1. HAMOODUR RAHMAN, C. J.-These three appeals, which raise a common question of law relating to the validity of the exclusive jurisdiction clause in bills of ladings, have been heard together and will be disposed of by this judgment.
2. The owners of the vessel and their local agents filed an application under Order VII, rule 10 of the Code of Civil Procedure, alleging that since the bill of lading provided that "any dispute arising under this bill of lading shall be governed by Japanese law except as may be otherwise provided herein and any such dispute shall be decided by Tokyo District Courts in Japan", the Courts at Chittagong had no jurisdiction to try the suit.
3. On this application the learned Subordinate Judge, on the 25th of March 1967, ordered that the suit is not maintainable against the defendants Nos. 1 and 2, namely, the owner of the vessel and their local agents, but may proceed against the remaining defendants after the names of the above- mentioned defendants have been struck off within 90 days from the date. Failing that the plaint was directed to be returned to the filing Advocate for presentation to the proper Court.
4. The appellant moved the High Court against this order under section 115 of the Code of Civil Procedure but a Division Bench summarily dismissed the application on the 12th of June 1967, on the ground that the point agitated in the said applica--petition was "covered by decisions" of that Court. Leave was thereafter granted by this Court on the 13th of November 1967,' to consider whether such a jurisdiction clause in a bill of lading could lawfully oust the jurisdiction of the Courts in Pakistan, since there was a divergence of opinion on this point between the High Courts of East and West Pakistan.
5. The appellant in Civil Appeal No. 86-D of 1968 imported a consignment of 163 Rolls of M. S. Black wire from Antwerp. The goods were shipped per s. s. HAINAN belonging to M/s. Scandinavian Joint Service represented by their partner, Swedish East Asia Co. Ltd., under a bill of lading No. 13, dated 25-5-65, to the Chittagong port. The vessel reached Chittagong on or about the 17th of June 1965, and discharged her cargo under the supervision of the local agents of the ship owners, M/s. United Liner Agencies of Pakistan Ltd. Out of the consignment of the appellant, 78 Rolls were short delivered according to the short landing certificate issued by the Chittagong Port Authority.
6. The appellant claimed a sum of Rs. 13,369.20 as the C. M. F. Value of the goods from the shippers and the insurers of the goods, but having failed to recover this amount filed a suit on the 20th of July 1966, in the Court of the Third Subordinate Judge, Chittagong, for the recovery of the sum of Rs.
7. 20,871.73 being the C. M. F. Value of the Rolls short delivered, the customs duty and sale tax paid on them.
8. "All actions under this contract of carriage shall be brought before the Court at Rotterdam and no Court shall have jurisdiction with regard to any such action unless the carrier appeals to another jurisdiction or voluntarily submits himself thereto."
9. The decisions of the High Courts of East Pakistan in such cases have consistently from 1953 been that section 28 of the Contract Act does not invalidate such an exclusive jurisdiction clause in a contract between a national of this country and a party resident and domiciled in another foreign country. The first case in which this question was considered was the case of Abdur Razak v. East Asiatic Co. Ltd. (5 D L R 394). There a learned Single Judge of the East Pakistan High Court took the view that the Principle of Law was well-settled that section 28 of the Contract Act "makes void only that agreement which absolutely restricts a party to a contract from enforcing his right under the contract in ordinary tribunals but has no application when a party agrees not to restrict his rights in the ordinary tribunal but only agrees to the selection of a particular tribunal in which the suit is to be tried. In other words, this section prevents parties to a contract from divesting Courts of their inherent jurisdiction but does not, in any way, nullify and vitiate an agreement between them, by which one of the contracting parties, who has the choice of the forum, agrees to a limitation of that choice".
10. A Division Bench of the same High Court in the case of Tar Muhammad & Co. v. Federation of Pakistan and others (9 D L R 197) where the jurisdiction clause in the bill of lading gave exclusive jurisdiction to the Courts in Karachi, again had occasion to consider this point. Here the provisions of section 20 of the Code of Civil Procedure, section 28 of the Contract Act and section 64 of the Sea Customs Act were all taken into account and the case of Abdur Razak was referred to, but it was held that since this was a case in which both the competing Courts at Karachi and Chittagong had jurisdiction and they were ordinary tribunals within the meaning of section 28 of the Contract Act, the parties were entitled to choose their forum and section 28 of the Contract Act did not invalidate this contract. Section 64 of the Sea Customs Act was, however, held to be inapplicable, as it did not lay down anything about the jurisdiction of any Court.
11. PLD 1966 Dacca 481) another Division Bench of the Dacca High Court took the view that the principle applic--able to the subject had by then become well-settled by a series of decisions of that Court. The decisions referred to were the three cited earlier. This Bench also found support for this view from the fact that a foreign national resident in a foreign country could not be sued in a Court in Pakistan.
12. After this the view in Dacca had hardened and subsequent Benches merely contented themselves by following the earlier decisions. Thus in the case of British India Steam Navigation Co. Ltd. v. A. R.
13. Chowdhury and others (PLD 1968 Dacca 860) Hasan and A. S. Chowdhury, JJ. Merely followed the case of Osaka Shosen Kaisha O. S. K Line Japan v. The Province of East Pakistan.
14. A petition for leave was filed in this Court from the above decision being Civil Petition for Special Leave to Appeal No. 81-D of 1966 (A. R. Chowdhury v. British India Steam Navigation Co. Ltd.) but it was dismissed. It does not appear from the order of the Court that this precise question was raised before this Court, for, all that was argued there was that the clause giving exclusive jurisdiction to the Courts in England, was not a part of the contract between the parties. The Court took the view that no material had been placed before it for thinking that the contract between the parties did not envisage the retention of the said jurisdiction clause.
15. Be that as it may, the Dacca High Court has interpreted this order as one by which its decisions had been approved by this Court and thereafter no question of taking any other view could possibly arise-Vide Swedish East Asia Co. Ltd. v. Md. Masud Raza & Co. (21 D L R 343).
16. There are also a number of unreported decisions of the Dacca High Court to the same effect but, it is unnecessary to refer to them as they merely follow the earlier decisions and do not give any special reasons of their own.
17. It may here be pointed out that in another case, namely from the decision of the Dacca High Court in the case of Narayanganj Iron Works Ltd. v. Pakistan and others an appeal was actually brought to this Court but again in that appeal this specific question was not considered on the ground that it did not arise in that case. The result, therefore, is that there is no considered decision of this Court on this question.
18. Learned counsel appearing for the appellants in these cases have, of course, argued that the Dacca High Court has fallen into error in taking the view that section 28 of the Contract Act is not applicable. Learned counsel have argued with some force that the error begins from the very first decision of Guha, J. In the case of Abdur Razak v. East Asiatic Co. Ltd. Because, he has failed to notice that all the Indian decisions which he had cited in support of his interpretation of section 28 of the Contract Act, were decisions where the competition was between two Courts in British India having jurisdiction in a matter. It is argued by learned counsel that the principle that a plaintiff who is dominus litis can always choose his forum, is necessarily limited to a competent forum situated within a country, both having jurisdiction in the case or matter. Otherwise the result would be that notwithstanding the specific provision in the statute (Contract Act) it would still be possible for parties to a litigation to oust the jurisdiction of competent Court by consent. This cannot, it is argued be permissible.
19. Section 28 of the Contract Act reads as follows:- "28. Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent.
20. Exception 1-This section shall not render illegal a contr--act by which two or more persons agree that any dispute which may arise between them in respect of any subjects or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.
21. When such a contract has been made, a suit may be brought for its specific performance, and if a suit, other than for such specific performance, or for the recovery of the amount so awarded, is brought by one party to such contract against any other such party in respect of any subject which they have so agreed to refer, the existence of such contract shall be a bar to the suit.
22. Exception 2.-Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to reference to arbitration."
23. It is urged that the words "usual legal proceedings in the ordinary tribunals" in this section must necessarily be restricted to legal proceedings under the Code of Civil Procedure and similarly ordinary tribunals to tribunals within the country. They cannot possibly refer to tribunals outside the country. Indeed even an arbitration proceeding would have been hit by the provisions thereof if it had not been specifically excepted from the operation thereof by the exceptions thereto.
24. On the other hand, it is contended on behalf of the respondents that this Court should not lightly interfere with the consistent view that has prevailed in the East Pakistan High Court since 1953, and unsettle the law which has been regarded in East Pakistan, at any rate, to have become settled.
25. The word "tribunal", it is said in its generic sense means "a body appointed to adjudicate on some matter". In this sense it will include even an internationally recognised arbitrator under the Arbitration and Protocal Convention Act, 1937 and even a "foreign Court" since the judgments of foreign Courts are also under our own Civil Procedure Code, enforceable in this country. The provisions of section 28 of the Contract Act, it is contended, are attracted only where the exclusion is absolute; i.e., no recourse to any tribunal is allowed and not to a case where the parties have merely agreed in advance to choose one of two competent forums. If it is at all possible to give effect to these exclusive jurisdiction clauses in bills of lading then, it is said, the Courts should lean towards it since such clauses have come to be regarded as a usual provision of such contract according to trade and mercantile usage generally followed in the case of such contracts of affreightment.
26. The arguments advanced on either side are weighty but the mere fact that some Courts of the country have for a few years, adopted a particular interpretation of a legal provision, is, by no means, a sufficient reason for maintaining that interpretation if it is clearly opposed to some general principles. The principle of stare decisis is not applicable to a case where only some of the Courts in a country have taken a particular view and that too for a comparatively short period. The leave granting order itself indicates that in West Pakistan the High Court has, in the case of Malik A.I Akbar v. Metropole India Limited (PLD 1952 Lah. 249), not found it possible to adopt the view of the East Pakistan High Court, even though the East Pakistan High Court has claimed that a Full Bench decision of the Lahore High Court in the case of Musa Ji Lukman Ji v. Durga Dass (AIR 1946 Lah. 57) supports its view.
27. Since the decisions of the Dacca High Court appear to be based mainly upon the reasonings given in the case of Abdur Razak it is necessary to examine these reasons. A large number of decisions, both of the British Indian High Courts as well as of English Courts have been referred to therein for basing the conclusion that the "principle was well-settled". An examination of the decisions of the British Indian High Courts cited in this case, however, reveals that they were all cases of competition between two Courts in British India, which were, even under the strict interpretation of section 28 of the Contract Act, "ordinary tribunals of the country," as pointed out by Abdur Rahman, J., even in the Lahore Full Bench case. Out of the English decisions cited in this case only three are really to the point, namely, the cases of Kopin v. Adamson ((1875) 1 Ex. D 17), Law v. Garrett ((1878)
28. Ch. D 26) and Austrian Lloyd Steamship Co. v. Gresham Life Assurance Society Limited ((1903) 1 K B 249).
29. The case of Kopin v. Adamson arose out of a suit filed in England on the basis of a foreign judgment delivered by a French Court. The defendant in that suit resisted the suit on the ground that he was neither a native of France nor at any time before judgment resident or domiciled within the jurisdic--petition of the French Court nor was he ever served with any process or summons in that suit. Replication was put in by the plaintiff saying that he being a share-holder in a French Company had agreed to be bound by the articles of association of that company which provided, inter alia, that all disputes arising during the liquidation of the company between the share-- holders of the company, the administrators or the commissioners would be submitted to the jurisdiction of the French Court. The Courts in England held this replication to be a good replica-- petition and gave verdict in favour of the plaintiff holding that it was an absolute agreement by the defendant that his rights shall be decided by a foreign tribunal.
30. This, it will be observed, is not the same thing as saying that the jurisdiction of the Courts is ousted.
31. Even as early as 1878 the Court of Appeal in England had ruled that under section 11 of the Common Law Procedure Act of 1854 the Courts would have a discretion in the matter of staying or not staying a suit filed in breach of such an agreement.
32. Section 11 of the Common Law Procedure Act, 1884, had in the meantime been repealed by the English Arbitration Act of 1889 and section 4 of the latter Act, although somewhat differently worded, re-enacted the principles contained in section 11 of the earlier Act. The language of section 4 of the English Arbitration Act was substantially the same as section 19 of the Indian Arbitration Act of 1889, which was repealed by the Indian Arbitration Act of 1940, but the provi--sions of section 19 were re-enacted in section 34 of the latter Act.
33. This Court has already held in the case of Seafarers Inc. v. The Province of East Pakistan (20 D L R 225 (SC)), that under section 34 of the Arbitration Act the Courts have a discretion in the matter and are not bound to stay every suit, even though it arises out of contract which contains a clause for arbitration.
34. It is unfortunate that Guha J., who wrote the Judgment in 5 D L R, did not notice these distinctions.
35. Indeed, the question of returning the plaint for submission to another Court could hardly arise under the English Procedure. It appears that even the view of Gentle, J. In the case of Ramhicklal Chhaganlal v. Vivekanand Mills Co. Ltd. (49 C W N 58), went unnoticed. This question was elaborately discussed there and it was pointed out by Gentle, J., that under the principles adopted by the English Courts there could be no question of ouster of jurisdiction. The jurisdiction is not, and cannot, be ousted by a contract purporting to deprive the Court of its jurisdiction nor by a term by which the parties agree that their disputes shall be decided by one of two Courts, each of which has jurisdiction.
36. There is, of course, nothing to prevent the parties to a contract from agreeing upon a tribunal, whether a chosen Court having jurisdiction to entertain a suit between the parties or a lay arbitrator, but in such a case the Courts in England have consistently taken the view that it is not a case of ouster of jurisdiction but the Courts would treat such a clause in a contract as a reference to arbitration and then might stay the suit and allow the arbitration to proceed in accordance with the principle embodied in section 4 of the English Arbitration Act of 1889 and section 34 of our own Arbitration Act of 1940.
37. It is true that in the case of Racecourse Betting Control Board v. Secretary of State for Air ((1944) Ch. D 114), Mackinnon, L. J., while discussing the cases of Law v. Garrett and Austrian Lloyd Steamship Co. v. Gresham Life Assurance Society Ltd., had observed that it was perhaps not quite correct to say that the power and duty of the Court to stay the action was exercised under section 4 of the Arbitration Act, 1889. He thought that it was on a wider general principle, namely, "that the Court makes people abide by their contracts and, therefore, will restrain a plaintiff from bringing an action which he is doing in breach of his agreement with the defendant that any dispute between them shall be otherwise determined," but even so he did not go to the extent of saying that under this wide principle a clause of such a nature completely ousted the jurisdiction of the Courts which were otherwise competent to try the suit.
38. The principle referred to by Lord Denning was propounded earlier by Atkin, L. J., as he then, was in the Athenee's case ((1922) 1 I L R 6), wherein the latter had adopted the language of Lord Moulton from the judgment in the case of Bristol Corpora--petition v. John Aird & Company. This was to the following effect :- "I always look upon these arbitration clauses as in a business point of view a substantial portion of the contract, and I think the Courts have acted quite rightly in requiring good reason to be shown why this part of a contract, should not be strictly performed. But, my Lords, it must be remembered that these arbitration clauses must be taken to have been inserted with due regard to the existing law of the land, and the law of the land as applicable to them is, as I have said, that it does not prevent the parties coming to the Court, but only gives to the Court the power to refuse its assistance in proper cases. Therefore, to say that if we refuse to stay an action we are not carrying out the bargain between the parties does not fairly describe the position. We are carrying, out the bargain between the parties, because that bargain to substitute for the Courts of the land a domestic tribunal was a bargain into which was written, by reason of the existing legislation, the condition that it should only be enforced if the Court thought it a proper case for its being so enforced."
39. Atkin, L. J., thought that whether it was a case of a clause giving jurisdiction to a foreign tribunal or to another domestic tribunal the question always is as to "whether there are proper reasons for not enforcing it" and amongst these reasons he considered "the balance of convenience, the substantial advantage which the plaintiffs may have by suing in the country, and other advantages in respect of proof of loss" to be relevant.
40. Finally, in the Elefrheria's case ((1969) 2 All E R 641), which was also a case of an application for stay of action brought against the ship---owners by the cargo-owners, Brandon, J., after reviewing all earlier decisions, summarised the principles followed by English Courts as follows :- "(1) where plaintiffs sue in England in breach of an agree--ment to refer disputes 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 unless strong 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 ;
(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.
41. It would thus appear that so far as England is concerned the Courts there had never proceeded on the basis that such a clause absolutely ousted the jurisdiction of the English Courts. At most, they have treated such a clause as being in the nature of a submission to arbitration, which does not oust the jurisdiction of the Court but gives the Court a discretion to decide whether it will allow the suit to proceed or enforce the agreement between the parties and compel them to go to arbitration as agreed upon whether before another tribunal in the same country or in a foreign country or before a lay arbitrator.
42. It seems difficult to appreciate how the question of ouster of jurisdiction can at all arise in a case of such a clause providing for adjudication of the dispute by a tribunal in a foreign country, if the principle is accepted, as was done in the Dacca case, that no one can by consent either vest a Court with jurisdiction which it does not otherwise possess or' take away its jurisdiction which it does possess. The principle that where two Courts are equally competent to try a cause or matter, then it is open to the plaintiff to choose his forum or for the parties to the dispute to agree to a particular forum in advance, must in my opinion, be read subject to the laws of the country in which the contract was made and in which it was intended to be performed. Such a choice or election by the parties cannot be in defiance of the law or opposed to public policy or to statutory provisions expressly prohibiting the making of such agreements or rendering the same, if made, invalid. The practice adopted by the East Pakistan Subordinate Courts and approved by the Dacca High Court is, to my mind based neither upon principle nor upon precedent. Even upon the principle adopted by the East Pakistan High Court in each case there should of necessity have been an enquiry to find out whether under the proper law of the contract the foreign Court to which exclusive jurisdiction was sought to be given, had, in fact jurisdiction to try the cause or matter according to the laws of that country. If it had no such jurisdiction, then obviously the principle that a party may choose one of two competent Courts which had jurisdiction to try a cause or matter, would not be applicable. If it so happens that the foreign Court has no jurisdiction in the matter, or is unable to grant the relief sought for, then the plaintiff would be left with no redress at all. Again the question of returning the plaint can only arise where the same plaint can be presented in a foreign Court. This may well not be possible, for, the rules of procedure of the foreign Court may require the plaint to be in the form prescribed by that Court in the language of the country in which that Court is situated and affixed with court-fees, if any prescribed, in the manner laid down by the laws of that country. Obviously this procedure of returning the plaint can only apply where both the competing Courts are situated in the same country and follow the same laws.
43. The contention of the learned counsel supporting the decisions of the Dacca High Court that such foreign Jurisdiction clauses are not hit by the main provisions of section 28 of the Contract Act, as, they are neither opposed to the public policy nor amount to an absolute ouster of jurisdiction of "ordinary tribunals" within the meaning of the section, is a lithe difficult to accept. I cannot persuade myself that "ordinary legal proceedings" and "ordinary tribunals" referred to in that section embrace the proceedings under different systems that may be prevalent in the foreign Courts as also such foreign Courts themselves, merely because a foreign judgment may be enforced by a suit in our own Courts. This can be done even where the foreign judgment has been delivered in a case where there is no contract containing such a clause. The legal proceedings and tribunals referred to in section 28 of the Contract Act can only mean legal proceedings and tribunals known to the Legislature as "ordinary tribunals" in the country and the usual proceedings available in these Courts. In the case ' of Setrucherla Ramablza Drasaju v. Maharaja of Jeypore (46 I A 151), the Privy Council held that "Courts" in section 17 of the Code of Civil Procedure mean Courts to which the Code applies. Following the same principle I see no reason why the "ordinary tribunals" referred to in section 28 of the Contract Act should not mean ordinary tribunals within the country and not any and every kind of tribunal.
44. The argument that because a foreign judgment can be enforced by a suit in our country, therefore a foreign tribunal which passed that judgment is also an "ordinary tribunal" within the meaning, of section 28, is clearly untenable. A foreign judgment is not conclusive even under section 13, C. p. C.
45. When it is pronounced by a Court which is not a Court of compete; jurisdiction, where it is on the face of it g founded on an incorrect view of an international law or appears to be based on a refusal to recognise the law of Pakistan in cases to which it is applicable, or where the judgment has been obtained in contravention of the principles of natural justice or sustains a claim founded on a breach of a law in force in Pakistan. Section 34-A, C. P. C. Applied only to judgments of superior Courts of the United Kingdom or in a reciprocating country. It is patent, therefore, that every foreign judgment is not enforceable in Pakistan.
46. I am also not impressed by the argument that since no suit can be filed against a non-resident foreigner in Pakistan the exclusive jurisdiction clause in a contract entered into with such a foreigner must be treated in a different manner. This has really no bearing on the question of jurisdiction. If the, suit can otherwise be defeated or is not maintainable in the Courts in Pakistan, that is an entirely a different matter. That cannot be a valid ground for legalising the exclusion of the jurisdiction of the Courts in Pakistan or taking away "the jurisdiction which they would otherwise possess under the law of the land.
47. If by reason of the provisions of section 20 of the Code of Civil Procedure a particular Court in Pakistan has no jurisdiction to entertain a suit against a particular defendant, the suit can be dismissed as against that defendant but that cannot be a ground for refusing jurisdiction altogether even as against the defendants who are properly before the Court and are amenable, to its jurisdiction.
48. The next contention that since such clauses have now become usual in bills of lading by the custom and usage of international trade, they cannot be affected by the Contract Act which specifically provides by its very first section that nothing therein contained shall affect usage or custom of trade. The short answer to this contention is that it is no body's case here that such a clause has now become an ordinary incident of a contract of affreightment by custom or trade usage, but what is being claimed here is that since the contract expressly provides for giving exclusive jurisdiction to a foreign Court, the parties to the contract should be compelled to carry out their bargain under the contract and not de hors the contract. Even otherwise it may be pointed out that there is no such universally recognised custom or trade usage, for, there are many countries, e.g. Australia, New Zealand, Belgium, Argentina, Italy, Portugal, Egypt, Morocco and France, where such clauses have either been declared by law to be invalid or are not enforced on the ground of being opposed to public policy.
49. It furthermore appears that neither in the International Convention of Brussels, 1924 (Hague Rules), was anything said regarding such jurisdiction clause, nor have the countries ratifying the Convention followed any uniform pattern. While some countries have ratified it simply without adding anything to its text, others have, on the other hand, inserted special provisions in their own respective Acts. Thus, while the ratifying legislations of the United States, Great Britain, France, Belgium, Germany, Canada, the Scandinavian countries, and our own country, are silent with regard to such jurisdiction clauses, the legislations of Australia, New Zealand, and Morocco expressly provide that such jurisdiction clauses ousting the jurisdiction of the local municipal Courts shall be null and void.
50. Learned counsel have also attempted to justify that these clauses are not opposed to section 28, for, there is another clause in the bills of lading under consideration which make the exclusive jurisdiction clause itself subject to the laws of the country. If this be so, then no question of ouster of jurisdiction arises and the only question which falls to be considered is that which was posed by Lord Denning; namely, as to whether the parties should be bound by their contract, and whether the Courts should stay proceedings instituted in breach of such an agreement. According to the tenor of the decisions of the Courts in England and the rule enunciated by Dicey in his Conflict of Laws, 7th Edn., p. 1085, this is a question purely within the jurisdiction of the Court, although the Court would do so in order to bind the parties to their contract unless the plaintiff proves that it is just and proper to allow them to continue the suit.
51. Learned counsel for the respondents have also advanced a great deal of argument on the basis of what has been called "the proper law of the contract" in these cases, but I do not think that this is of much assistance in deciding the precise question now before the Court. The decisions in the cases of the Media (41 L R 18) and the Chapparral ((1968) 2 L R 153) relied upon in support of the respondents' contentions too seem to indicate that the English Courts have always held that they had a discretion in the matter of allowing writs to issue out of jurisdiction and, therefore, when applications are made for setting aside such orders on the ground that the suit has been brought in violation of an agreement giving exclusive jurisdiction to a foreign Court, the Courts will take into consideration all the circumstances relevant for the purposes of exercising a judicial discretion.
52. My examination of the treatment given to such foreign' jurisdiction clauses by Courts in different countries leads me to, the irresistible conclusion that nowhere have the Courts gone to the same extent as the Courts in East Pakistan. In no country has any Court accepted that such a foreign jurisdiction clause in a contract can legally oust the jurisdiction of the municipal Courts of the country, but the tendency actually seems to be that such a foreign jurisdiction clause, which is derogatory to the sovereignty of an independent country, should not be recognised. Even in Great Britain the British Maritime Law Association Agreement of 1st August 1950, has now, miter alia, provided that "in the event of any claim being contested by legal process, the ship owner will not rely on any provision in the contract of carriage stipulating that claims must be referred to tribunals outside the United Kingdom". This is a significant change.
53. Some countries have actually declared by law that such clauses shall be null and void, others have struck them down as being opposed to their own public policy, while a few have given them the status of an arbitration clause providing for an arbitration by a foreign arbitrator in a foreign place, and in order to preserve the sanctity of private contracts by binding the parties to their bargain merely stayed proceedings in their own Courts, if the clause is otherwise found to be reasonable and does not .Decrease the rights which would be available to a party to the contract in the ordinary tribunals of the country of does not relieve the other party altogether or lessen his liability in any way. In some cases, the Courts have even held that such a foreign jurisdiction clauses does not bind the party, who is not a signatory to the contract. But there is no cases in which such a clause has been held to be valid in the face of an express law prohibiting the making of such a contract or invalidating the same. Indeed, the very fact that most Courts treat such clauses to be void as being against public policy seems to indicate that where there is an express provision in a local law forbidding the making of such a contract too then it would be void on the same principle, for, whatever a law prohibits is also opposed to public policy.
54. 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 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. 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.
55. 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 A.I Akbar, which I approve.
56. "(1) Staying the action is often the most equitable 'solution, because the Court which is given jurisdiction by the jurisdiction clause may refuse jurisdiction.
(2) Reasonableness is the usual criterion used by Courts in deciding whether a jurisdiction clause should be honoured.
(3) A jurisdiction clause should designate as clearly as possible the Court given jurisdiction.
(4) Jurisdiction clauses are rarely valid against a person not a party to the bill of lading e.g., the stevedore or the chartered who did not issue the bill of lading. Nor are jurisdiction clauses usually valid if they result in a jurisdiction in which other parties who should be party to the action cannot be joined.
(5) If the Court referred to in a jurisdiction clause is subject to a different law, which latter will decrease the rights of the parties, the jurisdiction clause is usually held invalid.
(6) Jurisdiction clauses are rarely honoured in proceedings in rem.
(7) It would seem that the burden of proof in the U. S. 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.
57. To this conclusion I would like to add that if a jurisdiction clause will have indirectly the effect of relieving the carrier from the liability he would normally have incurred under the legislation of the country, then the Courts will not honour such a jurisdiction clause. Again, if the result of the enforcement of the jurisdiction clause will in effect be to deprive one of the parties to a contract of his right to seek any remedy at all, then too the clause will not be given effect to.
58. Learned counsel appearing on behalf of the respondents have contended that the question of convenience or inconvenience of the parties is a wholly irrelevant consideration and should not, in any event, be taken into account by the Courts in deciding the question as to whether a stay should or should not be granted. In this case I am not called upon to lay down exhaustively each and every one of the circumstances that a Court should or should not take into consideration in deciding this question, nor would it be desirable to do so, for, each case will have to be determined on the basis of its own facts. The considerations mentioned in the Eleftheria's case are, in my pinion, merely illustrative of the nature of the considerations which may have to be taken into account and are by no means exhaustive. The Courts called upon to decide this question will e the best judges of the circumstances which should weigh with them.
59. It now remains only to consider the question of burden, gamely, as to on whom should be the burden to satisfy the Court as to the justification for staying its proceedings, I cannot help feeling that the American view on this subject would be he one that should apply more appropriately in our own country, for, here too a foreign jurisdiction clause, as I have lm field, 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 s 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 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.
60. For the reasons given above, I would allow these appeals set aside the orders of the High Court and of the trial Court and remand the cases back to the trial Court to consider, in accordance with law, as to whether the suits filed before them should or should not be staved.
61. A. SATTAR, J.-I agree.
62. M. R. KHAN, J.-I agree.
…and 14 more citing cases