an agreement whereby the parties bind themselves to have any disputes arising out of the transaction, to which such agreement is applicable, to be adjudicated upon and decided by a domestic tribunal and not by resort to a Court of law. It was, therefore, observed that the language of the clause fulfilled the ingredients of arbitration agreement, and consequently the 'referee' as mentioned in the agreement was deemed to be an arbitrator .
13. It would also be pertinent to refer to the case of 'Messrs Jugotekhstil Impex, 61001, Lubijana Yugosalvia v.
Messrs Shams Textile Mills Ltd.' [1990 MLD 857] wherein the Sindh High Court has held that in its very nature an arbitration forum has to be definite and certain, or at least capable of being made so.
14. It is, therefore, obvious that the intention of the parties has to be gathered from the language used in a written agreement. The Court is, therefore, to be satisfied that the parties had intended that they shall settle or resolve their disputes through arbitration i.e throu gh a person, who after conducting an inquiry , will give a decision and the same shall be binding on the parties. In such an eventuality the Court would live effect to such a clause as an arbitration agreement, despite the fact that it may not contain such expressio ns as 'arbitration' arbitrator' or 'arbitration agreement'.
15. In the instant case, clause 19.2.1 has named the Chief Executive Officer of PTCL to be the person chosen by the parties, who would decide the disputes, and that his decision would be binding. Though the said clause has not used expressions such as 'arbitrator', 'arbitration' or 'arbitration agreement', yet the characteristics and ingredients are such that it definitely amounts to an arbitration agreement. Moreover , the parties also agree that clause 19.2.1 was intended as an arbitration agreement. As noted above, no reservation has been brought on record or otherwise by the Respondent/Plaintif f or Applicant/Defendant No,1 regarding the resolution or decision of the disputes by the named arbitrator i.e the Chief Executive Officer of the PTCL, as unambiguously mentioned in clause 19.2.1. The parties are in tandem regarding clause 19.2.1 being an arbitration clause and that disputes were to be decided by the person holding the designation as named therein.
16. For what has been stated above, the instant application is allowed and the proceedings in Suit No,61/2014 are ordered to be stayed. It shall open to the parties to refer their disputes arising out of or in connection with the agreement dated 07-May-2005 pursuant to clause 19.2.1 thereof.