1. ' By a short order dated 1-6-1998, C.M.A. No,3687 of 1997 was allowed. Following are the detailed reasons for it. This is an application under section 34, Arbitration Act, 1940 through which the defendant seeks to invoke the Arbitration Clause in the agreement between the parties and in consequence to have the suit stayed. Briefly the facts of the case are that the parties to the suit entered into a sales contract dated 19-11-1995 under which over a period between 1995 and 1996 plaintiff placed orders on the defendant based in South Korea for the supply of "Electrolytic Tinplate Prime Quality"; payments for which were made by plaintiff by establishing Letters of Credit in favour of defendant. It transpires that certain consignments, to be exact four in number, upon receipt by the plaintiffs were found to be of inferior quality and not in conformity with the agreed specifications which resulted in loss to the plaintiff. There appears to have been correspondence between the parties to this effect which led to the defendant allegedly offering to compensate the plaintiff for their tosses by reducing the invoice value of their future consignments by a certain figure. This offer by the defendants was rejected by plaintiff ostensibly because they took a high moral ground as they regarded this to be an illegal act of under invoicing. Whatever be the motives for the rejection of defendant's offer, the fact remains that the plaintiff did reject the defendant's offer for compensation of plaintiff's losses. The plaintiff then filed this suit against the defendant for recovery of Rs,6,070,059, The defendants on their part, immediately upon being served, filed an application under section 34, Arbitration Act wherein they invoked the Arbitration clause in the sales contract, praying that the proceedings in the suit be stayed and that the plaintiff be directed to refer the matter to arbitration as per clause 12 of the Contract, which is reproduced below: "(12) All disputes, controversies, or differences which may arise between the parties, out of or in relation to or in connection with this contract, or for the breach thereof, shall be finally settled by arbitration in Seoul, Korea in accordance with the Commercial Arbitration Rules of The Korean Commercial Arbitration Board and under the laws of Korea: The award rendered by the arbitrator(s) shall be final and binding upon both parties concerned."
2. ' It is significant to note that even though plaintiffs' claim was based on alleged breach of a contract between the parties, they did not even annex the sale contract to their plaint and it were the defendants who brought the contract on record. This clearly goes to show that due to some reason the plaintiff wanted to avoid reference to the terms of the contract between the parties. Mr. Nasir Ahmed Khan, the learned counsel for the plaintiff in rebuttal of the application under section 34, Arbitration Act, mainly contended that it is only the front page of the sale contract which is signed by the parties and hence plaintiffs were bound by what is written on that page but the contents of reverse page of the contract that contains general terms and conditions of the contract, being unsigned are not binding upon the parties. It followed therefore that since Arbitration Clause appeared on the reverse page, plaintiffs were not bound to resolve their dispute through Arbitration. Alternatively he contended that even if arbitration clause is held to be binding on the parties, since the said clause envisaged the arbitration to be held in Korea, it would be expensive and inconvenient for the plaintiff to pursue that remedy besides all evidence relating to the goods being substandard was at Karachi hence Karachi was a more convenient forum for resolution of the dispute. The learned counsel for the plaintiff also maintained that since the defendants had already agreed to compensate the plaintiffs for their losses they had tacitly accepted plaintiff's claim and their reliance now on the arbitration clause was not a genuine demand at all. In support of his contentions he relied on PLD 1986 Karachi 138, 1993 SCMR 866 and PLD 1993 SC 42.
3. ' M. Mansoorul Arfin, the learned counsel for the defendant on the other hand argued that the terms and conditions on the reverse page of the sale contract was as much part of the contract as the contents of the front page as the plaintiffs had acted upon these terms particularly with regard to term regarding "payment". According to him as per various authorities, whereas an Arbitration Agreement ought to be in writing but it need not be signed by the parties. In support of this, he relied on AIR 1963 SC 1685 and 1987 CLC 83. He also pointed out that since the dispute related to the quality of the goods shipped from Korea, the evidence would of necessity be available in Korea rather than Karachi. An examination of the sale contract which is an admitted document shows that the front page merely contains the description of the goods and its value but is silent about the other terms and conditions that are vital part of every sale contract, that is terms regarding mode of payment, insurance, lodging of claims, shipment and exceptions that can be relied upon.
4. All these including the Arbitration Clause are of course reflected on the reverse page which is titled and begins as under: ' General terms and conditions.---Both parties agree to following terms and conditions: The plaintiffs do not deny the existence of these general terms and conditions on the reverse page, they merely say that since this page is not signed, they are not bound by these terms and conditions, which include an arbitration clause. This is obviously a weak argument because the parties have acted upon these terms and conditions otherwise the contract itself would be impossible to perform being devoid of any modalities for working it. It is obvious that this argument is being resorted merely to deny the applicability of arbitration clause. Moreover, it is now settled law that while an arbitration agreement must be in writing, it is not essential that it be signed by the parties. In this connection the case of Ralli Brothers and Coney Ltd. v. Muhammad Amin Muhammad Bashir Ltd. Reported in 1987 CLC 83, where Saleem Akhtar, J. Had reviewed a number of authorities on this point and has finally reached the conclusion that: "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 plaintiffs containing arbitration clause the existence of arbitration agreement between the parties cannot be denied."
5. ' I have therefore no doubt in my mind that in this case an arbitration agreement existed between the parties. The question now is whether this arbitration agreement ought to be given effect to or not. Now in the world of commerce today arbitration as a method of resolving of disputes finds its way in most contracts, the aim being to avoid long and arduous litigation in Courts. Most parties to the contracts at the time of signing it agree to incorporation of an arbitration clause quite readily because at the time the primary concern of the parties is to clinch the contract. It is only later when the disputes arise that they begin to circumvent or avoid the arbitration agreement depending upon whether it suits them or not. What is interesting is that while Courts are generally strict in enforcing the various terms of the agreement depending upon the principle "consent facit legem", they are prone to give latitude to parties where arbitration agreement is concerned when question of "forum conveniens" arises but this consideration is discretionary and not mandatory and depends upon the facts of each case. However, in the instant case, the dispute is about the quality of goods being shipped from South Korea and not its short delivery or damages to it. It is obvious that the dispute with regard to quality will require detailed testing and examination by inspector/experts which can be best done in the place where the material originates, that is South Korea. Needless to say that most of the evidence would be there and, thus, the argument of plaintiff, for whatsoever it is worth, that Pakistan will be the 'forum conveniens is effectively repelled.
6. ' Lastly, there is the question of admission of plaintiffs; claim by the defendants. There is nothing on record to show that the defendants ever admitted that the goods shipped by them were of substandard quality or that these were not in accordance with the agreed specifications. All that the defendant did was to offer a discount by way of compensation at U.S. Dollar 70 per metric ton in future shipments in view of long standing business relationship between the parties. Here it may be advantageous to re-produce the contents of fax dated 28-12-1996 from defendants to the plaintiff which is self-explanatory: "This refers to our previous correspondence, please be noted that our contracted specifications of tinplate was temper T-3CA and you have opened the L/C accordingly and we produced the Tinplate as per our contracted specifications Temper T-3CA and L/Cs. Moreover please note that our shipped cargo was prime Tinplate which was inspected by SGS Korea before each shipment and test reports were submitted to you alongwith shipping documents of each shipment.
7. ' Our supplied material was prime Tinplate and strictly as per offered/contracted specifications but even though our mill has agreed to compensate you U.S. Dollar 70 per metric ton in view of our old business relations with your organization.
8. ' Please note our top management refused to accept your claim because export department had shipped out the material striclty as per specifications of the contract/LCs. But on our hard persuation, they accepted U.S. Dollar 70/MT compensation and it must be adjusted in future orders."
9. At best this was an offer by the defendants to the plaintiff to assuage their feeling as a marketing gimmick but since this offer was, admittedly, rejected by the plaintiffs' they cannot now be heard to say that the said offer constituted an admission of plaintiffs' claim. 1, therefore, find that there was a valid and subsisting Arbitration Agreement between parties and the parties are bound to abide by it. Accordingly C.M.A. No,3687 of 1997 is allowed and the proceedings in this suit are stayed till further orders.
10. Proceedings stayed,