1. This is a suit for enforcement of foreign award under section 5 of the Arbitration (Protocol and Convention) Act, 1937 (hereinafter referred to as the Act). By a short order, dated 12-8-1998 I directed that the Award be filed and decreed the suit in terms of the award. Following are the reasons for it.
2. The facts of the case are that the parties entered into a contract, dated 3-5-1994 which was made subject to bye-laws and rules of Liverpool Cotton Association Limited (hereinafter referred to as L.C.A.) of which both parties were the members at the relevant time. The contract was made out on a standard form of contract and under it the plaintiffs agreed to sell 700 metric tons of C/S raw cotton 1993/94 type Tanya to the defendants at 82.50 cents (U.S.) per lb. Out of this 500 metric tons were to be shipped in June, 1994 and the balance 200 M/T in July, 1994. The payment under the contract was to be effected by Letter of Credit which was to be opened and fully operable by 15-5- 1994 for the June shipment and by 15-6-1994 for the July part or the Seller i,e, Plaintiff had the right to close out the contract at par or market price.
3. Dispute arose between parties due to failure of defendants to open and forward the Letter of Credit as per terms of the contract. The plaintiffs, therefore, in accordance with rules of L.C.A. appointed Mr. W.D. Farrar as their Arbitrator but the defendants failed to appoint their Arbitrator in spite of being invited to do so several times. Consequently, an application was made to the President of L.C.A. in accordance with rules of L.C.A. for compulsory appointment of an arbitrator to act on behalf of the defendants. The President L.C.A. then after due notice to defendants appointed Miss H.S. Anderson to act as an Arbitrator for the defendants. Thereafter, the defendants participated in the Arbitration and after hearing parties and, due deliberations the Arbitrators gave their award, dated 24-7-1995 under which the defendants were directed to pay the plaintiffs US L54,579.25 together with interest and costs. Under the rules of L.C.A. the defendants could appeal to Technical Appeal Committee against the award within thirty days but even though the defendants did give notice to appeal within time, they did not pay the requisite fees under L.C.A. Rules. Accordingly, no appeal was formally made and the award became final and binding on both parties.
4. The defendants have filed objections to the award, which are elaborate and copious and .go beyond the scope of section 7 of the Act, which deals with conditions of enforceability of a foreign award and the objections that can be raised against it. For case of reference this section is reproduced below:-- "7. (1) In order that a foreign award may be enforceable under this Act it must have--
(a) been made in pursuance of an agreement for arbitration which was valid under the law by which it was governed,
(b) been made by the Tribunal provided for in the agreement or constituted in manner agreed upon by the parties,
(c) been made in conformity with the law governing the arbitration procedure,
(d) become final in the country in which it was made,
(3) been in respect of a matter which may lawfully be referred to arbitration under the law of British India (Pakistan). and the enforcement thereof must not be contrary to the public policy or the law of British India (Pakistan).
(2) A foreign award shall not be enforceable under this Act if the Court dealing with the case is satisfied that--
(a) the award has been annulled in the country in which it was made, or
(b) the party against whom it is sought to enforce the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case, or was under some legal incapacity and was not properly represented, or
(c) the award does not deal with all the questions referred or contains decisions on matters beyond the scope of the agreement for arbitration: Provided that if the award does not deal with all questions referred the Court may, if it thinks fit, either postpone the enforcement of the award or order its enforcement subject to the giving of such security by the person seeking to enforce it as the Court may think fit.
(3) If a party seeking to resist the enforcement of a foreign award proves that there is any ground other than the non-existence of the conditions specified in clauses (a), (b) and (c) of subsection
(1) or the existence of the conditions specified clauses (b) and (c) of subsection (2), entitling him to contest the validity of the award, the Court may, if it thinks fit, either refuse to enforce the award or adjourn the hearing until after the expiration of such period as appears to the Court to be reasonably sufficient to enable that party to take the necessary steps to have the award annulled by the competent Tribunal."
5. Notwithstanding numerous points raised by the defendant in the objections filed by them, the learned counsel for the defendants Mr. Qadir H. Sayeed very candidly and indeed gallantly conceded that basically he wanted to urge only two points, which he did quite forcefully.
6. Mr. Sayeed, firstly, contended that since admittedly the Arbitration did not have sight of a contract form signed by both parties, they were not seized of jurisdiction and hence, the award is invalid abs initio. Secondly, Mr. Sayeed's contention was that the Arbitrators had determined the date of breach of the contract to be 21-7-1994 whereas it should have been 17-6-1994 since the defendants had intimated the plaintiffs through a fax, dated 17-6-1994 that they were willing to amicably settle contract owing to unexpected imposition of import duty on raw cotton by the Government of Pakistan. According to Mr. Sayeed if the date of 17-6-1994 had been chosen the alleged losses of plaintiffs would have been reduced considerably due to difference in price of cotton on the two dates.
7. In so far as the objection regarding non-sighting of the contract form duly signed by parties is concerned, it will be advantageous to reproduce the paragraph 8 of the Award on which the defendants rely for their contention. It reads as under:-- "Neither the Buyers nor the Sellers dispute the existence of this contract, in spite of the Arbitrators having no sight of the contract form signed by both parties."
8. A plain reading of this paragraph would show that in raising their objections the defendants have merely relied on the latter part of the paragraph ignoring the first part. Read as a whole the paragraph would show that the parties had waived the production of the signed contract and had admitted the existence of the contract. It would, thus, appear that the defendants have merely torn the said portion of the paragraph out of contract to arrive at an erroneous conclusion. In any case nowhere in the objections filed by the defendants they have denied the existence of contract. In so far as non-signing of the contract is concerned while dealing with an arbitration award under L.C.A. rules in the case of Ralli Brothers & Company Ltd. v. Muhammad Amin Muhammad Bashir Ltd. reported in 1987 CLC 83, a Single Bench of this Court has held that signing of such contract is not necessary. The relevant portion is reproduced below:-- "By virtue of membership of Liverpool Cotton Association which provides for arbitration between the members there exists an arbitration agreement between the parties. In these circumstances, even if the parties have not signed any agreement for arbitration or the defendants have refused to sign the contract note sent by the plaintiff containing arbitration clause, the existence of arbitration agreement between the parties cannot be denied."
9. In so far as the date of breach of the agreement is concerned, it is a question of fact and it is well- settled that Courts cannot go behind the award. Defendants remedy in this regard was to appeal against the award as provided in L.C.A. Rules. Having not availed of that remedy, the defendants cannot urge at this stage a point that is entirely a question of fact.
10. Finally I feel it is pertinent to mention here, that if Pakistan is to attain some respectability in the commercial world, it is necessary that trans national commercial agreements must be honored and judicial process must not be used merely to delay the implementation of such agreements or judicial or quasi-judicial decisions passed in disputes arising from such agreements. I, therefore, find no merit in the objections to Award raised by defendants and accordingly direct that the award, dated 24-7-1995 be filed. In so far as the suit is concerned, I decree this suit in terms of the said award.