' Messrs Aslo Marines Limited have filed this suit under Admiralty Jurisdiction against 'M. T. Magda', an ocean-going oil tanker, defendant No, I (hereinafter individually called the Vessel') and her owner Atalanta Shipping Company Limited, a company incorporated and registered in Cyprus, defendant No, 2 (here-in-after individually called 'the Vessel Owners'), claiming a sum of Rs, 13,02,728.70 as damages on account of short-landing of the oil cargo at Karachi.
2. It is the case of the plaintiffs in the plaint that under 4 charter-parties, 'the Vessel Owners' the Vessel' to the plaintiffs for carrying crude oil from Rastanura and Jebel Dhanna (Saudi Arabian Ports) for carriage by sea to Karachi.
3. Accordingly 'the Vessel' carried the oil but short-landed certain quantity mentioned in the plaint.
Therefore, the plaintiffs have brought the present suit for damages as already stated in Admiralty.
Jurisdiction of this Court.
4. Alongwith the suit the plaintiffs filed an application under rule 731 of the Sind Chief Courts Rules (0. S.) read with section 151, C. P. C. (being C. M. A. No, 213 of 1977) for arrest of 'the Vessel', On 14-2- 1977, the then learned Chief Justice, Mr. Justice Abdul Kadir Shaikh passed the following order :- "Notice for 16th February, 1977. A warrant for arrest of Oil Tanker "M. T. Magda" shall issue, and a direction shall be sent to the Collector of Customs, Karachi not to issue port clearance to the vessel M. T. Magda unless sum of Rs, 13,36,071.95 is deposited with the Nazir of this Court, or security in the said sum to his satisfaction is furnished."
5. It further appears that on 16-2-1977, the Master of 'the Vessel' namely, Anastasios Lefakis filed a counter-affidavit, paragraphs 2 and 5 whereof, which are material, read as follows :- "2. 1 have read the plaint and the plaintiff's application under rule 731 of the Sind Chief Court Rules and its accompanying affidavit and submit that the claims made by the plaintiffs are completely false, concocted and flimsy. The defendants crave leave to properly reply all the allegations made in the plaint at the time of filing the written statement. It is, however, submitted that the plaintiffs at the material time were the charterers of the vessel.
5. That the defendants reserve their right to file proper application for stay of the suit and referring the dispute to arbitration in terms of the charter party. This affidavit or any proceeding taken to secure the release of the vessel to avoid loss to the defendants may not be treated as step in the proceedings. Due to delay and detention the defendants will suffer a loss of U. S. $ 7,000 per day."
6. Thereafter, on 17-2-1977, the defendants applied under section 34 of the Arbitration Act, 1940 for stay of the suit relying on clause 38, which is common in all the Charter parties and provide as follows : "38. (a) This charter shall be construed and the relations between the parties determined in accordance with the laws of England.
(b) Any dispute arising under this charter shall be decided by the English Courts to whose jurisdiction the parties hereby agree : ' Provided-that either party may elect to have the dispute referred to the arbitration_ of a single arbitrator in London in accordance with the provisions of the Arbitration Act, 1950, or any statutory modification or re-enactment thereof for the time being in force. Sun election shall be made by written notice by one party to the other not later than 21 days after receipt of a notice given by one party to the other of a dispute having arisen under this charter."
' On the same day, it appears from the record that the defendants furnished guarantee of Grindlay's Bank Limited for the amount claimed in the suit and the then learned Chief Justice passed the following order :- "In view of the Bank Guarantee having been furnished in terms of the order dated 14-2-1977, the warrant of arrest of the Oil Tanker M. T. Magda is recalled and the Collector of Customs, Karachi be informed that the directions issued to him prohibiting him from granting port clearance to the oil tanker stands vacated. The case will now come up before the Additional Registrar, by consent, for filing the written statement and any other steps that may be taken by the parties."
7. I have now, therefore, before ale for consideration the application for stay of the proceedings with the following prayer :- "It is, therefore, prayed that this Hon'ble Court will be pleased to stay the above suit and refer the matter to arbitration in terms of the charter parties."
8. It is opposed by the plaintiffs on the grounds :- (0 that the arbitration clause has not been invoked ;
(ii) that the defendants have already taken steps in the proceedings; and
(iii) That discretion should not be exercised in favour of the defendants for the reasons :-
(a) that the evidence and witnesses relating to short-landing are mostly in Pakistan ;
(b) that it would be difficult for the plaintiffs to take their witnesses to foreign country in view of the difficulty in obtaining foreign exchange; and
(c) that the plaintiffs will lose the benefit of security furnished by the defendants if stay is granted.
9. I have heard Mr. Mansoor Ahmed Khan the learned counsel for the plaintiffs in opposition to the application and Mr. Muhammad Naeem, the learned counsel for the defendants in support of the application.
10. The conditions for grant of stay under section 34 of the Arbitration Act, 1940 are as follows :- "(1) the proceeding must have been commenced by a party to an arbitration agreement against any other party to the agreement ;
(2) the legal proceeding which is sought to be stayed must be in respect of a matter agreed to be referred ;
(3) the applicant for stay must be party to the legal proceeding and he must have taken no step in the proceeding after appearance. It is also necessary that he should satisfy the Court not only that he is but also was at the commencement of the proceedings ready and willing to do everything necessary for the proper conduct of the arbitration ; and
(4) the Court must be satisfied that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the arbitration agreement."
' See Anderson Wright Ltd. v. Moran & Co. AIR 1955 SC 53.
11. It is not disputed that under section 34 of the Arbitration Act, Court has discretion to grant or not to grant stay of the proceeding, though no doubt such discretion has to be exercised with due regard to the facts and circumstances of each case and on judicial considerations and not arbitrarily' or capriciously.
12. It is also not disputed that the application fulfills conditions Nos. 1 and 2. What is in dispute is that conditions Nos. 3 and 4 are not fulfilled.
13. So far as first point raised by Mr. Mansoor Ahmad Khan is concerned, in clause 38 of the Charter parties the parties have primarily agreed that Courts in England will have jurisdiction. However, it is further provided therein that either party will have option to invoke arbitration by taking necessary steps provided therein. It is contended by Mr. Mansoor Ahmed Khan that no steps to invoke arbitration were taken by the defendants. According to the provisions of clause 38 of the charter parties the party who elects to refer the dispute to arbitration has to give written notice to the other party not later than 21 days after receipt of the notice given by one party to the other of the dispute having arisen under the charter party. It is argued that since no notice has been given by the defendants invoking arbitration, therefore, the reference clause _cannot be said to have been invoked. On the other hand, it is submitted by Mr. Muhammad Naeem that the defendants were required to give notice within 21 days of the receipt of the notice from the plaintiff of the dispute and since no notice was admittedly served on the defendants they could not, therefore, invoke the arbitration agreement and if the filing of suit is taken as notice then by the application under section 34 of the Arbitration Act, the defendants should be deemed to have invoked the arbitration agreement.
14. I would not consider the merits or demerits of these arguments, for in sub-clause (b) of clause 38 of the charter parties it is provided that any dispute arising therein under the same shall be decided by the English Court, whose jurisdiction the party thereby agreed. Such a clause has been construed in this country by the highest Court. That is, the Supreme Court of Pakistan in M. A.
Chowdhury v. Messrs Mitsui 0. S. K. Lines Ltd. And 3 others (1), as reference clause.
15. I may here refer to the relevant observations of Hamood-urRahman, C. J., who delivered the opinion of the Court and the same read as follows :- "Having said this, however, I am of the opinion that in order to preserve the sanctity of contracts 1 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 tne nature of arbitration 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."
16. Therefore, in view of the above observations, I need not dwell on this point any more as the sub- clause (b) of the charter parties is still attracted and the application under section 34 of the Arbitration Act can be considered with reference to sub-clause (b) ibid.
17. Now, I would, therefore, take up the next ground urged by the learned counsel for the plaintiffs that the defendants by filing affidavit had not only taken step in the proceedings but have manifestly expressed their intention to proceed with the case by filing the written statement. In fact they have in the counter-affidavit, as quoted hereinabove, submitted that the claim made by the plaintiffs was completely false, concocted and flimsy. These are matters germane to defence of the suit. Further, in paragraph 2 of the counter-affidavit, they have sought leave to properly reply to all the allegations made in the plaint at the time of filing the written statement. However, it is submitted by the learned counsel for the defendants that the defendants have reserved their right to file proper application for stay of the suit and refer the dispute in the suit to arbitration in terms of the charter parties. But firstly, it vas not done without prejudice to the earlier stand ; secondly, it appears from the provision of section 34 of the Arbitration Act that the condition provided therein that the defendants should make application for stay before taking any step in the proceedings is on the basis of principle of acquiescence in the proceedings, and if I judge in the light of D this principle, the defendants in paragraph 2 of the counter-affidavit have first in unequivocal terms acquiesced in the proceedings and then have taken
(1) PLD 1970 SC 373 stand of reserving their rights to file proper application for stay of the proceedings and refer the dispute to arbitration in terms of the charter E parties. -This, at best, amounts to approbation and reprobation at one and the same time, which is not permissible.
18. The counter-affidavit - was filed in reply to the application for arrest of the vessel. I am of the view that filing of the counter-affidavit containing matters pertaining to defence of the case and also a statement that the defendants will deal with the allegations made in the plaint in the written I statement, and furnishing security without simultaneously applying for stay are all steps in the proceedings. I am fortified in my conclusion by the observations of Russell in 'Russell on Arbitration', 19th Edition page 182 which read as follows :- "The filing of an affidavit, on a summons for judgment under Order XIV, disputing the claim and asserting a right. To submit the dispute to arbitration, is probably a "step in the action," so that if this is done a summons to stay ought to be taken out at the same time."
' In this connection reliance is placed on unreported judgment in Carbide Trading Co. Ltd. v. Charles Bingham & Co. Reference is also made to the judgment of Lord Goddard itlPitChers Ltd. v. Plaza (Queensbury) Ltd. (1), wherein the learned Lord disapproved the contrary dicta in an unreported decision in Allied Artist's Corporation v. Jacobson (1922). 1 may here quote the observations of Lord.
Goddard, L. J., which are as follows :- "The only other thing which I want to say is that the Annual Practice; 1940, p. 2502, states as follows :- "In Allied Artists Corpn. v. Jacobson it was held that where, on a summons for judgment under R. S. C., Order XIV, the defendant had filed an affidavit disputing the claim and claiming the right to submit the dispute to arbitration, he had not taken a step in the action, but as the defendant had alleged fraud in his affidavit, a stay was refused.
' For myself, I should say that that is a somewhat dangerous passage to follow. In the first place, as the stay was refused on the ground that the defendant had alleged fraud, any view which the Judge may have expressed as to whether or not the affidavit was insufficient to justify a stay is in the nature of an obiter dictum. The position was that, as the defendant alleged fraud, a stay had been refused. For myself, I am not at all satisfied that, if the defendant tiled an affidavit in answer to an application for judgment under R. S. C. Order XIV, although he may raise the arbitration clause, it may not be said that he has taken a step in the action unless at the same time he has taken out a summons to stay the action. Of course, if he has taken out a summons to stay the action which comes on (as, in the ordinary course, it would) at the same time as the summons for judgment, and the master refuses the application to stay, and says, "On the plaintiff's summons, I give judgment," I should say that there could be no doubt that, in -appealing against both the refusal of the master to stay and the order giving leave to sign judgment, the defendant is not taking a step in the action."
19. There is yet another aspect of the matter which also goes against the defendants. By the order dated 17-2-1977, the case was directed to go before the Additional Registrar for filing written statement and any other
(1) (1940) 1 All R 151 steps that may be taken by the parties in the suit. This was done by consent of the parties. Thus it is clear that on 17-2-1977 the defendants had shown their willingness to file their written statement and this case thus falls within F the purview of the following observations made by Constantine, J.
In a Division Bench judgment in Messrs M. M. Yaseen v. Messrs Irving R. Boody & Co. (1).
"Later there was a House of Lords case Ford's Hotel v. Bartlett, and Tendolkar, J., has quoted the observation of Lord Shand, "This appears to me to have in effect been an abandonment of the proposal to have the subject of the cause disposed of by arbitration." This was echoed by Ridley, J., in Austin v. S. Bowley. The learned Judge stated "In my opinion what is intended by a step in the proceedings is some step which indicates an intention on the part of a party to the proceedings that he desires that the action should proceed and has no desire that the matter should be referred to arbitration." The requirement, therefore, of Lindley L. J., that there should be something in the nature of an application should also take out a summons or something of that kind which is in the technical sense a step in the proceedings, has been extended to anything which shows an intention of a party that he desires that the action should:proceed. The two cases which have been mentioned at the beginning of this judgment were not referred to by Tendolkar, J.
' They are in our opinion to be considered from the point of view that where an order is passed against the other side and you stand by and allow that order to be passed you should be treated as having applied for that order."
20. I may also refer to Fleming Shaw & Co. v. Haji Yusif Ellias (2), wherein time was taken for filing written statement on the ground that the documents relating to suit had to be discovered and the time allowed had been too short to permit of this being done. On referring to the documents, defendants noticed an arbitration clause in the indent and thereupon filed an application for stay of the proceedings. The Court held "whether the applicant wished to have further time to file a written statement or wished to have further time to raise as a bar to the suit the agreement to refer to arbitration, in either event the application was an application to invite the Court to do something which would enable the applicant to establish his defence". It was further observed by Pratt, J. C.
That : "The later English cases go even further and establish that mere acquiescence in a proceeding initiated by the other party and in an order made on his separate application does amount to a step in the proceedings : County Theatres and Hotels, Limited v. Knowles 1902 K B 480 Lord Halsbury's Laws of England, Volume I, paragraph 956, summarises the law on the subject as follows : "A party who makes any application whatsoever to the Court, even though it be merely an application for time, takes a step in the proceedings."
' This seems to me to be also the law here and this application must, therefore, fail."
' Learned counsel for the defendants referred to Badshah Meah Sowdagar v.
(1) PLD 1957 Kar. 758 (2) AIR 1917 Sind 12 Nurul Hag (1) and Md. Esack v. Raja Miah and another (2). In the first-named case the defendant prayed for time for filing objections to the application for appointment of receivership, but until then he was not served with the copy of the plaint. It was, therefore, held that the prayer made by the defendant was not a step in the proceedings, as the act did not amount to acquiescence in the proceedings, particularly in view of the fact that the defendant was not even aware of the contents of the plaint.
' In this case it was observed that the primary duty of a Court is to look into the facts of the case fairly and then to decide whether the conduct of the applicant is such as would amount to participation in the suit itself or any indication of acquiescence in the proceedings so as to dig entitle him to file an application under section 34 of the Arbitration Act.
' In the second case the plaintiff had filed an interlocutory application for injunction and the defendant was called upon to show cause against the prayer for injunction but neither be was served with a copy of the application for temporary injunction nor with a copy of the plaint in the suit. The defendant in response to the injunction application filed an application under section 34 of the Arbitration Act and also filed another application for time to file objections to the prayer for grant of temporary injunction. On these facts it was held that the defendant was not even aware of the contents of the plaint and therefore, he could not have-acquiesced in the filing of the suit and Both these cases are distinguishable on facts and have no application to the facts of the present case. In fact both these cases were also cited in Island Textile Mills Limited v. V.
0. Technoexpert (3) and the learned Judge while dealing with the same observed as follows "In my view the question as to whether a defendant has taken steps in the proceedings will depend on the facts of each case and it will vary from case to case. If from the conduct of the defendant it appears that he has acquiesced to the suit and intended to contest the suit on merits before the Court, he cannot thereafter file or press an application under section 34 of the Arbitration Act.
However, if a defendant makes his stand clear at the earliest opportunity that he wishes that the disputes/differences be referred to arbitration as per arbitration agreement in such a case the mere fact that the defendant has contested an application for injunction or for appointment of a receiver will not constitute a step in the proceedings."
I, therefore, hold that the defendant had taken steps in the proceedings and had acquiesced.
21. Now, taking up the last point urged by Mr. Mansoor Ahmed Khan that the Court should not exercise discretion in favour of the defendants, he submits that it would be highly inconvenient for the plaintiffs to take their witnesses to London as most of the evidence concerning the claim will be from Karachi for the goods were short landed at Karachi and even if the plaintiffs could take the witnesses to London, they may not be provided with foreign exchange for their expenses. He further submits that the plaintiffs had filed action in rem and in the action the defendant No, 1 was arrested and was released on furnishing security and if the action is stayed the
(1) PLD 1967 Dacca 250 (2) PLD=1969 Dacca 719
(3) 1979 CLC 307 security has to be released and thus the plaintiffs would lose the benefit of the security. On the other hand, Mr. Muhammad Naeem submits that the plaintiffs had entered into charter which included adjudication of dispute in England or settlement of dispute by arbitration in London with open eyes and they should not be allowed to avoid their bargain on consecration of pleas now urged. In this connection the learned counsel relied upon a single bench decision of this Court in Island Textile Mills Ltd. Karachi v. V/O Technoexpert and another already referred to by me, wherein it was observed by the learned Single Judge at page 316 of the report as follows :- "(e) I cannot be unmindful of the well-established principle that the Court should not lightly release the parties from their bargain, that follows from the sanctity which the Court attaches to contracts.
In the instant a foreign State owned enterprise is involved, which entered into the contract in question on the basis that in case any claim would be made against them, the same would be adjudicated upon as per aforesaid arbitration clause but the plaintiffs wish to defeat the above clause with the aid of this Court. If Pakistan desires to acquire a respectable place in the community of nations, not only the Government, but even individuals are expected to honour their commitments-to the foreign parties."
22. And also on a judgment of Supreme Court in Haji Soomar Haji Hajjan v. Muhammad Amin Muhammad Bashir Ltd. (i), wherein it was observed that "wherever the parties to an agreement expressly chose, through an arbitration clause, a forum other than a Court of law, for the settlement of their dispute, neither of them should normally be allowed to avoid that forum. The sole purpose of the Arbitration Act is to curtail litigation in Courts and to promote the settlement of the dispute amicably through persons in whom both the parties repose their trust."
23. However, the rule laid down in the above cited case is not absolute. The provisions of section 34 of the Arbitration Act themselves leave much discretion with the Court and the same is recognized even in England in relation to similar provisions in the Arbitration Act in force there.
Mr. Mansoor Ahmed has pointed out that in M. A. Chowdhury v. Messrs Mitsui 0. S. K. Lines Ltd. And 3 others reference was made by the Supreme Court with approval to the "The Eleftheria" (2), which was a case of an application for stay of action brought against the ship owrers by the cargo owners wherein Brandon, J., after reviewing all the earlier decisions, summarised the principles followed by the English Courts as follows :- "(1) Where plaintiffs sue in England in breach of an agreement to refer dispute to a foreign Court, and the defendants apply for stay, the English Court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant stay but has a discretion whether to do so or not ;
(2) the discretion should be exercised by granting a stay unlessstrong cause for not doing so is- shown ;
(3) the burden of proving such a strong cause is on the plaintiff ;
(4) in exercising its discretion the Court should take into account all the circumstances of a particular case _
(1) 1981 SCM R 129 (2) (1969) 2 All R 641
(5) without prejudice to (4) above the following matters, where- they arise can properly be taken into account ;
(a) in what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts ;
(b) whether the law of the foreign Court applies and, if so, whether it differs from English law in any material respects ;
(c) with what country either party is connected, and how closely
(d) whether the defendants genuinely desire trial in the foreign country, or are only seeking a procedural advantage ;
(e) whether the plaintiffs would be prejudiced by having to sue in the foreign Court, because they would :-
(i) be deprived of security for that claim ;
(ii) be unable to enforce any judgment obtained ;
(iii) be faced with a time bar not applicable in England ; or
(iv) for political, racial, religious or other reasons be unlikely to get a fair trial.
24. Thus it is clear that the loss of security to the plaintiffs is a very relevant consideration in an application for stay of action.
25. In the Fehmarn case (1) , it was observed by Lord Denning in his separate opinion as follows :- "The next question is whether the action ought to be stayed because of the provision in the bill of lading that all disputes are to be judged by the Russain Courts. I do not regard this provision as equal to an arbitration clause, but I do say that the English Courts are in charge of their own proceedings ; and one of the rules which they apply is that a stipulation that all disputes should be judged by the tribunals of a particular country is not absolutely binding. Such a stipulation is a matter to which the Courts of this country will pay much regard and to which they will normally give effect, but it is subject to the overriding principle that no one by his private stipulation can oust these Courts of their jurisdiction in a matter that properly belongs to them. I would ask myself therefore ; is this dispute a matter which properly belongs to the Courts of this country ? Here are English importers, the cargo-owners, who, when they take delivery of the goods in England, find them contaminated. The goods are surveyed by surveyors on both sides, with the result that the English cargo-owners make a claim against the German ship-owners. The vessel is a frequent visitor to this country. In order to be sure that their claim, if substantiated, is paid by the ship- owners, the English cargo-owners are entitled by the procedure of our Courts of Admiralty to arrest the ship whenever she comes here in order to have security for their claim. There seems to me to be no doubt that such a dispute is one that properly belongs for its determination to the Courts of this country. But still the question remains: ought these Courts in their discretion to stay this action ?
' It has been said by counsel for the ship-owners that this contract is governed by Russian law and should be judged by the Russain Courts,
(I) (1958) 1 All E R 333 who know that law, and that the dispute may involve evidence from witnesses in Rursia about the condition of the goods on shipment. Then why, says counsel, should not it be judged in Russian as the condition says? I do not regard the choice of law in the contract as decisive. I prefer to look to see with what country the dispute is most closely concerned. Here the Russian element in the dispute seems to be comparatively small. The dispute is between the German owners of the ship and the English owners of the cargo. It depends on evidence here as to the condition of the goods when they arrived here in London and on evidence of the ship, which is a frequent visitor to London.
The correspondence leaves in my mind, just as it did in the learned Judge's mind, the impression that the German owners did not object to the dispute being decided in this country but wished to avoid the giving of security.
' The dispute is more closely connected with England than with Russia, and I agree with the Judge that sufficient reason has been shown why the proceedings should continue in these Courts and should not be stayed. I would therefore dismiss the appeal."
26. These decisions, therefore, clearly supports the submissions of Mr. Mansoor Ahmed Khan that stay should be refused on the ground that, the plaintiffs will be deprived of the security which is lying in this Court and which was furnished by the defendants as a condition for release of "The Vessel".
27. Reference was also made to a decision from Indian Jurisdiction in Michael Colodetz and others v. Serajuddin & Co. (I). In this case the facts were : "An agreement between an Indian Firm and an American Company for supply of manganese are provided for arbitration of their disputes in New York according to American Arbitration Association Rules. On arising of a dispute the Indian party filed a suit in Calcutta High Court. The defendant company applied for stay of suit under section 34, Arbitration Act. The law applicable to the dispute was Indian Law, all evidence was in India and there were difficulties in respect of foreign exchange which practically made it impossible to the Indian firm to attend or take their witnesses to New York. The proceeding in New York would thus be in effect ex parte and result in injustice to the Indian party. It was ruled as follows :- "4. The High Court addressed itself to the question, whether the pleas raised by the respondents constituted sufficient reason within the meaning of the Arbitration Act, and pointed out, and in our judgment it was right in so doing, that the statement made in the affidavit of the respondents had remained practically unchallenged, that all the evidence in the case relating to the disputes was in India and that was a strong ground for not exercising the discretion in favour of the appellants. It must be observed that having regard to the severe restrictions imposed in the matter of providing foreign exchange to individual citizens it would be impossible for the respondents to take their witnesses to New York and to attend before the arbitrators at the arbitration proceeding to defend the case against them and the proceeding before the arbitrators would in effect be ex parte. That
(1) A I It 1963 SC 1044 would result in injustice to the respondents. Undoubtedly the appellants would be put to some inconvenience if they are required to defend the suit filed against them in India, but the High Court has considered the balance of inconvenience and the other circumstances and has come to the conclusion, and in our judgment that conclusion is right, that the facts established make out 'sufficient reason' for not granting stay."
28. In Messrs Mercantile Fire and General Insurance Co. Of Pakistan Ltd., Karachi v. Messrs Arcepey Shipping Co., U. S. A. And another (1) I had the occasion to deal with the question of foreign jurisdiction clause and stay application under section 34 of the Arbitration Act, 1940, and in paragraph 7, I said "7. Now, therefore, the question that falls for consideration is as to on whom should be the burden to satisfy the Court as to the justification for staying its proceedings."
' It has been seen from the conclusion drawn by Tetley with regard to the exclusive jurisdiction clause and mentioned therein before th it the burden of proof in the United States is on the person wishing to alter the jurisdiction of the Court and in Great Britain the burden of proof is on the person wishing to overcome the jurisdiction clause. The view in the United States is based on Carbon Black Export v. S. S. Monrasa where the United States Supreme Court in Gulf Oil Corporation v. Gilbert at page 508, is cited "But unless the balance is strongly in favour of the defendants the pla,ntiff's choice of forum should rarely be disturbed". As regards the English view it would be useful to reproduce a passage from 'Marine Cargo Claim's by W. Tetley 1965 Edition), page 218, which is as follows :- "However, in Great Britain, where the Courts seem to be much more willing to recognise the rights of the parties to contract in almost any way they please, the opposite view is taken. There, the burden is on the person wishing to upset the jurisdiction clause."
' For this view reliance is placed on the Fehmarn (1) which was upheld on Appeal (1957) 2 Lloyd's Rep. 551, wherein Wilmer, J. At page 522 of the report states as follows "It is well-established that, where there is a provision in a contract providing that disputes are to be referred to a foreign tribunal, then prima facie, this Court will stay proceedings instituted in this country in breach of such agreement and will only allow them to proceed when satisfied that it is just and proper to do so."
' The view taken by the United States Supreme Court has been followed by the Supreme Court of Pakistan in M. A. Chowdhury's case wherein Harnoodur Rahman, C. J., (as his Lordship then was), at page 396 of the report observed as follows :- "I cannot help feeling that the American view on this subject would be the one that should apply more appropriately in our own country, for, here too a foreign jurisdiction clause, as I have held, would, unless it came within one of the exceptions to section 28, be void as being opposed to public policy. In such circumstances, the party who seeks to invoke the foreign jurisdiction clause, should ordinarily satisfy the Court that it is just and equitable to bind the parties to their bargain. I feel sure that if there had been a provision similar to that of section 28
(1) PLD 1978 Kar. 276 of the Contract Act in the law of Great Britain, there too the same view would have been taken. The Courts in Great Britain have taken a different view because of their willingness to recognise, as Tetley has put it "the rights of the parties to contract in almost any way they please." if there was by law any-clog on such freedom the result might well have been different."
' Examined in the light of the dictum of their Lordships of the Supreme Court, the case put forward by the defendants for staying the proceedings in the suit rests on the plea taken in the written statements filed by the defendants as well as in the application under section 151, C. P. C. That the suit is liable to be stayed pending adjudication in terms of jurisdiction clause contained in the Bill of Lading in a Court in Panama and according to law of that country as defendants appear to have their place of business there. Since the burden was, on the defendants, the aforesaid plea by itself in my opinion, does not discharge the same. Unless the defendants had shown something more in terms of conclusions made by Telley mentioned herein, before, the proceedings are not liable to be stayed.
' The learned Advocate for the defendants relying on the provisions of section 34 of the Arbitration Act, submitted that as soon as the application thereunder is made, showing the dispute raised in the suit is covered by the arbitration agreement, Court should stay the proceedings. This submission has no substance in view of rule, laid down by their Lordships of the Supreme Court in M. A Chowdhury's case that the burden is on the person who wishes to alter the jurisdiction of the Court and so long as United State's L Supreme Court view is followed here in Pakistan, the plea of defendants does not meet the requirement of the law.
' On the other hand, since the cargo was shipped from Dubai to Karachi and the claim has arisen due to short landing of the cargo, therefore, the main issue which would require decision will be as to what was the quantity of the goods shipped at Dubai and landed or discharged at Karachi for which evidence would in normal course, be available either at Dubai and/or in Karachi, and not in Panama. Indeed it is the case of the defendants, as stated in their written statement, "that the defendant carriers carried the said goods which were said to be 215 M/tons by the shippers and discharged the said goods as bulk/loose cargo at the port of Karachi. The alleged shortage, if any, after discharge of the goods is not the liability or the responsibility of the defendant carriers. The short landing certificate allegedly issued by the Karachi Port Trust is neither binding nor does not constitute any liability on the defendants".
Therefore, to enforce the exclusive jurisdiction clause would involve the plaintiff into unnecessary expenses and great inconvenience more so, when defendant No, 1 the carriers, who carried the cargo have their local agent in Karachi and when both are jointly defending the action by filing a joint written statement.
' The convenience of the parties and witnesses have always been taken into consideration while exercising discretion under section 34 of the N Arbitration Act. Reliance is placed on S. E. Asia Co.
Ltd. v. H & M (Ind.) P. (1), which was also a case of short landing of the cargo. In the cited case reliano was placed on the decision in the case of Serajuddin & Co., v. Michael Colodetz Ltd where the Court was called upon to consider an arbitration agreement which contained a clause to the effect that any dispute arising out of the contract was to be settled by arbitration in New York according to the laws of the American Arbitration Association. It was ruled upon a review of the facts of the case, that the agreed forum would not be a safe or convenient forum for a just decision of dispute between the parties ; in such circumstances, to compel a party to seek its remedy in America would practically amount to denial of justice as there was no sufficient reason for referring the dispute to arbitration and staying the suit.
' I may also refer to M. M. Yaseen v. Messrs Iriving R. Boady & Co. Wherein a Division Bench of this Court consisting of Constantine and Waheeduddin, JJ. Had refused to stay the proceedings where among other reasons, parties resided in Karachi and the venue of arbitration proceedings according to arbitration clause was in New York."
29. However, the learned counsel for the defendants submitted that Lord Brandon, J , had changed his view taken by him "The Eleftheria", in "The Golden Trader" (1974) I Lloyd's Law Reports p.
378. But I find that the principles enunciated by Justice Brandon, J., in the Eleftheria's case were not reviewed in any manner.
30. In fact in "The Golden Trader" the learned Judge referred to several cases wherein stay was refused. Here I may refer to some of them.
31. In "The Athenee" (1922) 11 Ll. L. Rep. 6, the facts, as stated in the report, were that there was a claim for damage to goods carried from Alexandria to Hull in a French ship under a bill of lading which contained a clause providing for all disputes under it to be brought before the Commercial Court of Marseilles. The cargo-owners brought an action in rem against the shipowners in the Admiralty Court in respect of the claim and the defendants applied for a stay. It was, therefore, a foreign jurisdiction clause case, Sir Henry Duke, President, refused a stay and an appeal from his decision to the Court of Appeal was dismissed. It does not appear from the report of the case whether the ship had been arrested or not. The Lamed Judge, however, had the record searched, and it shows that the ship had been arrested before the application to the President and was released presumably on security being given, between the time of the President's decision and the hearing of the appeal.
' In his judgment supporting the refusal of a stay Lord Justice Atkins said :- "The question arises in respect of a clause to refer to a foreign tribunal as to a clause to refer to a domestic tribunal, whether there are proper reasons for not enforcing it. To my mind there were ample reasons for the learned President not enforcing it in this case. I think the balance of convenience and the substantial advantage which tbe plaintiff have by suing in this country which they lose by not being able to proceed in rem against this ship and many other advantages such as in respect of proof of loss, all those grounds seem to me to afford ample reasons for the learned President coming to the conclusion that the clause in the contract should not be given effect to."
' It was observed by Brandon, J. :- "The Lord Justice is there saying that there were various reasons to justify the refusal of a stay, and one such reason was that, if a stay were granted, the plaintiffs would lose the substantial advantage of being able to proceed in rem against the ship. It seems to me to be implicit in this reasoning that the Lord Justice thought that there was no procedure by which the plaintiffs could obtain security for their claim by arresting the ship, and then, upon a stay of the action being granted, retain that security to satisfy the judgment of the agreed foreign Court. I say that because, if he had thought that such a procedure was available, it is likely that he would have referred to it."
32. The approach adopted in "The Athenee" was followed in "The Fehmarn" (1957) 1 W L R 815 another foreign jurisdiction clause case. In that case there was a claim for damage to goods carried from Ventspils in the U. S. S. R. To London in a German ship under a bill of lading which contained a clause providing for all disputes under it to be judged in the U. S. S. R. The cargo- owners brought an action in rem against the shipowners in the Admiralty Court in respect of the claim, but did not at that stage arrest the ship. The shipowners applied for a stay of the action. Mr. Justice Willmer refused the stay and his decision was upheld by the Court of Appeal. One of the matters taken into account by Mr. Justice Willmer in exercising his discretion was the security which the plaintiffs might expect to obtain by a subsequent arrest of the ship. As to this he said at p.
821.
' But it is the fact, that if I were to stay these proceedings which have already been launched, I might be depriving the plaintiffs of any remedy at all. It is not as though the defendant's ship were a Russian ship belonging to an organisation domiciled in Russia. There seems to be no possible guarantee that, if I ordered these proceedings to be stayed so as to enable the plaintiffs to start alternative proceedings in Russia, any judgment obtained would necessarily be of any value to them at all ' I am, therefore, of the view that I should refuse stay of the proceedings in this suit and I accordingly do so. Consequently I dismiss the application, leaving the parties to bear their own costs. Now, the defendants are allowed six weeks time to file their written statement.