' This is an application under sections 5 and 6 of the Arbitration (Protocol and Convention) Act, 1937 (hereinafter referred to as the said Act of 1937) whereby the petitioners seek to enforce foreign award dated 30-1-1975 made by Mr. William Reed, the Umpire, whereby he awarded and adjudged the respondents to bear and pay forthwith to the petitioners 14,297.72 together with interest on the said sum at the rate of 8% per annum from 1-3-1972 until the date of the said final award in full and final settlement of the matters at dispute in the reference. The petitioners have prayed for a decree equivalent to Pak Rs, 4,30,145.28 in terms of the award and such other reliefs that the Court may deem just and equitable to grant.
1. (i) The facts of the case briefly stated leading to the filing of the award in this Court for being enforced under the said Act of 1937 are as follows : The petitioners are the owners of the motor ship Nordpol. By charter-party dated 25-8-1971 executed at London the respondents hired the said vessel for time charter voyage for a direct trip from Karachi to the then East Pakistan possibly calling at Colombo for bunkers. Matters in dispute between the parties under the said charter-party or relating to it were agreed to be referred to arbitration vide arbitration clause No, 17 which reads as follows :- "That should any dispute arise between owners and the Charterers, the matter in dispute shall be referred to 3 persons at London, one to be appointed by each of the parties hereto, and the third by the two so chosen.
' Their decision or that of any two of them, shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the Court. The Arbitrators shall be commercial men."
(ii) The petitioners claimed that on balance of account between the parties 19,263.80 were due to them by way of unpaid hire and war risk and war risk insurance premiums, wrongful deductions from hire and disbursements outlaid on behalf of the respondents/charterers but the same were not settled. On the other hand the respondents though admitted their liability only to the extent of 11,454.56 claimed to have withheld the said amount against their counter-claim against the petitioners/owners for the alleged loss of 4,000 tons of bagged rice valued at 35.30 per ton plus freight at 3.58 per ton. The petitioners denied their liability. In view of the disputes thus having arisen between the parties, as contemplated by clause 17 of the charter-party for reference to the arbitration, the petitioners appointed in the first instance one Mr. R. A. Clyde and subsequent to his retirement appointed Mr. Donald Davies, London. The Respondents (charterers) on the other hand appointed Mr. Cedric Barelay of London as the arbitrator on their own behalf. The said two arbitrators by instrument in writing appointed Mr. R. W. Reed of Trident House, London as the Umpire.
(iii) The arbitrators gave the Umpire notice in writing that they were unable to agree whereupon he entered into the reference in their stead. Both the parties appeared before the Umpire and pleaded their respective claims.
(iv) The Umpire after entering upon the reference and hearing the parties, read the correspondence considering the facts of the evidence, made his award on 30-1-1975 whereby he awarded that :
(1) The owners succeed in their claim to the extent of 14,297.72 and no more.
(2) The charterers failed in their counter-claim in its entirety which was dismissed."
' The Umpire accordingly awarded to the owners (the petitioners) 14,297.72 together with interest on the said sum at the rate of 8% per annum from 1-3-1972 until the date of his said award in full and final settlement of the matters in dispute in the reference. It was further held that the charterers to bear and pay their own cost and owners cost in the reference.
2. The award made as above at London in accordance with the law prevailing in England was filed in this Court on 4-6-1977 under sections 5 and 6 of the Arbitration (Protocol and Convention) Act, 1937 with a prayer for grant of reliefs mentioned above.
' The respondents filed objections to the abovementioned application raising therein a number of pleas. At the time of hearing Mr. Mansoorul Arfin the learned counsel for the respondents pressed the following points in opposition to the making of the award rule of the Court.
(1)That the award has not been made by the three arbitrators as contemplated by clause 17 of the charter-party.
(2)That the Umpire granted interest which ought not to have been allowed.
4. Before proceeding to dispose of the objections thus raised on behalf of the respondents, at the outset it may be mentioned here that the learned counsel for both the parties agree that the law governing the procedure and the award would be the law of England where the contract was made the arbitration proceedings took place and the award was made.
5. With the clarification as above I now proceed to dispose of the objections raised by the learned Advocate for the respondents.
' As regards the first objection the learned counsel submitted that the arbitration clause 17 which governs the settlement of disputes by arbitration provides that any dispute that shall arise between the parties shall be referred to three persons (commercial men) at London one to be appointed by each of the parties thereto and the third by the two so chosen, and The learned counsel accordingly submitted that in this particular case a reading of the award itself would show that each party appointed his own arbitrator separately and that by a separate instrument in writing the two arbitrators thus appointed, nominated Mr. R. W. Reed of London to be the Umpire and that the said two arbitrators gave the Umpire notice in writing that they were unable to agree and thereupon the said Umpire entered upon the reference in their stead. The learned counsel accordingly submitted that the award so made by the Umpire was not an award made in accordance with the arbitration clause which according to him, contemplated that the decision of all the three arbitrators or that any two of them would be final and enforceable. Accordingly the learned counsel submitted that the award is vitiated as having not been made in accordance with the arbitration clause No, 17, reproduced above.
6. In order to appreciate the above submission of the learned counsel it would be relevant for the purposes of disposal of this case to find if the foreign award, subject-matter of this case, fulfils the conditions laid down in section 7 of the said Act of 1937.
' It is not disputed as already noted above, the reference, procedure and making of the award would be governed by the law of England which in present case would by the (English) Arbitration Act of 1950, section 9 whereof provides as follows :- "9.-(1) Where an arbitration agreement provides that the reference shall be to three arbitrators, one to be appointed by each party and the third to be appointed by the two appointed by the parties, the agreement shall have effect as if it provided for the appointment of an umpire, and not for the appointment of a third arbitrator, by the two arbitrators appointed by the parties.
(2) Where an arbitration agreement provides that the reference shall be to three arbitrators to be appointed otherwise than as mentioned in subsection (1) of this section, the award of any two of the arbitrators shall be binding."
7. Mr Mansoorul Arfin, learned counsel for the respondents however placed reliance upon the case of United Kingdom Mutual Steamship Assurance Association v. Houston & Co. (1) for the proposition that where disputes were agreed to be referred to the decision of three arbitrators, and the agreement provided that of the three arbitrators one to be nominated by each of the parties, and the third by the two arbitrators so nominated, an award made by two of the arbitrators only would be bad in law and invalid.
' Reference was also made to the case of British Metal Corporation Ltd. v. Ludlow (2)in support of the proposition referred to above by the learned counsel.
8. The learned counsel also referred to the case of Abdul Hameed v. H. M. Qureshi (3) which was a case where the reference was to be made under the gatemen to two arbitrators and a Surpanch. It was observed by the Honourable Supreme Court that it was a case of a reference to three arbitrators and Surpanch was not an Umpire.
9. I have carefully considered the above-cited cases by the learned counsel for the respondents but find that the same have no application to the law governing the award made in the instance case the validity of which is to be determined in accordance with the law in force in England on 30- 1-1975 (i. e. The English) Arbitration Act of 1950.
In terms of section 9 of the aforementioned (English) Arbitration Act of 1950, I find that the award in question was validly made. Reference in the present case was agreed to be made to three commercial men at London one to be appointed by each of the Parties and the third by the two so chosen arbitrators. The agreement of reference thus shall be deemed to have effect as if it provided for the appointment of an Umpire by the two arbitrators and not for the appointment of the third arbitrator by the two arbitrators appointed by the parties. I am fortified in my opinion reached as above by the
(1) (1896) 1 Q B D 567 (2) (1938) 1 A E R 135 (3) PLD 1957 SC (Pak.) 145 interpretation placed on relevant provision of the English Arbitration Act, 1950 in the case of Marino.; and Frangos Ltd. v. Dulietz Steel Products Inc. Of Washington (I) wherein (at page 196) it was held :- "In my view, Mr. Lloyd's submission on that matter is right. Section 9(1) is mandatory ; it provides that where there is an apparent reference to three arbitrators in this way, the third of them is to be treated as though he were an umpire, and the effect of that is, and must be, that the last sentence of clause 35 of the charter-party is overridden. The third arbitrator is now an umpire and it is not a case of a decision of any two of the three being final, because section 9 (1) has said that the third arbitrator is to be an umpire."
' It may be mentioned that the reference to the case of Abdul Hameed is irrelevant as the said case has no application to a foreign award the validity of which is to be determined in the light of the law of England (section 9 (1) of (English) Arbitration Act of 1950) whereas the observations of the Honourable Supreme Court in the aforementioned case were based upon the interpretation of section 9 (b) and section 10 (2) of the Arbitration Act of 1940, in force in Pakistan.
The objection of the learned counsel for the respondent to the validity of the award for the alleged reason that it was made by the Umpire and not C by the three arbitrators acting jointly therefore fails.
10. It was then argued by the learned counsel that interest granted by the Umpire at the rate of 8% p. a. From 1-3-1972 until the date of making of the final award by him is illegal and thus liable to be struck down. Reliance was placed upon the case of A. Z. Company v. Maula Bukhsh Muhammad Bashir (2) wherein the Honourable Supreme Court held that generally in the absence of an express or implied contract to pay interest or of usage of trade interest cannot be allowed on damages for breach of a contract. A careful reading of the said judgment however would show that the Honourable Supreme Court was dealing with an award which was governed by law of this country and not by law as applicable in England. The next case Punjab Province v. Zafar Iqbal (3) upon which reliance was sought to be placed also does not advance the case of the respondent for the reasons discussed above.
' The learned counsel for the respondent thus could not successfully assail the power of the arbitrator/umpire to award interest governed by foreign law by placing reliance on the case decided according to law applicable in I ndo-Pak Sub-Continent.
' The foreign award made at London in the present case is governed by the Law of England and, therefore, we ought to adjudge its legality and propriety in accordance with the principles of law applicable in that country. My attention was drawn to the case of Chandris v. Isbrandtsen Moller Co. Inc. (4) wherein the arbitrator awarded to a ship owner against the charterers of the vessel certain amounts under the demurrage clause in the charter-party. However the arbitrators refused to award interest which matter ultimately came before the Court of appeal wherein after discussing the law applicable in England as to the power of arbitrator to grant interest Mr. Justice Asgutth, L. J. (at page 624) held : "I should have found it very difficult to resist the argument presented by counsel for the respondents if Edwards v. Great Western Ry. Co. 138
(I) (1961) 2 Lloyd's Law Rep. 192 (2) PLD 1965 SC 505
(3) NLR 1980 Civil 89 (4) (1950) 2 A E R 618 ER 603 had not been decided as it was and had not stood unchallenged for over three-quarters of a century before the Act of 1934. But for those circumstances, it would have been difficult it seems to me to resist a construction of section 3 (1) of the Act of 1939 which would limit the discretion conferred by that section. But, by parity of reason, the right given by the Act of 1833 should have been limited to proceedings before a jury, yet, in the Edward's case, that contention was impliedly or expressly rejected, and it was held that an arbitrator could award interest in cases in which, by statute, a jury was given power to do so."
11. Reference was also made by the learned counsel for the petitioners to the case of Panchaud v.
Pagnan (1). In that case arising out of arbitration proceedings in which award was made for damages but the arbitrators had not made any award as to interest on motion made to remit the award Megaw L. J. Observed as follows :- "The buyers asked the judge for the award to be remitted so that interest should be awarded. See p.
409. The Judge did so. I think he was quite right. In a commercial transaction, if the plaintiff has been out of his money for a period, the usual order is that the defendant should pay interest for the time for which the sum has been outstanding. No exception should be made except for good reason."
' In the same report Sir Eric Sachs, J. Held :- "Accepting, as I do, that the position as regards interest is that stated in the judgments of Mr. Justice Devlin, as he then was, in Kemp Ltd. v. Tolland, (1956) 2 Lloyd's Rep. 681, and by Mr. Justice Donaldson in The Myron, (1970) 1 Q. B. 527 at p. 536 ; (1969) 1 Lloyd's Rep. 411 at 417, that any party in a case such as this is prima facie entitled to interest on his damages if he succeeds, it next follows that any party seeking to obtain damages can conduct his case on the basis that he will automatically be awarded interest on them unless a contrary contention is raised for him to deal with."
12. Reference may lastly be made to the case of Wildhandel N. V. v. Tucker & Cross (z). In the said case placing reliance on the case of Panchaud v. Pagnan the learned Court on the question of omission on the part of Arbitrator to award interest while observing that a failure to award any interest or to deal with interest in such circumstances constitutes technical misconduct, held :- "But even if I should be wrong about this, and if there was no technical misconduct in the sense of the arbitrator not having followed the ordinary practice and not having acted judicially in this matter, then I would still have remitted this case to the arbitrator so that he should make an appropriate award of interest. The reason is that it seems to me, as it did to the Court of Appeal in that case, to be quite wrong that in a dispute in which it has been held that one party should have been paid a sum of money some substantial time ago, which the losing and contractually liable party has had in its pocket for that period, there should nevertheless be no award of interest unless there be some exceptional justification for such a course."
13. Perusal of the law referred above would thus show that in accordance with the law in force in England the arbitrator/umpire has lawful authority to award interest upon the amount awarded by him.
(1) (1974) 1 Lloyd's Law Rep. 394 (2) (1976) 1 Lloyd's Law Rep. 341 ' Accordingly the second objection raised on behalf of the respondents by the learned counsel Mr. Mansoorul Arfin also fails.
14. For the reasons discussed above I find that the award which became final in the country in which it was made and is enforceable under the Arbitration (Protocol and Convention) Act, 1937 and that the respondents having failed to show any cause why the same should not be made rule of the Court and be enforced, I reject the objection raised on behalf of the respondents and direct that the award be made rule of the Court and decree shall follow in terms thereof.
' I further order that the respondents shall bear the costs of the suit and shall pay interest at the rate of 8% per annum from the date of filing of the suit in this Court till payment.