1. The facts calling to the present case are extensively recorded by my learned brother Rana Bhazwan Das, J. in the order dated 6-2-1997 passed by him in relation to injunction application, C.1'4.i.A. No,5155 of 1996 and I do not consider it necessary to record the same again. Suffice to observe that various objections were urged by the defendants in their written-statement about the maintainability of the present proceedings. One of the preliminary objections, taken by the defendants, is that this Court has no jurisdiction in the matter due to foreign jurisdiction clause, (also referred as forum selection clause), contained in the agreements between the parties.
2. Besides the above, it is urged that the defendants Nos,1 to 7 and 8 are not residents in Pakistan nor do they carry on business in Pakistan and for such reason this Court does not have jurisdiction to try the suit. As regards the first mentioned objection, the defendants chose to file an application under section 151, C.P.C. read with section 34 of the Arbitration Act (C.M.A. No,76 of 1997) which came to be dismissed as not pressed on 26-6-1998. As regards the next-mentioned objection, preliminary issue was settled on 2-11-1998 in the following terms:-- Whether this Court has jurisdiction in the matter?
3. None of the parties led any oral evidence. However, by consent copies of the documents filed as Annexures 'D-1' to 'D-5/A' with the written-statement of defendants No,1 to 4 and 6 to 8 (referred herein as the main defendants) were taken as the admitted documents through order dated 2-6- 1999. I have heard the learned counsel for the plaintiff, the main defendants Nos. 6 to 8 and defendant No,5.
4. My findings on the preliminary issue are as follows.
5. Mr, Sharifuddin Pirzada, during this arguments, has mainly stressed upon want of jurisdiction in this Court on the basis of forum selection clauses contained in the six agreements which were read in extension and for the sake of convenient reference are reproduced hereunder: "9. Execution and Applicable Law This copy of the Agreement in the English language shall be deemed to be the original hereof. This Agreement does not become binding until accepted by DU PONT at its principal office in Wilmington, Delaware, USA. This Agreement shall be construed in accordance with the laws of the State of Delaware, USA and the decisions of its Courts shall govern with respect to any question or controversy which may arise hereunder. This Agreement shall be first executed by Sales Representative and shall become Effective when subsequently completed on behalf of DU PONT by its authorised representatives.
6. 12.Execution and Applicable Law.-This agreement does not become binding until accepted by DU PONT INTERNATIONAL, at the principal office at Geneva, Switzerland, The laws of SWITZI:RLAND shall govern with respect to any question or controversy which may arise hereunder.
13. Execution. Applicable Law and Jurisdiction.--- This Agreement does not become binding until accepted by DISA at its principal place of business in Carouge, Geneva, Switzerland. It shall be construed in accordance with the laws of Switzerland. Subject to Appeal to the Swiss Federai Tribunal in Lausanne, THE COURTS OF GENEVA or, at plaintiff's opinion, the Courts of the defendant's principal place of business shall have jurisdiction over any controversy which may arise hereunder unless the parties agree otherwise in writing.
18. Applicable Law.
7. The statute and decision law of Pakistan shall govern with respect to any question or controversy that may arise hereunder.
11. Execution And Applicable Law.---This agreement does not become binding until accepted by DU PONT LUXEMBOURG at its principal office at Contern, LUXEMBOURG. The law of the Duchy of Luxembourg shall govern with respect to any question or controversy which may arise hereunder.
17. Applicable Law.
8. The laws of Japan shall govern with accept to any question or controversy which may arise under this Agreement except to the extent of any conflict with United States laws regarding the subject- matter of Article 12.
9. It is to be noticed that the foreign jurisdiction lause contained in the agreements dated -3-1990, Annexure 'D-2' and dated 9-5-1992, Annexure ' D-5 ' stipulates application of the laws of Switzerland and the laws of Grand Duchy Luxembourg, respectively, to the parties in relation to matters arising under the two agreements, whereas the laws of Pakistan are contemplated to apply to the matters arising under the agreement dated 1-3-1990, Annexure 'D-4' to the written- statement. The remaining three agreements contemplate exclusive jurisdiction of foreign Courts besides applicability of foreign laws.
10. According to Mr. Pirzada, the foreign jurisdiction clause contained in the agreement is to be read in the nature of an arbitration clause with the result that the present proceedings be stayed leaving the parties to approach the forum of their mutual choice. According to the learned counsel for the objecting defendants, the choice of forum, mutually agreed between the parties, .deserves due weightage and in view of present economic trends and the global trade and commerce activities, often undertaken by the large number of multi-national business concerns, the old theory of insisting on acquisition of jurisdiction on the basis of accrual of cause of action, even partial, within the local limits, needs reconsideration. The theory of forum convenience, according to the learned counsel for the main defendants, is misfit and has little place in an era of expanding global trade and commerce. The parties in the instant case having selected for a of their choice must respect the same unless its applicability is shown by the plaintiff to be unreasonable, unjust and oppressive in the given circumstances. Reference in this behalf has been made to section 28 of the Contract Act with assertion that the scope of exceptions to the said provision ought to be determined in the prospect of future development of international commercial dealings. It is asserted with vehemence that the foreign jurisdiction clause incorporated in the contracts is in the nature of agreement for arbitration and, therefore. not ultra vires the provisions of section 28 of the Contract Act. The learned counsel, in support of his above submissions, has referred to the cases of M.A.
11. Chaudhry v. Messrs Mitsui O.S.K. Lines Limited and others PLD 1970 SC 373, Zapata Off-shore Corporation v. The "Bremen" and Unterweser Reederei G.M.B.H. 1972 (2) Lloyd's Law Reports 315 and Hitachi Limited and another v. Rupali Poi)ester and others 1990 SCM R 1618. All the three judgments cited at Bar were read out in detail by the learned counsel for the main defendants and I propose to discuss the rule -deducible therefrom separately.
12. The first case had arisen out of claim made by the appellant Messrs M.A. Chaudhry & Co., on of loss suffered due to short landing of p14 carried per S.S. Kyushumarce owtml and controlled by the respondent. The owner of the vessel and its local agent as defendants had filed an application under Order VII, Rule 10, C.P.C. for return of plaint on the ground that the Bill of Lading had provided for applicability of Japanese Law and the Tokyo District Courts in Japan were further agreed to possess exclusive jurisdiction in relation to disputes arising under the Bill of Lading. The suit against owners of the vessel and the local agent was held not maintainable which decision came to be confirmed by a Division Bench of the erstwhile High Court of East Pakistan. In appeal, the judgment of the Supreme Court authorised by the then Chief Justice took into account various aspects of the case; and the views expressed in relation to for selection clause by the Courts in differ not countries e.g. United Kingdom, Australia, Newzealand, Belgium, Argentina. It all Portugal, Egypt, Morocco have also been considered. It is observed that notwithstanding the forum selection clause having become common and ratification of International. Convention of Brussels, 1925 (Hague Rules) by various countries of the World including Pakistan, the ouster of jurisdiction of the Municipal Courts was void and of no effect on the ground of being opposed to public policy. The conclusion reached by the Hon'ble Judges on the touchstone of section 28 of the Contract Acts as follows:-- "It now remains only to consider the question of burden, namely, as to one 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 the one that should apply more appropriately in our own country, for; here to 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 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."
13. The appeal with the above observations was allowed holding that the local Courts have jurisdiction to adjudicate upon disputes notwithstanding the foreign jurisdiction clause contained in the Bill of Lading. This judgment, in my view, therefore, does not support the case of the defendants.
14. The next case from American jurisdiction, cited by Mr. Pirzada, had arisen from initiation of proceedings in admiralty in the United States by the appellant Zapata Off-Shore Company seeking damages against salvager Bremen alleging negligent to wage and breach of contract. The proceedings were commenced in the United States District Court at Tampa ignoring the term of the contract to the effect that Courts at London alone had jurisdiction to adjudicate upon disputes between the parties. The proceeding were resisted by invoking the foreign jurisdiction clause with motion for dismissal due to lack of jurisdiction or, in the alternative, for staying action pending submission of dispute to the London Court of Justice. The motion from the side of defendants did not find favour and raven in appeal through majority decision the applicability of foreign jurisdiction clause was denied. The United States Supreme Court, however, taking a liberal view found that due weightage had not been given to the foreign jurisdiction clause and the matter was remitted back to the District Court with the following observations: "Forum selection clauses have historically not been favored by American Courts. Many Courts, Federal and State, have declined to enforce such clauses on the ground that they were 'contrary to public policy,' or that their effect was to oust the jurisdiction" of the Court. Although this view apparently still has considerable acceptance, other 'Courts are tending to adopt a more hospitable attitude toward forum selection clauses. This view, advanced in the well-reasoned dissenting opinion in the instant case, is that such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ' unreasonable' under the circumstances. We believe this is the correct doctrine to be followed by Federal District Courts sitting in admiralty. It is merely the other side of the proposition recognised by this Court in National Equipment Rental Ltd. v. Szukhent, 37 US 311 (1964), holding that in Federal Courts a party may validly consent to be sued in a jurisdiction where he cannot be found for service of process through contractual designation of an 'agent' for receipt of process in that jurisdiction. In so holding, the Court stated: It is settled .. that parties to a contract may agree in advance to submit to the jurisdiction of a given Court, to permit notice to be served by the opposing party, or even to waive notice altogether' ."
15. This case, indeed, advances the view in deviation from the rule contained in the case of M.A.
16. Chaudhry (supra). The third case cited by the learned counsel for the main defendants had arisen out of dismissal of application under sections 14 to 17 of the Arbitration Act challenging award rendered by Arbitral Tribunal at London, by the learned Senior Civil Judge, Sheikhupura. The above order was set aside in Civil Revision by the learned Single Judge of the Lahore High Court which was assailed before the Hon'ble Supreme Court. The facts which had given rise to the proceedings were that the respondent-Company, having its office at Karachi, under an agreement, had undertaken to purchase from the appellants which are both incorporated abroad, some plant, equipment, material etc., for erection and, installation of unit for production of ordinary chips of polyester. The contract between the parties had provided that all disputes or differences thereunder would be settled by Arbitration of the International Chamber of Commerce. The arbitration was to take place in Karachi in matters where respondent was a buyer but in cases where it was a seller, the arbitration was to take place in London. A large number of authorities were considered with reference to section 20, C.P.C. which permits institution of cases in a Court within the local limits of whose jurisdiction, the cause wholly or in part arises. The principles of law set down by the Hon'ble Supreme Court are summarised in para. 10 of the judgment containing 16 sub paragraph. The dictum contained in sub-paragraph (16) of the judgment was referred before me as applicable to the present matter and is as follows:
(xvi) That the raison detre of private international law is the existence in the world of a number of separate municipal systems of law and a number of separate legal units. A sovereign is supreme within his own territory and according ,o the universal maxim of jurisprudence, he has exclusive jurisdiction over everybody and everything with what territory and over every transaction that is there effected. But in the modern civilised world, the same has become impracticable and the nations have long found that they cxrs ot, by sheltering behind the principle of territorial sovereignty afford to disregard rules of law merely because they happen to be at variance with their own territorial or internal system of law."
17. ' On the basis of above view, it is urged, the principle contained in the case of M.A. Chaudhry (supra) stands modified with the result that judicial chauvinism has been replaced by judicial comity. The Courts have adopted an attitude to avoid interference with freely negotiated contracts unless its shown that the enforcement of foreign clause would contravene a positively stated public policy. The learned counsel for the main defendants has referred to section 120 of Code of Civil Procedure which excludes applicability of section 20, C.P,C. to the cases heard by this Court in exercise of its civil jurisdiction. Consequently, it is contended that the jurisdiction exercised by this Court, being free from statutory constraints, would be amenable to the principles of Private International Law. It is pointed out that the defendants Nos.1, 2, 7 and 8 do not have any liaison office or legal presence in Pakistan in any form whatsoever. Reference has also been made to the judgment in Vogal v. R&A Kohnstamm Ltd. (1971) 2 All ER 1428 wherein it was held that mere presence of a representative within the territorial jurisdiction of Court would not make its judgment enforceable when the defendants' dealings, which were their only connections, were found not sufficient to make the defendants a person who was doing business there.
18. Mr. Muneer A. Malik, Advocate for the plaintiff has referred to application, preferred by the contesting defendants under section 34 of the Arbitration Act, which was subsequently dismissed on 26-6-1998, as not pressed. According to Mr. Malik, the defendants had conceded to jurisdiction of this Court. It is further contended that mere residence of the defendants abroad cannot divest this Court of its jurisdiction and power to adjudicate in the case. The disputes between the parties are based on cause of action accruing within the jurisdiction of this Court. The acceptance of objection, raised on behalf of the contesting defendants, it is urged, would militate against the concept of sovereignty of State within its territories. The jurisdiction of this Court, according to the learned counsel for the plaintiff, continues to subsist since cause of action for the present proceedings has arisen within the territorial jurisdiction of this Court. The distinction between choice of law governing the relationship between the parties and the choice of jurisdiction are two different concepts and except for the agreement, Annexure "D-5' to the written-statement, no other agreement executed between the parties, postulates exclusion of jurisdiction of this Court.
19. According to Mr. , Malik, this Court can apply Foreign Laws as are not in express violation of the Municipal Laws. it is urged that even if the arguments of Mr. Pirzada are accepted, the bar to jurisdiction of this, Court cannot be inferred and the foreign jurisdiction clause upon being construed in the nature of Arbitration Agreement would justify merely stay of present proceedings.
20. Such option, however, can no more be pressed in view of dismissal of application for stay on 26-6- 1998. Consequently, it is urged that the finding on preliminary issue has to be recorded in the affirmative.
21. While replying to the arguments, based on dismissal of application under section 34 of the Arbitration Act, Mr. Pirzada has urged that the order, dated 26th June, 1998 was in the nature of an interlocutory order and the prohibition, contained in Order XXIII, Rule 1, C.P.C. restraining institution of fresh cause is not attracted to the present case. The learned counsel, in this behalf, has referred to the observations, contained in Bengal Agency & Stores Syndicate and others v. Stores and Engineering Supply Corporation AIR 1958 Calcutta 411, Najam Ali v. Lal Khan and others PLD 1968 Kar.
22. 59, Pakistan International Airlines Corporation v. Messrs Pak SAAF Dry Cleaners PLD 1981 SC 553, Food Corporation of India and another v. Yadav Engineer and Contractor AIR 1982 SC 1302 and Pakistan Refinery Ltd. v. Mst. Shahida Sultan 1988 M LD 1150.
23. The effect of order dated 26-6-1998 whereby the application preferred by defendants under section 34 of the Arbitration Act was dismissed as not pressed may at once be addressed. The above-referred provision of Arbitration Act confers right upon a defendant to seek stay of proceedings further requiring the parties to have their dispute adjudicated elsewhere (Arbitrator) provided such option is exercised before entering defence. The enforcement of last mentioned condition has, rigidly, been followed incessantly. The reasons are the above right is not absolute, it can be waived, the Court has discretion to decline the application etc. The reference of dispute to arbitration inherently implies ouster of jurisdiction vested in Court which is not inferred in the absence of clear and undisputed arbitration clause. The underlying idea is to preserve existence of jurisdiction of Court. Indeed, reference of dispute to arbitration in presence of clear agreement in this behalf is the rule and deviation therefrom, an exception. However, it is evident that the right to have the dispute referred to arbitration is a feeble right which is lost even when a defendant files written-statement or takes any step in defending the proceedings, implying thereby, waiver of arbitration clause. In the present case, the application under section 34 of the Arbitration Act was filed on behalf of the main defendants seeking stay of present proceedings on the ground that the various agreements between the parties had provided that any question or controversy between the parties arising under the agreements would be determined in accordance with laws of the countries where under the respective defendants reside or carry on business, Reference was also made to the foreign jurisdiction clause, contained in the agreements, whereby exclusive jurisdiction was agreed to vest respectively, in the Courts of United States, Switzerland and Japan. The said application, thus, was not based upon existence of arbitration clause but had sought stay of present proceedings by treating the foreign jurisdiction clause as one in the nature of arbitration, The above application came up for hearing on 26-6-1998 when the learned counsel representing the said defendants did not press, the same was dismissed accordingly. While making the statement, as above, pertinently, the said defendants did not reserve any right to urge the objection about the lack of jurisdiction in this Court at any subsequent, stage and had consciously given up the said plea. Although, it is axiomatic to say that jurisdiction cannot be conferred upon a Court when there is none nor can it be taken away from the Court by the parties. However, as already noticed, the stand taken by the main defendants is that the foreign jurisdiction clause contained in the agreements, in question, is in the nature of Arbitration Agreement. It is not the case of the defendants that this Court does not possess jurisdiction in the matter, altogether.
24. Therefore, the concept of conferment of jurisdiction, when there is none, by consent is not attracted to the present case. The stand taken by Mr. Muneer A. Malik that the issue about jurisdiction of this Court in the context of foreign jurisdiction clause or stay of present proceedings, stands concluded by the order dated 26-6-1998 is not without force, in the circumstances of the case.
25. The arguments of Mr. Pirzada that the order dated 26-6-1998 was interlocutory in nature and does not enjoy finality on account of non-application of the prohibition contained in Order XXIII, Rule 1, C.P.C. does not, in my view, apply to the present case. The present case does not involve an interlocutory order simpliciter. The order dated 26-6-1998 goes a step further and, ex facie, amounts to recording waiver of a plea raised by the main defendants. Indeed, the position would have been different, if an order, interlocutory in nature, was passed by the Court, itself. Once a plea is given up, the party is estopped, in law, from raising the same again. Any different approach may result in interminable stream of applications militating against the theory of finality. An order recording statement of counsel or a party giving up a plea, cannot be treated differently from an order passed, by consent and therefore cannot be reversed, In the present case, reading of the order dated 2-11-1998 makes it amply clear that the question of jurisdiction posed for trial by way of preliminary issue is to be considered only in the context of objection that the main defendants are residents abroad. The learned counsel for the contesting defendants has, however, confined his arguments merely to the effect of foreign jurisdiction clause, contained in the agreements between the panics which, as already observed, cannot be asserted in view of the order dated 26th June, 1998. As regards the question of jurisdiction, based on residence of the main defendants abroad, reference was invited to the case of Messrs Popular Pharmacy, Karachi v. Messrs Nova Bio Medical and others PLD 1996 Kar. 411 wherein objection raised in the similar terms was repelled by my learned brother Rana Bhagwan Das, J, in the following terms:-- "I have gone through the reported cases dealing with a corporation carrying on business and the scope of the words ' shall be deemed' and carries on business' within the meaning of clauses (a) and (b) of section 20, C.P.C. which per do not divest this Court of the jurisdiction already vested in it.
26. Needless to point out section 120, Civil Procedure Code is a Replete answer to the point raised by Mr. Sarwana. This section unequivocally postulates that sections 16, 17 and 20 shall not apply to High Court in the exercise of its original civil jurisdiction. The civil jurisdiction of the High Court is divided into four classes (I) ordinary, (ii) original, (iii) appellate and (iv) those special matters which are the subject of Special provisions, Ordinary jurisdiction embraces all such jurisdiction as is exercised in the ordinary course of law without any additional steps being necessary to assume it, as opposed to extraordinary jurisdiction which the Court fitly assume in its discretion upon special occasions and by special orders. C.P.C. is applicable in exercise of civil jurisdiction by the High Court except the exercise of civil original jurisdiction.
27. Restrictions contained in sections 16, 17 and 20 are not applicable to the High Court in the exercise of its original jurisdiction."
28. I do not find any reason or justification to deviate from the rule, expressed as above. Even otherwise, the relief claimed in the present proceedings is based on the termination of agreements which had to be executed exclusively in Pakistan, It is an admitted position between the parties that the contracts were acted upon locally and cause of action has, thus, evidently, arisen to the plaintiff within the jurisdiction of this Court. The effect of section 120, ' C.P.C. is to enhance the jurisdiction instead of its curtailment. The jurisdiction, in the present matter, therefore, cannot be questioned merely on the ground that sections 16, 17 and 20, C.P.C. are not applicable to the present proceedings. The accrual of cause of action, even partly, within the territorial jurisdiction of a Court creates jurisdiction to grant relief to the wronged parties. In any event, a perusal of the prayer clause, in the present case, shows that decree for damages has also been sought. I have already held in the case of Value Gold Limited and others v. United Bank Limited PLD 1999 Kar. 1 that the doctrine of forum convenience cannot be applied to the claim for damages. The choice of forum by the plaintiff, generally speaking. can be objected only on the ground of mat' fides, vexation and intent to defeat justice. No allegation to the above effect has been asserted in the present case. The rule contained in the case of Zapata Off-Shore Co (supra) cannot be applied in the face of waiver inferable from the order dated 26-6-1998 and being in variance with the principle, laid down by the Supreme Court of Pakistan in the case of M.A. Chaudhry (supra) which clearly provides for inference against ouster of jurisdiction clause. Such principle has not undergone any modification or change in the case of Hitachi Limited and another (supra).
29. The defendants have failed to prove lack of jurisdiction in this Court on the ground of their residence abroad. The preliminary issue settled on 2-11-1998 is, therefore, answered in the affirmative. Let the matter, now, be fixed for settlement of issues and further proceedings in accordance with law.