1. KAUSAR SULTANA HUSSAIN, J. The learned counsel for defendants Nos.2 to 4 has submitted an application under section 34 of the Arbitration Act, 1940 (C.M.A. No. 8102 of 2019) praying therein to stay the proceedings in the present suit with directions to the plaintiff to approach the relevant Arbitration Forums, pursuant to the respective Arbitration Clauses, provided all five Contracts executed between the parties, instead of suing/institution the instant suit before this Court. The Senior Executive logistics of defendant No.2, who is duly authorized attorney of defendants Nos. 2 to 4 has enclosed his own affidavit along with instant application.
2. The plaintiff through its Recovery Officer has submitted Counter Affidavit to the instant application of the defendants Nos. 2 to 4. The defendants Nos. 2 to 4 through filing affidavit in rejoinder of the Senior Executive Logistics have reiterated the contents of their application filed by them under section 34 of Arbitration Act.
3. I have heard the learned counsel for the defendants Nos. 2 to 4 and plaintiff at length. The learned counsel for defendants Nos. 2 to 4 has submitted that all the contracts executed between the plaintiff and defendant No. 2 have contained Arbitration clauses, in spite of that the plaintiff instead of invoking the said Arbitration clauses for resolving the dispute arising out of the said contracts instituted the instant suit before this Court, which is liable to be stayed; that defendant No. 2 has neither filed any written statement nor taken steps in the proceedings; that the commencement of the instant proceedings by the plaintiff is in contravention of the terms of the contracts and the jurisdiction of this Court is barred under the provision of Arbitration Act, 1940. In support of his contention the learned counsel for defendants Nos. 2 to 4 has relied upon the following judgments of Hon'ble Supreme Court as well passed by this Court in such like matters. i. AIR 1933 Sindh 75 (Messrs Mc. Kenzies, Ltd v. Messrs Sulleman and Co.). ii. 1983 CLC 3273 (Karachi) (Messrs Waseem Contract Co. v. Province of Sindh). iii. 2018 SCMR 662 (Gerry's International (Pvt) Ltd v. Aeroflot Russian International Airlines). iv. 2015 MLD 304 (Shaheen Construction Company v. Fauji Fertilizer Bin Qasim Ltd.) v. PLD 2011 Karachi 571 (Mst. Sarriya v. Siemens Pakistan Engineering Company).
4. The learned counsel for the plaintiff straight away acceded the view point of the defendants Nos. 2 to 4 in respect of solution of the dispute arisen between the parties through arbitrator, but he has some reservation over solution of their disputed through pre-nominated arbitrator i.e. Senior Logistics Officer etc., as being subordinates of defendant No. 2, probably they may not initiate arbitration proceedings impartially and neutrally, therefore, he requests that this Court itself being legally empowered under section 8 of the Act, 1940 may appoint impartial and neutral arbitrator in this matter. In support of his arguments the learned counsel for the plaintiff has relied upon the following judgments of Hon'ble Supreme Court, mentioned are as under. i. PLD 2016 Supreme Court 121 (Karachi Dock Labour Board v. Messrs Quality Builders Ltd.) ii. PLD 1995 Karachi 286 (Pakistan Development Corporation (Pvt.) Ltd v. Ministry of Defence, Government of Pakistan) iii. PLD 2018 Islamabad 1 (Federation of Pakistan v. Messrs James Construction Company (Pvt.)
5. Ltd.)
6. The learned counsel for the defendants Nos. 2 to 4 submits that the plea of the plaintiff counsel to change the arbitrators, who have been nominated in the subject Contracts by consent of the parties is not liable to be considered as the law does not permit to replace the arbitrators, who have been nominated the parties by themselves at the time of execution of Contract. He points out that in all five contracts arbitrators have been nominated by the parties with their consent.
7. After hearing arguments and perusal of the record, it reveals that admittedly, it was decided by the parties at the time of execution of the contracts between the plaintiff and defendant No.2 that if any question, difference or objection whatsoever or any other dispute of whatever cause and nature shall arise in any way connected with or arising out of these Agreements or the meaning or operation of any part thereof or the rights, duties or liabilities of either party, then every such mutter shall be referred for arbitration to the Company's General Manager, Operations or his nominee or such other Officer of the Company as may designate by it and his decision shall be final. The plaintiff's constituted attorney has signed the said contracts. The learned counsel for the plaintiff has given reasons for filing instant suit instead to resolve their dispute(s) through nominated arbitrators that prior to filing the present suit he sent letters to the Arbitrators but they did not reply them, hence the plaintiff lost their confidence and has apprehension that the pre-nominated arbitrators being employees of the defendant No. 2 will not decide their dispute on merits. The plaintiff's counsel although did not oppose the contention of the learned counsel for the defendant for staying the proceedings in this matter but he requests that this Court may appoint impartial and neutral arbitrator to resolve their dispute(s) impartially and neutrally. I have gone through the relevant provisions of section 8 of The Arbitration Act, 1940, which empowers the Court to appoint arbitrator or an umpire in certain cases, by providing machinery A for effectively working out and enforcing the arbitration Agreement, so that the arbitration Agreement may not become abortive.
8. The Arbitrator or umpire appointed under section 8 of 'The Arbitrator Act, 1940' has the like power to act on the reference and to make an award as if he was appointed by consent of the parties.
9. The section 8 uses the word 'may' which suggests that the Court has discretion to appoint the arbitrator or umpire or supersede the reference. For convenience section 8 of the Arbitration Act, 1940 is being reproduced her under:
8. Power of Court to appoint arbitrator or umpire.----(1) In any of the following cases:--
(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or
(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or
(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him; any party may serve the other parties or the arbitrators, as the case may- be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave notice and after giving the other panics an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties."
10. In the instant matter both the parties' counsel are present before the Court, the learned counsel for the plaintiff gave his consent for referring the matter to the arbitrator, but the point of controversy between them is over the appointment of General Manager, Operation or his nominee etc. as arbitrator(s), as mentioned in the Contract(s) executed between the parties. Per learned counsel for the plaintiff the pre nominated arbitrators being subordinates of the defendant No.2 are not supposed to act as impartial and neutral arbitrator.
11. The relevant clause(s) of the Contracts with regard to the appointment of arbitrator(s) in case of any dispute, if arises between the parties, provide the mechanism to resolve the dispute is being reproduced here from the subject Contract dated 18.11.1990 as under:-
26. If any question, difference or objection whatsoever or any other dispute of whatever cause and nature shall arise in any way connected with or arising out of this Agreement or the meaning or operation of any part thereof or the rights, duties or liabilities of either party, then every such matter shall, be referred for arbitration to the "COMPANY'S" General Manager, Operations or his nominee or such other Officer of the "COMPANY" as the "COMPANY" may designate and his decision shall be final and binding on both parties. Any arbitration under this agreement will be held at Karachi and the Courts at Karachi will have exclusive jurisdiction in all matters connected with this Agreement."
12. A bare reading of the above quoted clause of the contract it is crystal clear it was already decided by the parties that all kind of disputes arising out between the parties would have to resolve through arbitrator, who would be an officer/official of the plaintiff's Company, however, the plaintiff has approached to this Court after arising dispute between them instead to resolve their dispute through pre designated arbitrator showing the reason that they being employee of the defendant No. 2 might not be able to decide/resolve their dispute impartiality and neutrality on merits within the four corners of substantive law, now plaintiff raised objection against referring the matter/dispute of the parties to the pre designated arbitrator, who are serving Officers of the defendant No.2.
13. In these circumstances, this Court by exercising the Powers authorized by section 8 of the Arbitration Act, 1940 deem it appropriate to appoint any person, other than the pre-designated arbitrator(s), who shall act as arbitrator in this matter, in order to resolve the disputes arising between the parties. However, in the interest of justice the parties are at liberty to submit the names of the arbitrator(s) by consent or individually within two weeks' time from today for appointment of arbitrator(s) by this Court, if parties are unable to agree on the appointment of Arbitrator(s) by consent, then this Court being empowered under section 8 of the Arbitration Act, 1940 shall appoint Arbitrator in this matter. Application of defendants Nos. 2 to 4 is hereby allowed.
14. Adjourned. For a date to be fixed by the office after three weeks.