1. ' This matter has come up for hearing of Preliminary Objections as to the maintainability of the suit.
2. The controversy during pendency of suit has already been decided in arbitration proceedings.
3. Award, rendered has been registered as a separate Suit No,272 of 2000 pending hearing of objection to the confirmation of award.
4. ' Brief facts as may be relevant for deciding the objections as to maintainability of instant suit preliminary are that the plaintiff, a proprietorship concern, exported 9,000 Metric Tons of bagged rice loaded on "m. v. Junior M", entered into a charter party agreement with the defendant No,
1. Port of discharge was agreed to be 1-2 Safe Berth, Antsiranana, Morni, Mahajanga or Anjoun. It appears that on account of the trouble at the port of Morni, the vessel could not berth. The plaintiff advised the agent of the defendant No,1 at the request of foreign buyer to discharge the cargo at the ports in Madagasca. Such request appears to have been declined being in violation of charter party agreement; however, the defendants agreed to discharge the goods as per request of the plaintiffs subject to further condition as stipulated in the terms of the revised financial obligations under an addenda. The case of the plaintiffs as set out in para. 7 of the plaint is that terms under addenda were agreed under duress, therefore, Addenda dated 29-1-1999 to the Charter Party is not binding and cannot be enforced. Consequently, instant suit has been filed seeking declaration together with claim of damages and injunctive relief against the enforcement of the Addendum. It is also stated in the plaint in para. 20 that on refusal of the plaintiff to accede to the demand of the defendants a notice dated 15-3-1999 for arbitration was served and arbitration was set into motion.
5. ' Plaintiff filed the instant suit on 31-7-1999 alongwith an application under Rule 76 of the Sindh Chief Court Rules (O.S.) read with Order 39, rules 1 and 2, C.P.C., inter alia, praying for temporary injunction restraining the defendants from taking any action. Or initiating any proceedings or coercive measures directly or indirectly for or recovering any amount in any manner whatsoever on the basis of or, in pursuance of the Addendum No,1 to the Charter Party Agreement dated 29-1-1999. It further appears that, after service, the defendants before stepping into proceeding, by filing written statement, moved an application under section 34 of the Arbitration Act on 23-8-1999. However, before either of the application could be heard and decided on merits the Award was delivered on 21-12-1999. The award filed in this Court was registered as Suit No,272 of 2000. Enforcement thereof is sought in terms of sections 4, 5 and 6 of the Arbitration (Protocol and Convention) Act, 1937.
6. Consequently, when both the applications under rule 76, S.C.C. Rules filed by the plaintiff and application under section 34 of the Arbitration Act filed by the defendant in Suit No,1051 of 1999 came up for hearing on 16-12-2002 it was though observed that for all intents and practical purposes the suit has become infructuous, listed applications for injunctive relief as well as for stay of the proceedings were dismissed having become infructuous.
7. ' Learned counsel for the plaintiffs, Mr. You suf Moulvi, contended that once the suit was pending, no stay in terms of section 34 of the Arbitration Act was granted, the matter should not have proceeded before the Arbitrator. The Award rendered during pendency of suit would not affect the merits of the suit which is to be decided on its own merits. According to him, the Award rendered during pendency of suit is nullity in the eye of law. In support of his contention, he has relied upon the case-laws reported as (1) Messrs Mitsue Bussan Kaisha, Ltd., Karachi v. Messrs Tataram Bhagwandas and another AIR 1924 Sind 146; (2) Firm Ghansham Dass and another v. Tek Chand AIR 1935 Lahore 916; (3) Doleman & Sons v. Ossett Corporation 3 King's Bench Division 257.
8. ' As against above, Mr. Khalid Rehman, learned counsel for the defendants contended that the arbitration agreement exits between the parties. The case is governed under the Arbitration (Protocol and Convention) Act, 1937 which is based on International Convention. Such being the position this Court cannot control the proceedings of arbitration conducted in the Court of foreign jurisdiction. Arbitration proceedings are governed in terms agreed by the parties as per law of seat of arbitration. He further contended that the plaintiffs, in fact, participated in the arbitration proceedings, therefore, is estopped from objecting to such arbitration proceedings in separate suit.
9. He urged that the objections to the award, if any, could be considered when the award is taken up for confirmation or otherwise. According to him, once foreign award is delivered it could only be challenged in terms of section 7 of the Arbitration ,(Protocol and Convention) Act, 1937. He further urged that the award rendered in United Kingdom has since attained finality. No appeal was preferred under the English Arbitration Act, 1996. In support of his contention, he has relied upon the case-laws reported as (1) East and West Steamship Co., Georgetown, Madras v. S.K. Ramalingam Chettiar AIR 1960 SC 1058; (2) G. M. Pfaff A.G. v. Sartaj Engineering Co. Ltd., Lahore and 3 others PLD 1970 Lah. 184; (3) A. Merdith Janes Co. Ltd. v.Crescent Board Ltd. 1999 CLC Lahore 437; (4) Arbitration between Dampskibsselskabet Nordon Aktieselskale v. Ahmed Shipping Lines Limited, Wallace Road, Karachi PLD 1983 Karachi 247; (5) Petrocon (Pvt.) Ltd. v. Hyderabad Development Authority, Hyderabad 1990 MLD Karachi 1675; (6) Messrs European Grain and Shipping Ltd. v. Messrs Polychem Company Ltd. PLD 1990 Kar. 254 and (7) an unreported judgment passed in Suit No,1681 of 1998 titled as Oriental Maritime v. Hassan Ali Company Cotton (Pvt.) Ltd.
10. ' After having heard the arguments advanced by learned counsel for the parties, we perused the material available on record and case-laws cited at bar.
11. ' In the case of Doleman & Sons (1912) 3 KB 257, action commenced upon a contract containing arbitration agreement. The defendant stepped into proceeding and at the same time invoked arbitration, without notice either to the plaintiff or any application for stay of the action in Court.
12. The award, rendered during the pendency of action was held to be invalid. In the instant case, plaintiffs themselves have admitted that before they could bring an action in Court, the defendant had already invoked the foreign arbitration clause, in fact, plaintiff also participated in the arbitration proceedings. The defendant's instant suit, before taking any step into the proceedings filed the application for stay of proceedings. Said case was followed in AIR 1935 Lahore 916. In the case of Messrs Mitsue Bussan Kaisha Ltd., Karachi AIR 1924 Sind 146 (supra) a contrary view was taken by a Division Bench. In said case, suit was filed before the arbitration commenced, award was made during pendency of the suit and the stay of suit was not obtained. It was held that the award will not be rendered invalid but remains suspended till stay application is disposed of.
13. Indeed, irrespective of arbitration agreement neither of the party td arbitration agreement is precluded to seek resolution of dispute by bringing action in Court but once a party opts for arbitration, the other party may not be easily released from the bargain entered before the commencement of a legal proceedings. More particularly, in case where a contract contains foreign arbitration clause. Generally any agreement in restraint of legal proceeding is void.
14. However, arbitration agreements are an exception to this general principle (See Exception No,1 to section 28 of the Contract Act). Therefore, where Charter Party Agreement provides for submission to arbitration in U.K. Such clause is saved and protected by Exception No,1 to section 28 of Contract Act. In terms of section 3 of the Arbitration (Protocol and Convention) Act, 1937, it is obligatory on the part of the Court to stay the suit, whereas, in terms of section 34 of Arbitration Act such is merely a discretionary power of the Court resting on condition laid down therein, [For reference one may see Messrs Manzoor Textile Mills Ltd. Through Director v. Nichimen Corporation and 2 others 2000 MLD Karachi 641].
15. ' As noted above in the narrative, the arbitration proceedings commenced much before the institution of the suit. Even the plaintiff entered and defended the claim before the arbitration in London. However, before the applications both by the plaintiff as well as by defendant, could be heard, the award was delivered. It may further be pointed out that in terms of the proviso to section 21 of the Specific Relief Act, 1877, a suit in respect of any subject-matter which was agreed to be referred to the arbitration, the existence of such contract bars the suit to the extent of matter covered by Arbitration Clause. For ready reference the said proviso is reproduced as follows:-- "Save as provided by the Arbitration Act, 1940, no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract other than an arbitration agreement to which the provisions of the said Act apply and has refused to perform it sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit."
16. ' Even otherwise, it is neither the intention nor within the contemplation of the law that parallel proceedings in respect of the same subject-matter may continue at the same time.
17. ' In the instant case, the plaintiff had also filed an application under rule 76 of the Sind Chief Court Rules read with Order 39, rules 1 and 2 and section 151, C.P.C. Seeking restraining orders against the defendant from initiating any proceedings or adopting coercive measures directly or indirectly for the recovery of the amount in any manner whatsoever on the basis of or in pursuance of the Addendum No,1 to the Charter Party Agreement dated 29-1-1999. Plaintiff did not pursue this application to obtain any injunctive order against the pending arbitration proceedings on the contrary participated in the arbitration proceedings. Plaintiff is estopped to challenge such arbitration. Even otherwise, once arbitration proceedings are commenced in a foreign country then such arbitration proceedings are regulated and controlled by the law at the F seat or venue of arbitration and this Court in exercise of its Original Civil Jurisdiction cannot have control or domain over such foreign arbitration proceedings. In the instant case, the seat of arbitration admittedly was at purpose were controlled and regulated by the law of London, such arbitration proceedings for all intent and country in whose territory arbitration took place i.e. (English) Arbitration Act, 1996.
18. ' Subsequent proceedings may be hit by the doctrine of res sub judice enshrined in section 10 of Civil Procedure Code. However, in any case if the proceedings for any reason are allowed to continue in parallel forum then, if one proceeding culminate deciding the controversy one way or the other then, it operates as res judciata. On such count also, the finding recorded in earlier proceedings which culminated into an Award during pendency of instant suit would be hit by doctrine of res judicata. When certain matters agitated before the Court are properly referred to the arbitration by any of the party to the suit who is also a party to Arbitration Agreement, in all fairness the arbitrator alone are seized of the matter. Such being the position, it will be improper for the Court to assume the jurisdiction to decide the point in controversy. Unless of course the condition laid down in section 34 of the Arbitration Act or section 3 of Arbitration (Protocol and Convention) Act are attracted to assume the jurisdiction by the Court.
19. ' In the instant case as noted above, the award was delivered by the Arbitral Tribunal at London, during the pendency of this suit at Karachi. The principle of res judicata as embodied in section 11 of Civil Procedure Code are not only applicable to the pending suit but are also attracted in cases of other proceedings including arbitration. Where a controversy covered by the arbitration clause was heard and decided, then same controversy between the same parties could not be adjudicated upon by the Court in a suit pending adjudication as it would be hit by res judicata. The decision/award rendered by an Arbitrator has been registered as a Suit being No,277 of 2000. From the record, it appears that the defendant has also filed objections to the award. Therefore, in my humble 0 opinion, the instant suit is covered by Explanation No,1 of section 11 of Civil Procedure Code, which reads as follows:-- "Explanation I. ---The expression 'former suit' shall denote a suit which has been decided prior to the suit in question whether or not it was instituted prior thereto."
20. ' Even otherwise the arbitration proceedings were set into motion prior to filing of suit as admitted in paragraphs .Nos.12 and 20 of the plaint, fact that the plaintiff participated and defended the arbitration proceedings, all issues raised in suit including the issue as to the validity of the arbitration clause were raised, considered and decided in the arbitration award. Accordingly, the suit being hit by res judicata otherwise is not maintainable. [For reference one may see Muhammad Anwar v. Messrs Associated Trading Co. Ltd. And others 1989 MLD Lahore 4750 and Abdul Karim v. Haji Ilyas and 4 others 1986 CLC 1660]. In respect of the last mentioned case-law, it may be observed that it was held that an award may be pleaded as res judicator and the suit may be dismissed. However, for the purpose of instant proceedings, no doubt remains that, the conclusive award has been delivered in respect of the subject-matter of the suit, such award which is earlier in time come in way of the plaintiff's suit, therefore, trial of the suit under the facts and circumstances would be exercised in futility. Before parting, this judgment, it may not be out of place to mention here that remedy against a foreign award is provided for under the Arbitration (Protocol and Convention) Act, 1937. Award could be challenged at the seat of arbitration in accordance with the law applicable thereto [see section 7(3), Arbitration (Protocol and Convention) Act, 1937]. As far as the remedy against the foreign award within the jurisdiction of this Court is concerned, such remedy is provided for under section 7 of the Arbitration (Protocol and Convention) Act, 1937. It seems that the plaintiff has already filed its objections, same shall be heard and decided on its own merits.
21. ' The upshot of foregoing discussion, instant suit is dismissed; however, with no order as to costs.