This is first appeal against an order of the Senior Civil Judge, Kasoor recorded on 11-7-2000 whereby application under section 34 of the Arbitration Act, 1940 made by the defendants/present respondents was granted and the suit for recovery of damages at Rs.216.115 million filed by the present appellant as plaintiff was stayed.
2. It appears that the present appellant placed an order for the purchase of a chip board making plant from the respondents Nos.1 and 2 which represented their Company based in China namely Messrs Hebei (CMEC) Machinery and Equipment Incorporated, China. The sale was apparently negotiated at different intervals and agreement for purchase also under went changes at different times. A printed sales confirmation letter, dated 20-12-1993 was executed between the parties for sale of the aforesaid machinery for a total sum of Rs.10,69,700 U.S.$. Except for the description of plaint and the aforesaid amount made the printed form is blank and at the bottom the representative of buyers and sellers put their signatures. The general terms and conditions have been given in reverse of the form which contains as many as 7 clauses. Clause No.4 reads as under:-- "All disputes arising from the execution of, or in connection with this contract, shall be settled amicably through friendly negotiation. In case no settlement can be reached through negotiation, the case shall then be submitted to the Foreign Trade Arbitration Commission of the China Council for the promotion of International Trade, Peking, for arbitration in accordance with its provisional rules of procedure. The arbitral award is final and binding upon both parties."
3. According to the appellant, the goods were finally shipped to Pakistan in July, 1994. The buyer/appellant noting a number of discrepancies and violation of terms of sales agreement approached the sellers through their local representative and finally on 12-6-1999 filed the aforesaid suit before the said Court. On being served, the defendants (present respondents) made an application under section 34 of the Arbitration Act. It was stated that the suit for damages being based on breach of contract for purchase of machinery could not proceed due to the aforesaid clause; that the plaintiff had failed to pay the second and third instalments as per schedule and that the matter having already been referred to the arbitration commission as per clause (4) of the sale confirmation letter, the suit for damages could not proceed any further.
4. In reply, the present appellant submitted a vague and sketchy reply whereupon after hearing the parties, the learned trial Court opted to stay proceedings. Earlier the learned trial Court rejected the contention of the plaintiff (present appellant) that the said clause (4) in letter, dated 20-12-1993 was not binding upon the plaintiff because it was not part of the main contract of sale.
5. Heard the learned counsel for the parties. Their stances remain the same which were earlier put forth before the trial Court.
6. The learned counsel for the appellant in support of the submission that the proceedings in the suit could not have been stayed, relies upon Re: Akbar Cotton Mills Ltd. v. Messrs Ves 0juanojo Objedinenije Tech/Amesh Export and another 1984 CLC 1605, Re: Messrs Hohnson and Philips (Pakistan) Ltd. Through Chief Executive v. Sahibzada Muhammad Ayaz and another 1997 CLC 1177; Re: Sheikh Azizullah v. Haji Qismat Khan and another PLD 1996 SC 831; Re: Messrs Rupali Polyester Ltd. v. Dr. Nael G. Bunni and others PLD 1994 Lah. 525; Re: Diamond Food Industries Ltd. v. Messrs Werner & Peleiderer Gmbh, Federal Republic of Germany 1992 MLD 926.
7. The learned counsel for the respondents, on the other hand, supports the impugned order for the reasons stated therein. Also seeks to support the order by relying upon Re: Messrs Uzim Export and Import Enterprises for Foreign Trade v. Messrs M. Iftikhar & Company Ltd. 1993 SCMR 866, Re: Hashmi Can Company v. Hysong Corporation of Karachi PLD 1999 Karachi 25 and Re: Hitachi Limited and another v. Rupali Polyester and others 1998 SCMR 1618.
8. Having heard the parties, I am of the view that the appellant has not been able to make out a case. It will be seen that an application under section 34 of the Arbitration Act must succeed if the conditions stated therein are properly answered. The first of them being existence of an agreement to arbitrate, second, any sufficient cause to the contrary as to why the matter should not be referred in accordance with the arbitration agreement and thirdly that the petitioner was ready and willing to do all things necessary for the proper conduct of the arbitration. All these conditions appear available in the case of the present respondent. The agreement to arbitrate as reproduced above was not denied as such. Mere reason that various other parts of the sale agreement negotiated at different times did not contain an arbitration clause hardly means anything. As observed earlier, in reply to the application under section 34, the present appellant made a vague and uncertain reply which could by no means be taken to have been a serious attempt to resist the application for stay of proceedings. It is also not the case of the appellant that some or part of the claim made in the suit for damages was not directly relatable to sale effected through the said sale confirmation letter, dated 20-12-1993.
9. In other words, it was not contested that the matters falling for determination in the suit for damages were different from those agreed to be referred. The fact that in the meanwhile the seller respondent had already approached the nominated body for arbitration proceedings was also not controverted. Before me it has rather been stated by the respondents that an award in their favour already stands announced and that they are in the process of seeking its execution. The cases relied upon by the learned counsel for the appellant do not support the submissions made at the bar against the impugned order. In the first case Re: Diamond Food Industries Ltd. (supra) the existence of an agreement to arbitrate or an arbitration clause was found to be a sine qua non for the success of an application under section 34. As observed earlier, the aforesaid clause is not denied to be a part of the sale confirmation letter. Therefore, the appellant cannot seek any help from this precedent. In the second case Re: Sh. Azizullah (supra) it was inter alia found that where dispute between the parties was not clearly stated in the alleged arbitration agreement or the same was vague and denied by the respondent, the arbitration proceedings even if taken would be vitiated. In another case : Re: Messrs Hohnson and Philips (supra) again a single Bench of this Court expressed the view that area of dispute must be definite and that an uncertain and vague agreement could not be made basis for reference of dispute to the arbitrator. It will again be seen that neither before the trial Court nor before this Court it has ever been the case of the appellant that the aforesaid arbitration clause was in any manner vague or uncertain. Even if that had been so, I doubt if it could be entertained by the trial Court or could be seriously considered by this Court inasmuch as the clause as reproduced above does not admit of any uncertainty as far the subject-matter, the scope and the area of arbitration is concerned. It is "all disputes arising from the execution of, or in connection with this contract...". The contract obviously being the one being confirmed by the letter, dated 20-12-1993. The submissions based upon the judgment of Karachi High Court in Re: Akbar Cotton Mills Ltd. (supra) also cannot be entertained at this stage because this has never been the case of the present appellant either in reply to the application under section 34 or thereafter. In that case, a single Bench of the Karachi High Court expressed the view that the plaintiff in a suit could resist an application under section 34 of the Arbitration Act if he could establish that commencement of arbitration proceedings in foreign country would result in an ex parte decision against him as all evidence in respect of dispute was available at the place where legal proceedings were filed and that it would be impracticable and impossible to produce evidence before foreign arbitral tribunal. The objection of the appellant at this stage, is therefore, quite late in the day. Particularly in view of the fact that arbitration proceedings before the foreign arbitrator already stand culminated in an award against the present appellant.
11. That being so, this appeal against the impugned order must fail. It shall accordingly be dismissed.