ASIM HAFEEZ, J. Instant Civil Revision is directed against order of 25.02.2020 ("impugned order") , whereby learned Civil Judge 1st Class Lahore ('Civil Court') stayed petitioner 's Civil suit, upon allowing application of the respondent No.1, filed under section 4 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 ("Act, 2011"), while giving effect to the arbitration agreement encapsulated in clause 19.1 of the Subcontract dated 19.05.2007 - (Arbitration clause).
2. This Court, through instant Civil Revision, is called upon to adjudicate upon and determine the legality of the impugned order in the context of the challenge thrown to the applicability of provisions of the Act, 2011 to the legal action initiated by the petitioner by way of a Civil suit, in juxtaposition to the provisions of the Arbitration Act, 1940 ("Act, 1940") .
3. Controversy raised needs to be contextualized in the context of the relevant facts, narrated hereunder .
Subcontract dated 19.05.2007 was executed between the petitioner and respondent No.1 for the improvement of a specified part of Kararo-W adh Road , comprising of Subcontract Documents, as specified in Special Conditions of Subcontract ("Subcontract") . Subcontract, in fact and law, embodies, governs and regulates the contractual relationship between the petitioner and respondent No.1 - signatories of the Subcontract. Execution of the Subcontract, succeeded the execution of Main Contract dated 04.10.2006, signed between respondent No.1 and respondent No.3 - National Highway Authority (NHA) - for the improvement of Section National Highway N-25 from Kararo to Wadh Project , ('project'), composed of the Contract Documents, as specified in Special Conditions of Subcontract ("Main contract"). Project was funded through grant of Japanese Yen 4,052,000,000 by the Government of Japan to the Governmen t of Pakistan. In terms of the Subcontract, 'NHA ' was classified as the Employer; 'Taisei Corporation' as the Contractor and 'A.M Construction Company (Pvt) Ltd' as the Subcontractor .
Conditions governing Subcontract were condensed in General and Special conditions of the Subcontract and scope of subcontracted works was specified in the Special Conditions of the Subcontract. Letter of Acceptance was issued, whereafter petitioner mobilized resources at the site and commenced subcontracted works. Even-keeled relations quickly gave way to overt differences, maturing into disputes of the scale that the petitioner was constrained to invoke clause 19.1 of the Subcontract, and referred alleged disputes for adjudication to the agreed foreign arbitral forum - petitioner claimed that disputes, subject matter of the arbitration reference, were confined to the issue of Interim Payment Certificates IPC's No. 1 to 16. Clause 19.1 of the Subcontract ('clause 19.1') is the epicenter of controversy , hence, it is expedient to reproduce it hereunder , "19.1 Amicable Settlement and Arbitration.
If a dispute of any kind whatsoever arises between the Contractor and the Subcontractor in connection with or arising out of the Subcontract or the execution of the Subcontract works whether during the execution of the Subcontract works or after their completion and whether before or after repudiation or other termination of the Subcontract then the Contractor or the Subcontractor may give a notice of such dispute to the other party , in which case the parties shall attempt for the next fifty-six days to settle such dispute amicably before the commencement of arbitration. Such notice shall state that it is made pursuant to this Clause. Any dispute which has not been amicably settled within fifty-six days after the day on which such notice is given shall be finally settled under the Rules of Conciliation and Arbitration of the International Chambers of Commerce by one or more arbitrators under such Rules. The place in which any such Arbitration is held shall be Singapore. Arbitration may be commenced prior to or after completion of the Subcontract Works, provided that the obligations of the Contractor and the Subcontractor shall not be altered by reason of the arbitration being conducted during the progress of the Subcontract W orks".
19.2......
4. Facts, for better understanding, need to be segregated in two phases. First phase related to the arbitration proceedings and consequent litigation, having proximity to the Arbitration award dated 09.11.201 1, and second phase relates to the disputes, arisen as consequence of final invoice raised by the petitioner . Present litigation pertains to second phase. Nonetheless, some facts of the first phase are significant to understand the context of the lis at hand, and same are highlighted hereunder .
4(a). Facts: pre-arbitration award . Petitioner issued letters dated 23.05.2008 and 13.08.2008 for seeking resolution of disputes in terms of clause 19.1. Reference of disputes resulted in commencement of arbitral proceedings, held under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, conducted in Singapore. Respondent No.1 raised counterclaim against the petitioner , part of the arbitration proceedings. Arbitration award was issued on 09.11.201 1 (Foreign Arbitral Award) . Petitioner , after the Arbitration award, initiated proceedings under section 14 of the Act, 1940 before the Civil Court at Lahore, seeking placement of the award. Respondent No.1 filed application under Order VII Rule 10 of the Code of Civil Procedure, 1908 ("CPC"), seeking return of the application , objecting to the application on the issues of territorial and subject matter jurisdiction, alleging that Sindh High Court at Karachi had the jurisdiction to deal with the questions relating to the enforcement of Foreign Arbitral Award. Application of the respondent No.1 was dismissed, upon treating award as domestic award, on the premise that law of Pakistan was the governing law of the contract and provisions of the Act, 1940 were applicable. Order was upheld by this Court while dismissing Civil Revision, filed by the respondent No.1, bearing C.R. No.691/2012 - which decision was reported as Taisei Corporation V. A.M. construction Company (Pvt.) Ltd. (PLD 2012 Laho re 455). The decision was assailed before Hon'ble Supreme Court of Pakistan through Civil Appeal No.12886 of 2012, wherein leave to appeal was granted on 08.08.2012. Matter is sub-judice. In the meanwhile, respondent No.1 invoked the jurisdiction of Sindh High Court at Karachi under Section 6 of the Act, 2011, for seeking enforcement of Foreign Arbitral Award. Application for enforcement was dismissed by learned Single Judge of the Court, while invoking principle of res-judicata - based on the decision of Lahore High Court in C.R.No.691/2012. Order of learned Single Judge was reversed by learned Division Bench of Hon'ble Sindh High Court at Karachi, while allowing High Court Appeal - HCA No.99 of 2015. Decision was reported as Taisei Corporation V. A.M. construction Company (Pvt.) Ltd. (2018 MLD 2058 ). Order passed in HCA No.99 of 2015 was also assailed before Hon'ble Supreme Court of Pakistan through Civil Appeal No.2649 of 2016, which appeal is also pending adjudication. It is pertinent to mention that proceedings for the enforcement of award, before Hon'ble Sindh High Court, were conducted pursuant to the order of the Hon'ble Supreme Court of Pakistan, dated 18.03.2014, which is reproduced hereunder for convenience, "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 be 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 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 of fice, the High Court of Sindh has territorial jurisdiction to entertain and decide the application.
2. We are informed that the said applic ation 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(b). Facts: After issuance of final invoice for payment. It is alleged that the petitioner , despite referring the matter for arbitration, continued its work under the Subcontract. Disputes regarding some core issues continued to plague the working relation, which lately intensified. Petitioner submitted final invoice for payment on 15.11.201 1, through letters bearing reference No AMCC/WKRP/SP/12 and AMCC/WKRP/SP/ 13, revised through letter dated 16.11.201 1, having reference No AMCC/WKRP/SP/14. Refusal to make payment, as claimed, led to the filing of suit by the petitioner before the Civil Court at Lahore on 11.12.2015, seeking declaration, permanent and mandatory injunction and recovery of Rs.2,741,783,313/- along with interest. Suit was filed not only against the respondent No.1 - sole signatory of the Subcontract - but five others, including the Consultant, Employer - NHA -, Adamjee Insurance Company and Federation of Pakistan. Respondent No.1 filed application, on 13.02.2016, under section 4 of the Act, 2011, seeking stay of suit. Respondent No.3 also filed applica tion under Order VII Rule 11 of CPC for rejection of plaint, on the ground of lack of territorial jurisdiction, which application was dismissed on 04.02.2019. Respondent No.4 filed application, under Order I Rule 10 of CPC for deletion of its name, which was dismissed on 04.02.2019 and said order was maintained by this Court while dismissing Civil Revision, C.R No.14128 of 2019, vide order of 29.10.2020. Arguments were addressed on various dates, in the backdrop of narrated facts.
5. Objection against the maintainability of instant Civil Revision.
Learned counsel for the petitioner , while responding to the office objection regarding non-maintainability of instant Civil Revision, - ordered to be considered on judicial side - submits that Civil suit was stayed in exercise of powers under section 4 of the Act, 2011, which special law does not provide the remedy of appeal, therefore revisional jurisdiction of this Court was invoked, in the context of pecuniary valuation of the suit. Adds that order to stay legal proceedings is an appealable order under section 39 of Act, 1940 but since jurisdiction was not exercised thereunder , hence, remedy of appeal is not available. Lastly submits that no remedy of appeal against order to stay legal proceedings was available under the provisions of CPC, therefore, revisional jurisdiction is invoked to question irregular exercise of jurisdiction. Adds that matters raised through Civil suit are otherwise not covered by clause 19.1, which constitute material irregularity , while exercising jurisdiction, hence, order is subject to adjudication under revisional jurisdiction. Reference is made to the cases of Muhammad Aslam and another V.
Munshi Muhammad Behram and another (1991 SCMR 1971) and Mubarik Cotton Factory V. Messrs General Agencies, Multan (PLD 1980 Baghdadul Jadid 1).
Submissions to the extent that no remedy of appeal is provided against order to stay legal proceedings in exercise of powers under section 4 of the Act, 2011 are plausible, when order is passed by the Civil Court - remedy of appeal against the order of learned Single judge of the Lahore High Court, passed in exercise of original civil jurisdiction, is otherwise available under section 3 of the Law Reforms Ordinance 1972, and Division Bench of this Court entertained appeal against the order of learned Single Judge in the case of Orient Power Company (Pvt.)
Limited V. Sui Northern Gas Pipelines Limited (PLD 2019 Lahore 607). The issues of exclusivity of the jurisdiction conferred upon the High Court(s) in terms of section 3 of the Act, 2011 and the question that whether Civil Court, in the instant case was competent to exercise jurisdiction under section 4 of Act, 2011, are discussed in due course. Objection against maintainability of instant Civil Revision is rejec ted and Civil Revision is held maintainable.
Submission on Merits.
6. Submissions on behalf of the Petitioner ; Leaned counsels for the petitioner raised two overarching questions, albeit each question raises multiple subsidiary questions, which are considered while rendering instant decision.
Firstly , what was actual understanding reached between the parties regarding applicable law of the arbitration - was it the Act, 2011 or the Act, 1940 -, and secondly whether legal proceedings could be stayed by the Civil Court, based on the arbitration agreement, in purported exercise of jurisdiction under section 4 of Act, 2011, when independent causes of action were pleaded against non-parties to the arbitration agreement - the consultant(s) and the Employer [NHA], not the signatories to the Subcontract.
7. Learned counsels submits that provi sions of the Act, 2011 are not attracted when parties agreed to the applicability of the Act, 1940, the law applicable at the time of the Subcontract. Adds that question of stay of legal proceedings, if to be considered and granted, have had to be examined and adjudged under section 34 of Act, 1940, and not section 4 of the Act, 2011. Elaborated, that Subcontract was executed on 19.05.2007 and in terms of clause 3.2 of Special Conditions of the Subcontract it was agreed that 'The Governing law shall be the law in force at the time in Pakistan' , implying that law applicable for the time being in force , would govern the contract as well as clause 19.1. Learned Counsel referred to the correspondence dated 19.04.2007, claiming it to be the part of Subcontract documents, to emphasize that Governing law is prevailing in Pakistan (confirmed in SC 3.2) - (Point (10) of the letter).
Emphasized that law governing the arbitration agreement, part of the Subcontract, was the Municipal law of Pakistan, hence, the applicable law, at that point in time, was the Act, 1940. Explained that on 19.05.2007 only two statutes, dealing with the arbitration matters, were in force in Pakistan, i.e., the Act, 1940 and the Arbitration (Protocol and Convention) Act 1937 (Act, 1937), and latter not being applicable, by virtue of sub-section (2) of section 9 thereof, as the law governing arbitration was the law of Pakistan. Referred to the cases reported as "Hitachi Limited and another V. Rupal i Polyester and others (1998 SCMR 1618), Rao Shiv Bahadur Singh and others V. The State of Vindhya Pradesh" (AIR 1953 SC 394), Muhammad Ghafoor and another V. The State (1998 PCr.LJ 1876) and Maj. Mehtab Khan V. The Rehabilitation Authority and another (PLD 1973 Supreme Court 451). Further submits that in terms of settled principles of interpretation of documents/ contracts, the intentions of the parties have had to be gathered from the text of the contract, which determination is a question of law and not of fact. Adds that arbitration clause must be interpreted in accordance with the law, in force at that time, and not in terms of any subsequent law, otherwise prejudicial to the rights claimed and available under the law in force at the time of execution of the Subcontract. Referred to the cases of "House Building Finance Corporation V. Shahinshah Humayun Cooperative House Building Society and others" (1992 SCMR 19), "Investors Compensation Scheme Limited V. West Bromwich Building Society and others" ([1998] 1 All ER 98), "Spencer V. Secretary of State" [2012] 2 All ER (Comm) 480], "Wood (Respondent) V. Capita Insurance Services Limited (Appellant)" [(2017) 4 All ER 615], "Muhammad Shahnawaz and 44 others V. Karachi Electric Supply Company through Company Secretary and 2 others" [2011 PLC (C.S.) 1579], "Burma Oil Mills Limited V. Trustees of the Port of Karachi through Chairman" (2011 CLC 1538 ), "Mst. Baswar Sultan V.
Mst. Adeeba Alvi" (2002 SCMR 326), "Bolan Beverages (Pvt.) Limited V. PEPSI Co. Inc. and 4 others" (PLD 2004 Supreme Court 860), and "Uzin Export Import Foreign Trade Co. v. MACDONALD LAYTON & CO. LTD.
KARACHI and another" (1996 SCMR 690), Home Building & Loan Association v. Blaisedell, 290 U.S. 398, 78 L Ed 413, James Miller and Partners Ltd v. Whitworth Street Estates (Manchester) Ltd, [1970] 1 ALL ER 796, and Armar Shipping Co. Ltd. v. Caisse Algerienne D' Assurance et de Reassurance [1981] 1 ALL ER 498.
Learned counsel submits that Act, 2011 was promulgated on 19.07.201 1, after the execution of the Subcontract, which cannot be enforced with retrospective effect, in the wake of the written understanding reached between the parties qua the governing law in force at the time of execution of subcontract, on 19.05.2007. Adds that retroactive application of the Act, 2011 is contrary to the contractual terms agreed. Learned counsel contends that on the date of execution of Subcontract on 19.05.20 07, none of the often-introduced Ordinan ces, regarding the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards), were in field, which situation necessitates the application of the governing law of arbitration, applicable at that time, which was the Act, 1940. Learned counsel laid much emphasis on the decision in the case of Taisei Corporation Vs. A.M. Construction Company
(Pvt) Ltd, (supra). Learned counsel, while impug ning the incidence of retrospective effect of the Act, 2011, elaborated that no such effect could be extended to the Act, 2011, in terms of sub-section (3) of Section 1 of the Act, 2011, simplicitor by interpreting the expression, 'before' employed therein, which, essentially , cannot be construed an explicit or implicit legislative intent, giving retrospective effect to the enactment, to the prejudice of the petitioner . Learned counsel has referred the cases of "Sh. Muhammad Sadiq v. Lala Krishan Lal Malhotra and Others" (PLD 1966 SC 439), Zila Council Jehlum through District Coordination Officer V. Messrs Pakistan Tobacco Company Ltd. and others (PLD 2016 Supreme Court 398), "Adnan Afzal v. Capt. Sher Afzal" (PLD 1969 SC 187), "Nabi Ahmed and another v. Home Secretary , Government of West Pakistan, Lahore and 4 Others" (PLD 1969 SC 599), "Shahida Bibi and others v. Habib Bank Limited and others" (PLD 2016 SC 995) to support submissions. Learned counsel also submits that Civil Court failed to appreciate material issue that provisions of the Act, 2011 could not be applied retrospectively to defeat the intentions of the parties, agreed in writing, and arbitrary imposition of alien terms tantamount to coerce the parties to agree, honour and abide by fresh terms, which situation per se attracts principle of 'Frustration of Contract'. Referred the case reported as Messrs Eckhardt & Co, marine GmbH V. Muhammad Hanif (PLD 1993 Supreme Court 42). Reference is made to section 56 of the Contract Act 1872. Learned counsel has referred to various case-laws from foreign jurisdiction(s) to elaborate concept of frustration of contracts, which need not to be mentioned as each of the cases have relevance in the context of the facts involved. On the point of maintainability of the suit, learned counsel submits that except respondent No.1, none of the other respondents were parties to the Subcontract, but their conduct and actions per se prejudiced the petitioner , hence suit, on its own, is proceedable against other respondents, without the necessity to stay legal proceedings. Adds that causes of action raised against non-parties to the arbitration agreement cannot otherwise be agitated before the Arbitrator , and in support thereof few paragraphs of foreign arbitral award are read, to show that certain objections against the conduct of the Employer were raised by the petitioner during arbitral hearings but brushed aside on the plea that the Employer was not party to the Subcontract. Learned counsel elaborated the contentious issues relating to the design change, disputes regarding rock classification, and wrongful extension of the performance guarantee by Adam jee Insurance, to emphasis plea of independent causes of action against the respondents, not parties to the Subcontract. Adds that petitioner , independent of the Subcontract, could still maintain claim of tortious liability , against the respondent No.3 - NHA -, which Authority otherwise controls and regulates networks of Highways in Pakistan. Submits that right of the petitioner to sue the respondent No.3 and other respondents - not party to the Subcontract - cannot be restricted or denied, and petitioner can invoke the jurisdiction of the ordinary courts, exercising general jurisdiction. Learned counsel referred to various paragraphs of the plaint to reinforce submissions and highlight collusive acts and omissions of the respondent No.3, for the purposes of necessity of conduct of trial. Learned counsel also read reliefs sought, to emphasis that claims raised against the respondents, established their obligation / liability , jointly and severally . Learned counsel, without prejudice to aforesaid submissions, contends that even the requirements / conditions prescribed in section 4 of the Act, 2011 were not fulfilled and Civil Court proceeded to stay legal proceedings in clear violation of the mandate of section 4 of the Act, 2011 and Article II of the NY Convention.
Submits that arbitration agreement was inoperative and incapable of being performed, in wake of the violations by the consultant(s) and the Employer - NHA.
8. Submissions for the Respondent No.1; Learned counsel submits that dispute of any kind, whatsoever arising between the contractor and the subcontractor - petitioner and respondent No.1 - in connection with or arising out of the Subcontract, pertaining to its execution, during the continuity and completion of the subcontracted works, etc., is solely referable to agreed arbitral forum in terms of clause 19.1, which envisages arbitration proceedings under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, to be conducted in Singapore - a Contracting State in terms of the Act, 2011. Adds that the Act, 2011 and not the Act, 1940 would apply , latter being only applicable to arbitration(s) in Pakistan. Learned counsel referred to ratio laid in the case of Orient Power Company (Pvt.) Limited V. Sui Northern Gas Pipelines Limited (PLD 2019 Lahore 607) and apprised that said decision was affirmed by Hon'ble Supreme Court of Pakistan in case reported as Orient Power Company (Private) Limited through Authorized Officer V. Sui Northern Gas Pipelines Limited through Managing Director (2021 CLD 1069), wherein question of jurisdiction was conclusively settled. Learned counsel explained that with the advent of the Act, 2011 legal position had changed significantly , whereafter the condition of Municipal law being the governing law of contract is not the criterion for determining the character of the award - as the Act, 1937 was also repealed, which enactment excluded awards made on arbitration agreement, governed by the law of Pakistan in terms of section 9(b) of the Act, 1937. Therefore, ratio settle d in the case of Hitachi Limited and another V. Rupali Polyester and others (1998 SCMR 1618) is not attracted. Learned counsel referred to a decision from neighboring jurisdiction, reported as Bharti Televentures Ltd. V. Dss Enterprises Private Ltd.
[2005 (2) ARBLR 561 Delhi]. Learned counsel also referred to the cases reported as Mian Iftikhar-ud-Din V.
Muhammad Sarfraz Administrator , Progressive Papers Ltd. (PLD 1961 Supreme Court 585), Sir Dinshaw Manekji Petit V. G.B. Badkas and others (AIR 1969 Bombay 151), Devkumars inghji Kasturechandji V. State of Madhya Pradesh and others (AIR 1967 Madhya Pradesh 268) and Ch. Tanvir Khan V. President, Cantt.
Board, Rawalpindi and 2 others (1999 MLD 721) to counter the arguments regarding applicability of Act, 1940 in wake of clause 3.2, and submits that clause 3.2 legally implied that the parties are bound by the prevailing law, all future enactment(s) and including amendments and new enactment(s).
9. Learned counsel submits that sub-section (3) of section 1 of the Act, 2011 mandates retrospective application of the Act, 2011 and the legislative intent is clear , whereby the Act, 2011 was made applicable from specified period.
Referred to the decision in the case of State V. Muhammad Jameel (PLD 1965 Supreme Court 681). Adds that no vested right could be claimed to avoid application of Act, 2011, which is otherwise procedural in character and retrospective application causes no prejudice. Referred to the decisions in the cases of Thyssen Stahlunion GMBH V. Steel Authority of India Ltd. (AIR 1999 Supreme Court 3923), Hungerford Investment Trust... V.
Haridas Mundhra & others [1972 SCR (3) 690] and Abbott V. the Minister for Lands (1895 A.C. 425). Learned counsel submits that clause 19.1 is comprehensive enough to include all disputes between the petitioner and respondent No.1. Adds that petitioner failed to identify any specific dispute, claimin g to be falling outside the scope of the agreement, to justify filing of the suit. He referred to decisions reported as Ovex Technologies (Private)
Limited V. PCM PK (Private) Limited and others (PLD 2020 Islamabad 52), Port Qasim Authority , Karachi V.
Al Ghurair Group of Companies and 3 others (PLD 1997 Karachi 636), Lahore Stock Exchange Limited V.
Fredrick J. Whyte Group (Pakistan) Ltd. and others (PLD 1990 Supreme Court 48) and Mst. Surriya Rehman V. Siemens Pakistan Engineering Company Ltd. (201 1 PLD Karachi 571).
10. Further submits that the discretion otherwise available to the courts to stay legal proceedings under section 34 of the Act, s1940 is no more available, while deciding the application filed under section 4 of the Act, 2011.
Referred to the decisions reported as Cummins Sales and Services (Pakistan) Limited through authorized signatory V. Cummins Middle East FZE through Chief Executive and 3 others (2013 CLD 291), FAR Eastern Impex Limited, Karachi V. Quest International Nederland BV and 6 others (2009 YLR 334) and Messrs Travel Automation (Pvt.) Ltd. through Managing Director V. Abacus International (Pvt.) Ltd. through President and Chief Executive and 2 others (2006 CLD 497). Further submits that mere impleading of parties, not privy to the Subcontract, would not give petitioner a pretext to avoid contractual bargain agreed, in terms of clause 19.1. Adds that claims otherwise pleaded are covered under the scope of the arbitration agreement and the substance, not the form of the claims need to be examined, which were examined, and Civil Court rightly stayed legal proceedings. He referred to the cases of Abid Associated Agencies International (Pvt.) Ltd. and others V. Areva and others (2015 MLD 1646 ), Messrs Haji Muhammad Ibrahim & Sons and others V. Karachi Municipal Corporation and others [PLD 1960 (W.P.) Karachi 916] and Lithuanian Airlines V. Bhoja Airlines (Pvt.) Ltd. and others (2004 CLC 544). Learned counsel further submits that no ground has been pleaded in the suit to establish that any one of the conditions specified under section 4 of Act, 2011, showing that contract was null and void, inoperative and incapable of being performed, are available.
11. Submissions by respondent No.3 ; Learned counsel, reiterating submissions made in the written comments / report, denied privity of contract with the petitioner or any enforceable obligation. Adds that respondent No.3 neither owes any obligation nor any legal responsibility to the petitioner . Learned counsel referred to the conditions of main contract, copy whereof placed on record, and indicated the immunity extended qua alleged acts and omissions inter se contractor 's subcontractors, and agents or employees or persons perform ing any part of the works for the Contractor - respondent No.1.
Determination by the Court:
12. Arguments heard. Record perused.
13. First thing first; merits of the order to stay legal proceedings. It is apparent that subject matter causes of action, alleged and pleaded in Civil suit, arose after submission of final invoice for payment and alleged refusal of respondent No.1 to pay claimed amounts of Rs.2,497,440,321/-. Evidently , the claimed amount in the final invoice and recovery sought through the suit is, by and large, same, demonstrating that sub-total amounts claimed was the cause and effect of the Subcontract. This fact alone substantially displaces claim of independent causes of action against non-parties to the Subcontract. The claim raised through final invoice was directed against the respondent No.1, to the exclusion of the respondent No.3. Paragraph 56 of the plaint referre d to final invoice, raised under clause 16.5 of General Conditions of the Subcontract, and conveyed through letters dated 15.11.201 1, bearing reference No AMCC/WKRP/SP/12 and AMCC/WKRP/SP/13, revised through letter dated 16.11.201 1, reference No AMCC/WKRP/SP/14. Letter enclosing final invoice refers to various conditions of the Subcontract, including clause 4.3 of the Subcontract, which reads as, 4.3 No Privity of Contract with the Employer .
Nothing herein shall be construed as creating any privity of contract between the Subcontractor and the Employer .
14. Clause 4.3 reiterates the intent conveyed through Article 9.5 of the Main Contract - signed between respondent No.1 and respondent No.3, the Employer -, which reads as, Article 9 Contractor 's Obligations 9.5 The Contractor shall be responsible for the acts or omissions of the Contractor 's subcontractors, or any of Contractor 's agents or employees, or any other persons performing any part of the W ork for the Contractor .
15. Clause 4.3 of the Subcontract, examined in the light of Article 9.5 of the Main contract, established absence of contractual proximity between the petitioner and respondent No.3 - the Employer - clearly indicating that respondent No.3 owes no contractual responsibility , duty or obligation towards the petitioner . No document was sued and relied upon to show any enforceable obligation of the respondent No.3 towards the petitioner , giving latter any right to initiate per se. Mere exchange of few letters or an act of registering some complaints, in the absence of privity of contract between the petitioner and respondent No.3, does not give any cause of action to the petitioner to sue respondent No.3. Subcontract was independent and any representation made therein, or scope of obligations undertaken in the context thereof do not bind the respondent No.3 - the Employer -, which cannot be held liable for any vicarious liability in the guise of Subcontract - [Reference to Article 9.5 of the Main contract is apt]. Perusal of the contents of the plaint failed to indicate any enforceable obligation, represented or undertaken by the respondent No.3, as alter ego of the petitioner , personally or any statutory responsibility / duty, otherwise subjecting the respondent No.3 to alleged tortuous claim. Allegations of tort of misrepresentation and conspiracy were not borne out from the plaint, nor conditions or elements necessary for attracting such allegations were available. Same is true with respect to other respondents - as far as assertion of independent causes of action is concerned. It is for the petitioner to establish that causes of action alleged are beyond the scope of the clause 19.1, and an obvious failure to segregate subject matter of the suit from the scope of clause 19.1 is evident. It is otherwise evident from letter dated 15.11.201 1, that claims raised through final invoice was inclusive of the alleged monetary claims regarding dispute of excavation of rocks and their classification. Assertions that responsibility / obligation is otherwise joint and several, are self-sabotaging, strongly suggesting that alleg ed acts and omissions of the respondent No.1, either personal or collusively undertaken with any of the non-parties to the Subcontract, were cause and effect of the Sub-contract, attracting the clause 19.1. It is expedient to reproduce paragraph relating to the cause of action and relief sought, inter alia showing that disputes raised had their roots in the Subcontract.
81. That the cause of action arose in favour of AMC and against the Defendants, inter alia, on the various dates referred to above, when Subcontract was entered into, when the various acts of omission and negligence were committed by the Defendants, when meetings were held and agreeme nts reached in order to settle disputes and when such agreements were breached, when the Award was delivered, when the Final Invoice was issued by AMC and when it was rejected , when the various requests for information and documents were made by AMC to Taisei and the Consultants but were not acceded to, when NHA was informed about wrongful acts and omissions of Taisei and the Consultant and it engaged in correspondence with them but failed to hold a proper inquiry after associating AMC , when NHA unlawfully withdrew the Evaluation Report, when the Arbitrator refused to submit the record in court despite orders of the court and requests of the parties , when efforts for amicable settlement were finally called off. The cause of action has arisen in part from Award and the issues raised by it. There has been no final settlement / adjus tment of accounts . The cause of action is recurring in nature and continues day to day .
PRAYER.
In the light of the foregoing, it is most respectfully prayed that this Honourable Cour t may be pleased to decree the instant Suit in favour of AMC and against the Defendants and grant the following reliefs to the AMC: i. Declare that the failure of NHA to decide AMC'S representations against the withdrawal of the Evaluation Report by NHA through the Withdrawa l Letter is unlawful and of no legal effect, and that the said withdrawal was unilateral, in violation of the principles of natural justice, unlawful, void ab initio and of no legal effect, so that the Evaluation Report is correct and valid, and is in full force and ef fect; ii. Direct NHA to conduct a Design inquiry into the Project and all appropriate tests, such as core cutting tests, California Bearing Ratio (CBR) tests and deep testing procedures , after associating AMC and all interested parties in order to ascertain whether or not the Design was actually imple mented and to share the results with them; iii. Declare that AMC is not to be held responsible for any defect, damage, loss or accident that may occur on the Project road i.e. Kararo-W adh section of National Highway (N-25), on account of the non implementation of the Design on the ground and the change in the Design effected by Taisei and/or the Consultant; iv. Permanently restrain NHA and Defendant No.6 from taking any adverse action against AMC regarding the Project or any other project on which AMC might be working as a contractor/subcontractor for NHA and/or Defendant No.6 or any of its offices, agencies, authorities or departments, on the basis of the issues raised herein; v. Declare that the issuance of the Defects Liability Certificate, if issued, to Taisei as well as the release of its performance guarantee to be unlawful and of no legal effect; vi. Direct Taisei and/or the Consultant to refurnish the performance security whic h was wrongly released by the Consultant to Taisei without inquiring into the matters raised herein and in the above referred correspondence by NHA, and that the performance security be kept valid and intact till the aforesaid Design inquiry is completed; vii. Direct that the final issuance of the Defects Liability Certificate be held in abeyance till the time such Design inquiry is completed; viii. Direct NHA and Defendant No.6 to blacklist Taisei and the Consultant for their wrongful acts and omissions and permanently restrain NHA and Defendant No.6, directly or through any of its offices, agencies, authorities or departments, from awarding any new contract or project to Taisei and the Consultant; ix. Pass a decree for recovery in favour of AMC and against Taisei, NHA and the Consultant, jointly and severally , for Rs.2,741,783,313 as the value of the work done and as compensation for the losses and costs incurred by AMC due to the various breaches of the legal and contractual obligations committed by them, as detailed above. This amount may be updated/revised once all the sought for documents and information, detailed above, are provided to AMC. Furthermore, interest at the rate of 18% per annum be granted on the aforesaid amount from 15 November 201 1 till the date of actual payment; x. Direct NHA to declare that AMC is entitled to receive the same extensions of time which NHA has granted to Taisei; xi. Declare that the Performance Bond is ineffective, unenforceable and of no legal effect, and that the demand dated 7 November 2011 and/or any subsequent demand for its encashment by Taisei is fraudulent, without lawful authority and no legal ef fect; xii. Permanently restrain Adamjee from encashing the Performance Bond on or pursuant to the demand dated 7 November 201 1 b y Taisei or any other such demand; xiii. Grant costs of the case to AMC.
Such other relief as may be deemed just and proper in the facts and circumsta nces of the case may also be granted to AMC.
[Emphasis Supplied]
16. Aforesaid details showed that alleged causes of action arise out of the conditions agreed and obligations undertaken in terms of the Subcontract, qua the Subcontracted works. Hence, in view of the above, subject matter of the lis at hand cannot be divorced from subject matter of the disputes, envisaged and agreed to be resolved through arbitral mechanism under clause 19.1. Petitioner attributed acts of contractual breach, collusively targeted towards it, and deliberate non-disclosure of details, fraudulent misrepresentations, conspiracy to deceit and shared negligence, which allegations, subject to proof of involvement of the respondent No.1, can form part of the disputes, amenable to clause 19.1. And independently these allegations, minus respondent No.1, are not borne out from the contents of the plaint. It is evident from paragraph 142 of the award that petitioner had earlier raised allegations of collusion between respondent No.1 and respondent No.3, and those were repelled being devoid of any substance. Hence, action initiated through the Civil suit was conspicuously launched to frustrate and defeat the purpose and enforcement of clause 19.1 - final invoice was issued on 15.11.201 1 and suit was filed on 11.12.2015 this long-awaited response manifests apparent attempt to render clause 19.1 ineffective. The judgments referred by learned counsel for the petitioner , on this point, extends no assistance to the petitioner , which are distinguishable, and ratio settled therein are not attracted. Order of staying legal proceedings, in these circumstances, was rightly and lawfully passed by the Civil Court. Now I deal with other legal objections, requiring interpretation of the provisions of the Act, 201 1, in the context of claim of applicability of the Act, 1940.
17. Petitioner 's counsel strenuously argued that arbitral mechanism agreed was intended to be governed by and regulated under the Act, 1940 - in terms of clause 3.2 of Special Conditions of Subcontract. Another submission was that firstly , the Act, 2011 was not available on the statute book, at the time of the Sub-contract, and secondly no retrospective effect could be extended to the Act, 2011, legally and in terms of overt consensus for application of Act, 1940. Submissions are misconceived and fallacious, when analyzed in the context of sub-sections (3) and (4) of section 1 of the Act, 201 1, reproduced hereunder for the sake of convenience,
1. Short title, extent, application and commencement. -- (1) this Act may be called the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 201 1
(2) It extends to the whole of Pakistan.
(3) It shall apply to arbitration agreements made before, on or after the date of commencement of this Act.
(4) It shall not apply to foreign arbitral awards made before the 14th day of July , 2005.
(5) It shall come into force at once.
[Emphasis Supplied]
18. No scholarly interpretation is required to construe sub-section (3) of section 1 of the Act, 2011, wherein the expression 'before' conveys the legislative intent, in crisp and clear manner . Laws can be made to give retrospective effect; this prerogative and authority of the legislature is not in dispute. All arbitration agreements, made before, on or after the commencement of the Act, 2011- except those wherein foreign arbitral awards were made before 14th July 2005 -, are covered under sub-section (3) of section 1 of Act, 2011. Exclusion provided is not attracted to the facts of instant case. Judgments referred and relied upon by the counsel for the petitioner , pleading displacement of retrospective application of the Act, 2011, are not relevant or attracted. Hence, objection to retrospective applicability and enforcement of provisions of the Act, 201 1 is repelled.
19. Learned counsel laid much emphasis on clause 3.2 of Special Conditions of Subcontract and argued that the law opted for and applicable, at the time of execution of the Subcontract, was the Act, 1940. Submission is misconceived. The argument raised need to be examined in the context of the facts of the case, which is at pre- arbitration stage and no submission to the arbitral tribunal is yet made. Why the clause 3.2, 'The Governing law shall be the law in force at the time in Pakistan' , cannot be construed to mean law in force when the cause of action accrues, meaning thereby that when one of the parties may invoke clause 19.1. The Act, 2011 is applicable with retrospective effect, which was and would be treated as the law prevailing or in force at the time in Pakistan - at the time of the execution of the Sub-co ntract. It is not the case of the petitioner that parties agreed for the applicability of Arbitration Act, 1940, agreeing to treat the potential arbitral award as domestic, instead of concurring to a prospective foreign arbitral award, circumstances so warranting. Clause 3.2 of the Special Conditions of the Subcontract, otherwise, does not convey consensus ad idem qua the exclusive application of the Act, 1940, and specific exclusion of the Act, 1937. Learned counsel erroneously argued regarding non-applicability of the Act, 1937, while referring to clause (b) of section 9 of Act, 1937, without appreciating the scope and effect thereof.
Section 9(b) of Act, 1937 would trigger once award was made and its nationality determined, and when question of its enforcement arises, which is not otherwise the case here. Assumption of alleged exclusion of the Act, 1937 is misplaced and contrary to the spirit and effect of section 3 of the Act, 1937. Section 9(b) of the Act, 1937 was not applicable, for the purposes of determinin g issue of grant or refusal to stay legal proceedings, which were regulated and decided in accordance with the mandate of section 3 of the Act, 1937. Section 3 of the Act, 1937 specifically excluded application of the Arbitration Act 1940, and Code of Civil Procedure 1908, significance and effect thereof was not appreciated. Section 3 and section 9(b) of the Act, 1937 are reproduced hereunder for the convenience of reference, "Section 3. Stay of proceedings in respect of matters to be referred to arbitration. (1) Notwithstanding anything contained in the Arbitration Act, 1940, or in the Code of Civil Procedure, 1908, if any party to a submission made in pursuance of an agreement to which the Protocol set forth in the First Schedule as modified by the reservation subject to which it was signed by India applies, or any person claiming through or under him, commences any legal proceedings in any Court against any other arty to the submission or any person claiming through or under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before filing a written statement or taking any other steps in the proceedings, apply to the Court to stay the proceedings; and the Court, unless satisfied that the agreement or arbitration has become inoperative or cannot proceed, or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make and order staying the proceedings".
Section 9. Savings. Nothing in this Act shall;-
(a) ..........
(b) Apply to any award made on an arbitration agreement governed by the law of Pakistan .
[Emphasis supplied]
20. The import and effect of section 3 of the Act, 1937 had to be examined and appreciated in the context of sections 46 and 47 of the Act, 1940, which otherwise excluded the applicability of Act, 1940 to the extent of inconsistency with the other Act. The case of "Hitachi Limited and another" (supra ) was decided in the context of the awards made, which were treated as domestic in the context of section 9(b) of the Act, 1937. Hence, assertion regarding per se exclusion of the Act, 1937, at the time of execution of the Sub-contract is otherwise erroneous - though submissions lost relevance and efficacy in the wake of repeal of the Act, 1937 and retrospective status extended to the Act, 2011. Another submission was that various Ordinances were promulgated and introduced, contemporaneously , to enforce obligatio ns under the NY Convention 1958 and to regulate the law regarding recognition and enforcement of foreign arbitral awards, none of which survived in the absence of grant of requisite legislative approval(s), even none of those Ordinances were otherwise applicable and operative on 19.05.2007, - when Subcontract was executed -, which submission too is without any substance. Legislature gave retroactive effect to the Act, 2011, which alone addre ssed the objection of enforceability of the Act, 2011. Another submission, that the Act, 2011 has not specifically excluded the applicability of Act, 1940, and therefore, the Act, 1940, and consequently the section 34 thereof, would apply , for the purposes of adjudication of application for the stay of subject matter legal proceedings, is fallacious. It is absurdity , otherwise, to assume or infer that mere non- mentioning of exclusion of the provisions of the Act, 1940 in the Act, 2011 would conversely imply applicability of the Act, 1940. The assertion that section 34 of the Act, 1940 would apply is misconceived and fails to appreciate that various provisions of the Act, 1940 are otherwise inconsistent with the provisions of Act, 2011, which inconsistency renders the Act, 1940 inapp licable. Reference is made to section 46 and 47 of the Act, 1940, which per se excludes the applicability of section 34 of the Act, 1940 in the wake of inconsistency apparent with section 4 of the Act, 2011. Hence, provisions of the Act, 1940, in the context of the on-going discussion /submissions are not attracted for the purposes of clause 19.1. Learned counsel for the petitioner failed to appreciate that provision, alike or similar to section 9(b) of the Act, 1937 was not traceable in the Act, 2011, which distinction substantially addresses the objections pleaded before this court. The submissions hereby made, largely fetch support from the ratio of the case of Taisei Corporation V. A.M. construction Company (Pvt.) Ltd. (PLD 2012 Lahore 455), which decision had erroneously classified earlier foreign arbitral award, between the petitioner and respondent No.1, as domestic award and upheld the maintainability of proceedings, initiated under section 14 of the Act, 1940, which determinations were disapproved by the learned Division bench of this Court in the case of Orient Power Company (Private) Limited, (supra). And likewise, the learned Division bench of Hon'ble Sindh High Court also disagreed with the ratio in the decision in the case of Taisei Corporation V. A.M. construction Company (Pvt.) Ltd. (PLD 2012 Lahore 455), while rendering decision in the case of Taisei Corporation V. A.M. construction Company (Pvt.)
Ltd. (2018 MLD 2058 ). I concur with the dicta laid in the cases of Orient Power Company (Private) Limited, (supra) and T aisei Corporation V . A.M. construction Company (Pvt.) Ltd. ( 2018 MLD 2058 ).
21. Another objection is relating to the scope of jurisdiction exercisable by the Civil Court in the context of exclusive jurisdiction extended to the High Court in terms of section 3 of Act, 2011, being the Court as defined in clause (d) of section 2 of Act, 201 1. It is expedient to reproduce relevant provisions of Act, 201 1, which read as,
2. Definitions.- In this Act, unless there is anything repugnant in the subject or context,
(a) "Article" means an Article of Convention;
(b) "Contracting State" means a State which is a Party to the Convention;
(c) "Convention" means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10th June, 1958, set forth in the Schedule to this Act;
(d) Court" means a High Court and such other superior court in Pakistan as may be notified by the Federal Government in the official Gazette; and
(e) "foreign arbitral award" means a foreign arbitral award made in a Contracting State and such other State as may be notified by the Federal Government, in the of ficial Gazette.
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.
(2) An application to stay legal proceedin gs pursuant to the provisions of Article II of the Convention may be filed in the Court, in which the legal proceedings are pending.
(3) In the exercise of its jurisdiction, the Court shall,-
(a) follow the procedure as nearly as may be provided for the Code of Civil Procedure, 1908 (Act V of 1908); and
(b) have all the powers vested in a civil court under the Code of Civil Procedure, 1908 (Act V of 1908)
4. Enforcement of arbitration agreements.-- (1) A party to an arbitration agreement against whom legal proceedings have been brought in respe ct of a matter which is covered by the arbitration agreement may, upon notice to the other party to the proceeding s, apply to the court in which the proceedings have been brought to stay the proceedings in so far as they concern that matter .
(2) On an application under sub-section (1), the court shall refer the parties to arbitration, unless it finds that the arbitration agreement is null and void, in operative or incapable of being performed.
6. Enforcement of foreign Arbitral award. -(1) Unless the Court pursuant to section 7, refuses the application seeking recognition and enforcement of foreign arbitral award, the Court shall recognise and enforce the award in same manner as a judgment or order of a court in Pakistan.
(2) A foreign arbitral award which is enforceable under this Act, shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set of f or otherwise in any legal proceedings in Pakistan.
[Emphasis supplied]
22. Evidently , sub-section (1) of section 3 of the Act, 2011 confers exclusive jurisdiction unto the Court, defined under clause (d) of section 2 of the Act, 2011 - meaning thereby the High Court(s) and such other superior court in Pakistan, as may be notified by the Federal Government in the official Gazette. The scope, effect and extent of section 3 of the Act, 2011 was deliberated upon extensively in the case of Orient Power Company (Private) Limited, (supra) , paragraph 1 1 whereof is reproduced hereunder , "11. We are of the opinion that the Act leaves little room for interpretation on the issue of exclusivity of jurisdiction of the High Court. Section 3 of the Act is clear and applicable to foreign arbitral awards, which has been clearly interpreted by division bench of the Sindh High Court in PLD 1982 Karachi 619 (supra). We also note that the Taisei Case relied upon 1998 SCMR 1618 (supra) which case interpreted the provisions of the 1937 Act which was repealed under Section 10 of the Act in 2011 where after for the purposes of the enforcement of a foreign award the Act is relevant, even if the arbitration takes place in a foreign country and the governing law of the agreement is of Pakistan, in such cases the 1937 Act will not apply . With the repeal of the 1937 Act, a foreign arbitral award under the Act is one made in a contracting state regardless of the governing law of the contract. The Act being the relevant law in terms thereof the High Court has exclusive jurisdiction. That being so, we find that it is totally impractical to allow a party to seek enforcement of a foreign arbitral award before the High Court while at the same time allow the parties remedy before the civil court to enforce the same award. The outcome will not only cause conflicting judgments but also create uncertainty so far as the award is concerned. For instance the High Court may decide to enforce the award whereas the civil court may decide to set it aside under the 1940 Act. It could also mean that one party invokes the jurisdiction of the civil court to file objections against the foreign award, whilst the other party invokes the jurisdiction of the High Court for recognition and enforcement of an award, as in this case.
This results in absurdity running contrary to the intent and purpose of the Act. Learned counsel for the Appellant, during the course of arguments through its partial written arguments on the issue of jurisdiction, has categorically stated that the Appellant's position is that the Award is a foreign arbitral award within the definition set out in Section 2(e) of the Act and for the purposes of the present case the Appellant accepts that the High Court has jurisdiction over the foreign arbitral award for recognition and enforcement of the award. Although this is a departure from the original arguments made before us, nonetheless the Appellant has conceded to the fact that the High Court has exclusive jurisdiction to recognize and enforce foreign arbitral awards. Therefore, in view of the aforesaid, we find that the High Court has exclusive jurisdiction to recognize and enforce foreign arbitral awards which means it has exclusive jurisdiction to recognize and enforce the Award. Hence the preliminary objection is without merit".
[Emphasis supplied]
23. The question of jurisdiction, in the context of post-award proceedings was settled in the case of Orient Power Company (Private) Limited , (supra), which decision was passed while adjudicating upon Intra-Court appeal, filed before the learned Division Bench of this Court while invoking section 3 of the Law Reforms Ordinance 1972, - which allows remedy of appeal against the order of learned Single Judge, passed in exercise of original civil jurisdiction. In the case of Orient Power Company (Private) Limited, (supra) the order , impugned through appeal, was passed by learned Single Judge of this court, in exercise of powers under section 6 of the Act, 2011 - proceedings initiated for seeking recognition and enforcement of foreign arbitral award. Section 3 of the Act, 2011 confers original civil jurisdiction on the High Court(s), not otherwise available to various High Court(s) of Pakistan - otherwise conferred through various statutes, for instance, the Companies Act, 2017 or the Financial Institutions (Recovery of Finances) 2001, etc. The scope of original civil jurisdiction and ordinary original civil jurisdiction, conferment of said jurisdictions and extent thereof were discussed and elucidated while rendering decisions in the cases of Pakistan Fisheries Ltd., Karachi and others v. United Bank Ltd.' (PLD 1993 Supreme Court 109) and Brothers Steel Mills Ltd. and others v. Mian Ilyas Miraj and 14 others' (PLD 1996 Supreme Court 543).
Observations appearing in the case of Brothers Steel Mills Ltd. and others (supra) are relevant, and few paragraphs therefrom are reproduced hereunder , "7. Ch. Muhammad Farooq, the learned counsel for the appellants contended that original civil jurisdiction derives its sanction from the Code of Civil Procedure where original proceedings are initiated by instituting a suit through a plaint and therefore the original civil jurisdiction will mean forum for filing a suit and its trial. Such jurisdiction has not been conferred on the Lahore High Court. In Ahmed Khan v. The Chief Justice and Judges of the High Court of W est Pakistan and others PLD 1968 SC 171 following observation was made:-- "The ordinary original civil jurisdiction was confined to the trial of suits arising within the local limits of that jurisdiction. The extraordinary original civil jurisdiction was given for the removal and trial of suits pending or falling within the jurisdiction of Courts subordinate to the High Court. Every other jurisdiction of a civil nature conferred by the Letters Patent would as contended by the learned Attorney-General, be best described as special jurisdiction or as statutory jurisdictions, since some of those jurisdictions were to be exercised under existing statutes. In the case of the Lahore High Court, there was no power to receive suits in the ordinary original civil jurisdiction, there being no provision in the relevant Letters Patent in that behalf. The Lahore High Court had testamentary and intestate jurisdiction to be exercised in accordance with law, and matrimonial jurisdiction exercisable under its own law. The jurisdiction of a general nature that it possessed was that conferred by clause 9 and described as extraordinary original jurisdiction, which was confined to power to remove and try suits pending before its subordinate Courts. " ......."A close scrutiny of the judgments holding that the Court under the Ordinance does not exercise original civil jurisdiction shows that they are based on the observation made in Ahmed Khan (supra), in which Cornelius, C.J. has specifically mentioned that the ordinary original civil jurisdiction is confined to trial of suits. Although in some judgments the word 'ordinary' has not been used, yet where the proceedings are initiated by filing a plaint as provided by the Code of Civil Procedure, it should be termed as ordinary original civil jurisdiction and not merely original civil jurisdiction. To clearly understand the meaning and impact of the term "original civil jurisdiction", it is necessary to differentiate between these two terminologies. The original civil jurisdiction cannot be restricted to proce eding initiated by filing plaint which in my view is ordinary original civil jurisdiction of a Court, as jurisdictions are conferred on the High Courts by statutes which provide for initiating proceedings before the High Court itself. It has been emphasised that such jurisdiction should be called statutory jurisdiction, but in any event it has to be considered whether it is an original jurisdiction or an appellate jurisdiction within the framework of even a statutory jurisdiction conferred by a statute. In Husain Bakhsh v. Settlement Commissioner PLD 1970 SC 1 it was observed that "as proceeding which deals with a right of a civil nature does not cease to be so merely because the right is sought, to be enforced by having recourse to the writ jurisdiction. Judged from these aspects a proceeding under Article 98 of the Constitution relating to a civil matter is a civil proceeding although the High Court's jurisdiction in such a proceeding is Constitutional jurisdiction of an original kind". It clearly indicates the Constitutional or statutory jurisdiction can be of original nature having all the characteristics of an original jurisdiction. It was followed in D.F. Hasan v. Habib Bank Ltd. PLD 1974 Lahore 117 where Nasim Hasan Shah, J. (as he then was) observed that "the exerci se of what is commonly termed as the writ jurisdiction, was considered to be a special original jurisdiction of the High Court and not ordinary original civil jurisdiction".
8. Under Article 175 of the Constitution, a Court is vested with jurisdiction "as is or may be conferred on it by the Constitution or by or under any law". Therefore, the jurisdiction can be conferred on any Court including a High court by a statute which, may provide for initiating the proceedings in that Court as a Court of first instance having power to entertain and decide it. Such Court will thus be vested with original jurisdiction. If it relates to civil dispute it will be termed as original civil jurisdiction. It is not uncommon that statutes are promulgated conferring jurisdiction on the High Court to initiate proceedings as a Court of first instance for purpose of exercises of jurisdiction. For instance under section 2(f)(ii) of the Banking Companies (Recovery of Loans)
Ordinance, 1979, in respect of cases in which the amount of loan exceeds Rs. I million, the High Court in exercise of original civil jurisdiction is the Special Court. Here by statute jurisdiction has been conferred on the High, Court to exercise original civil jurisdiction and try the cases as specified. All the High Courts are exercising this jurisdiction. If a technical ' meaning the term 'original civil jurisdiction' (i.e. having authority to entertain suits and try it) is given, then Lahore High Court, High Court of Balochistan and Peshawar High Court not having original civil jurisdiction in this technical sense cannot exercise jurisdiction conferred by the Banking Companies (Recovery of Loans)
Ordinance. This will create absurdity which cannot be attributed to law. Therefore, in the statute under consideration the term 'original civil jurisdiction' has been used in the general sense. In Pakistan Fisheries Ltd., Karachi anti others v. United Bank Ltd. and others PLD 1993 SC 109 while considering the nature of jurisdiction of the High Court as a Special Court as define in section 2(f)(ii) of the Banking Companies (Recovery of Loans)
Ordinance, it was observed as follows:-- "It seems to us that by the expression 'original civil jurisdiction' as used in the Ordinance, is meant the trial of the suit, on the original side of the High Court. The term has not been used in the technical sense as understood reference to the Letters Patent of some of the High Courts in the Sub-Contine nt, but has been employed in contradistinction to the appellate and revisional jurisdiction exercised by the High Court".
[Emphasis supplied]
24. Relevant paragraph from the case of Pakistan Fisheries Ltd., Karachi and others (supra) is reproduced as, (pages 123, 124, 125 & 128)
"9. It may be pointed out that some of the High Courts in the undivided India were vested with original civil jurisdiction, but no such jurisdiction was conferred on the High Court of Judicature at Lahore. For instance under clause 11 of the Letters Patent for the High Court of Calcutta dated 28th December 1865, it exercised ordinary civil jurisdiction within such local limits as from time to time declared and prescribed by any law and under clause 12 in exercise of its ordinary original civil jurisdiction the Court was empowered to receive suits for land or other immovable property situated in, and other cases if the cause of action arose within the local limits of the ordinary original jurisdiction of the said High Court. The Letters Patent of the High Court s of Madras and Bombay in all material respects were almost in same terms as those of Letters Patent for the High Court of Calcutta. As regards the Lahore High Court the only civil jurisdiction conferred on it was under clause 9 of the Letters Patent described therein as extraordinary original civil jurisdiction which empowers it to remove, try and determine as a Court of "extraordinary original jurisdiction"; any suit falling within the jurisdiction of any Court subject to its superintendence.
Reference in this behalf may also be made to section 24 of the Civil Procedure Code which confers upon the District Court and the High Court the general power to transfer , withdraw , either suo motu or on application of a party , a suit pending in a subordinate Court and try the same. Apart from this the Lahore High Court under the Letters Patent had testamentary , intestate jurisdiction. It also exercised matrimon ial jurisdiction over the persons professing the Christian religion. The examination of these provisions clearly shows that the Lahore High Court does not possess any original civil jurisdiction in the nature of the jurisdiction of principal Civil Court of original jurisdiction, called District Court, as exerc ised by the Sindh High Court for the civil district of Karachi under section 8 of the Sind Courts Act, 1926. Even the High Court of N.-W .F.P. and the High Court of Balochistan do not enjoy jurisdiction of the principal Civil Court of original jurisdiction, to entertain and try civil suits directly as is the case with the Sindh High Court in relation to Civil District of Karachi. It also does not possess any such jurisdiction over rest of the area of Sindh Province, falling within its territorial jurisdiction. In Firdous Trading Corporation v. Japan Cotton and General Trading Co. Ltd. (PLD 1961 (W.P.) Karachi 565 (574) the real character of its original civil jurisdiction has been described by Wahiduddin, J. as under:- "It is therefore perfectly clear that this jurisdiction is of a special nature and is not the ordinary civil jurisdiction of the West Pakistan High Court, otherwise there was no necessity of saying that the Karachi Bench of the High Court of West Pakistan shall- have the same original civil jurisdiction for the Civil District of Karachi as was exercisable by the Chief Court of Sindh under section 8 of the Sindh Courts Act, 1926. It will be further observed that original civil jurisdiction in respect of civil suit in Karachi was not conferred on the High Court as a whole as in the case of Calcutta, Madras and Bombay under their Letters Patent, but only to the Bench at Karachi. The nature of this jurisdiction is further clarified under para. 7 of the amendments in Part A of the Schedule of President's Order No.2 of 1956. In sub-clause (4) of para 7, which replaces the original section 45 of the Sindh Courts Act, 1926, it is provided that all decrees and, orders in suits and proceedings wherein the subject-matter in amount or value does not exceed twenty-five thousand rupees, or such sum as the Central Government may by order under the proviso to subsection (2) of section 22, prescribe, passed before the appointed day, by the Bench of the High Court of West Pakistan at Karachi functioning or exercising the powers and performing the dutie s as the principal Civil Court of original jurisdiction shall be deemed or the purpose of execution to have been passed by the District Court of Karachi. It is quite plain that the Karachi Bench of West Pakistan High Court is functioning or exercising the powers and performing the duties as the principal Civil Court of original jurisdiction in the Civil District of Karachi and not ordinary civil jurisdiction of the High Court as understood under the Letters Patent of some High Courts in this sub- continent......"
".......It seems to us that by the expression "original civil jurisdiction" as used in the Ordinance, is meant the trial of the suit on the original side of the High Court. The term has not been used in the technical sense as understood with reference to the Letters Patent of some of the High Courts in the Sub-Continent, but has been employed in contradistinction to- the appellate and revisional jurisdiction exercised by the High Court. The jurisdiction conferred on the High Court under the Ordinance is special jurisdiction and while exercising such jurisdiction the High Court bears the fictional character of a Special Court as defined in the Ordinance. It is a fundamental rule, that where an enactment creates a new jurisdiction, prescribes the manner in which that jurisdiction is to be exercised and further specifies the remedy , such remedy is exclusive and the party aggrieved of an order made in exercise of that jurisdiction must seek only such remedy and not others".
[Emphasis supplied]
25. However , the question of jurisdiction extended under section 3 of the Act, 2011 needs examination in the context of the facts of the case, wherein Civil Court at Lahore, exercised jurisdiction under section 4 of the Act, 2011, whereby suit filed by respondent No.1 was stayed. The Act, 2011 neither provides the option / remedy of filing Civil Suit nor regulates such remedy , however , conspicuously the remedy of initiating action for the recognition and enforcement of foreign arbitral award is provided in terms of section 6 of the Act, 2011, which is an exclusive remedy , exercisable by the Courts, havin g and exercising jurisdiction under sectio n 3 of the Act, 2011 - this is the ratio of the case in Orient Power Company (Private) Limited, (supra). Sub-section (2) of section 3 and section 4 of the Act, 2011 provides remedy for seeking stay of legal proceedings - both of which apparently manifest similarity / commonness in the context of the scope of remedies available, though forum may differ in the context of the original civil jurisdiction and ordinary original civil jurisdiction. The scope of instant decision is not to ascertain or identify the circumstances, wherein remedy of sub-section (2) of section 3 of the Act, 2011 is available or invoked, nor issue at hand relates to examine and construe the extent of jurisdiction exercisable thereunder - under sub- section (2) of section 3 of the Act, 2011-, which issue will be examined in some other case when arises. In the instant case, the scope of jurisdiction under section 4 of the Act, 2011 is relevant, exercised by the Civil court, while determining the question to stay or continue with the legal proceedings. Jurisdictio n exercised by the Civil court, in this case, is an ordinary original civil jurisdiction, where under court is invested with all the powers extended under the Code of Civil Procedure 1908. Section 4 of the Act, 2011, in the context of jurisdiction exercised by the Civil court, in the instant case, has had to be interpreted and given effect, independent of section 3 of the Act, 2011 - section 4 may be invoked by the Sindh High Court at Karachi, while exercising ordinary original civil jurisdiction, where the occasion arises. Section 4 of the Act, 2011 provides remedy / mech anism for stay of pending legal proceedings, where subject matter of the suit is common to the matter otherwise covered by the arbitration agreement. Section 4 of the Act, 2011 has its source in clause (3) of Article II of the NY Convention, reproduced hereunder for convenience, ARTICLE II
1. Each contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.
2. The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters of telegrams.
3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.
[Emphasis supplied]
26. In case of inconsistency , of the article s of Convention prevail. In view of the aforesaid, it is evidently clear that section 3 of the Act, 2011 provides exclusive remedy to the Court, defined in clause (d) of section 2 of the Act, 2011, for the purposes of entertaining the suit / proceeding initiated under section 6 of the Act, 2011, for the recognition and enforcement of foreign arbitration award, and also the remedy for seeking indulgence by stay of legal proceedings, where the circumstances so warrant and jurisdiction otherwise available - reference is aptly made to sub-section (2) of section 3 of the Act, 2011. Section 3 of the Act, 2011 provides Original Civil Jurisdiction.
And section 4 of the Act, 2011 provides jurisdiction to the Civil court exercising ordinary original civil jurisdiction to adjudicate upon the request, seeking stay of legal proceedings, by invoking section 4 of the Act, 2011. The definition of the Court in clause (d) of section 2 of the Act, must be interpreted and applied subject to the condition prescribed in section 2 of the Act, 2011, which states that "In this Act, unless there is anything repugnant in the subject or context". And the context of section 4 of the Act, 2011 must be construed accordingly . In the case of Pakistan Fisheries Ltd., Karachi and others (supra) the significance of the 'context' is explained in following terms; (Page 1 19)
4. For construing the words in a section it is to be kept in mind that the words and the expressions used in an Act take their colour from the cont ext in which they appear . As stated in Black' s International Laws (2nd Edn.) p.242 quoted in Crawford' s "The Construction of Statutes" at page 352: "When we speak of the "context", it is not meant that different words or clauses in the same sentence must be compared with each other or successive sentences be read together . But in a wider sense, one section of a statute may stand, as context to another , whether it immediately precedes or follows it or is more widely separated from it, provided it bears upon the same general subject-matter ."
[Emphasis Supplied]
27. This court is mindful of the fact that the Act, 2011 does not envisage "ouster of jurisdiction of the Courts of Pakistan" having jurisdiction to entertain and try Civil suit(s), irrespective of availa bility of arbitration agreement / arbitration clause, but extends option / remedy to the party , to such arbitration agreement / arbitration clause, for seeking stay of legal proceedings, provided conditions prescribed under section 4 of the Act, 2011 are available and met. Therefore, in the context of instant case, respondent No.1 exercised the statutory option / remedy through the application under section 4 of the Act, 2011, for seeking stay of legal proceedin gs, pending with the Civil court, which court enjoys ordinary original civil jurisdiction to adjudicate upon the application and decide qua the status of the proceedings, in terms of the jurisdiction extended through section 4, ibid, without impinging or offending the mandate of section 3 of the Act, 2011, and exclusivity extended, in the context. No defect qua assumption and exercise of jurisdiction arises. Other objections that written statement was not filed by any one of the respondents and dismissal of application of the respondent No.4, seeking deletion of name from array of the defendants, are insignificant and inconsequential qua the exercise of jurisdiction by the Civil Court, endorsing the bargain agreed in terms of clause 19.1.
28. No case is made out to substantiate and declare that arbitration agreement, under reference, is null and void, inoperative or incapable of being perform ed. It is pertinent to observe that legal proceedings stayed by the Civil Court shall remain stayed till the circumstances so warrant and may be resurrected if conditions so arise. Guidance is sought from the observations in the case of "M.A. CHOWDHUR Y v. Messrs MITSUI O.S.K. LINES LTD. AND 3 OTHERS" (PLD 1970 SC 373), relevant portion whereof is reproduced hereunder , Having said this, however , I am of the opinion that in order to preserve the sanctity of contracts I ought also to hold, as was done in the earlier cases in Great Britain that such foreign jurisdiction clauses, even when they- purport to give jurisdiction to a Court in a foreign country , are really in the nature of "arbitratio n clauses which come within the exceptions to section 28 of the Contract Act and, therefore, should be dealt with in the same manner as other arbitration, clauses. In the case of an arbitration it has to be remembered that the jurisdiction of the Courts is not altogether ousted, for, the Courts merely stay their hands to allow the parties to resort to the form of adjudication to which they have previously agreed. By only staying the actions before them the Courts still retain to themselves the jurisdiction to resume the case if the arbitration, for any reason, fails or the parties find it impossible to comply with the form of adjudication to which they had agreed. This was also the view taken in the case of Malik Ali Akbar , which I approve".
[Emphasis supplied]
29. The judgments referred by learned counsel for the petitioner may have relevance in the context of the facts of each case, which bears no relevance to the facts of the case at hand. The case of Taisei Corporation V. A.M. construction Company (Pvt.) Ltd. (PLD 2012 Lahore 455) was adjudicated upon in the context of distinguishable facts, wherein issues arise out of the controversy relating to the filing of objection, after foreign arbitral award was announced, under section 14 of the Arbitration Act 1940. The ratio in the decision of Taisei Corporation V. A.M. construction Company (Pvt.) Ltd. (PLD 2012 Lahore 455) was otherwise overruled by learned Division Bench of this Court in the case of Orient Power Company (Private) Limited, (supra) - both cases however dealt with the post-foreign arbitral award(s) position.
Some of the judgments relied upon the respondent No.1 are relevant to the context, ratio laid therein were considered, while rendering instant decision.
30. Learned counsels referred to pending litigation before the Hon'ble Supreme Court of Pakistan - between the petitioner and respondent No.1 - who concurred that determination of the questions raised and sought to be adjudicated can be adjudged and no restraining order was passed in those proceedings to refrain this Court from deciding instant Civil Revision.
31. In view of aforesaid, this Court do not find any reason to interfere in the order passed by learned trial court, invoke and exercise revisional jurisdiction. This Civil Revision is without merits and same is, therefore, dismissed .
No order as to the costs.