IN THE HIGH COURT OF SINDH AT KARACHI
Present: Justice Ms. Rukhsana
Ahmad.
O R D E R
Date of hearing : 12.02.2010 .
Plaintiff : Through Mr. Mazhar Lari Advocate.
Defendant : Through Mr. A.H.Mirza
Advocate .
-.-.-.-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.14 of 2008
Abdul Samad..................................................................................Plaintiff.
Versus.
M.T. Transport and others……………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.15 of 2008
Mohammad Ali Zia..........................................................................Plaintiff.
Versus.
M.T. Transport and others……………………………………Defendants
-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.16 of 2008
Abdul Majeed..................................................................................Plaintiff.
Versus.
M.T. Transport and others……………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.17 of 2008
M/s Razzaque Basit Oil
Versus.
M.T. Transport and others……………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.18 of 2008
M/s Al Hashmi Brothers
Versus.
M.T. Transport and others……….……………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.19 of 2008
M/s Waheed Hafeez
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.20 of 2008
M/s Khadija Edible Oil Refinery (Pvt) Ltd................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.21 of 2008
M/s Azhar Corporation (Pvt) Ltd……......................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.22 of 2008
M/sUmer
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.23 of 2008
M/s Aslam Oil and
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.-
Adm. Suit No.24 of 2008
M/s Hafeez Ghee and Gen Oil (Pvt) Ltd....................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.25 of 2008
M/s A.U. Oleochemicals (Pvt) Ltd....................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.26 of 2008
M/s Farooq Oil
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.27 of 2008
M/s Associated Ind Limited……….....................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.28 of 2008
M/s Yaqoot Oil Processing and Extracting Mills (Pvt) Ltd………………………………………...................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.29 of 2008
M/s Habib Oil Mills (Pvt) Ltd....................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.
Adm. Suit No.30 of 2008
M/s Habib Oil Mills (Pvt) Ltd……......................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.31 of 2008
M/s M.H. Oil Mills (Pvt) Ltd……….....................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.
Adm. Suit No.32 of 2008
M/s M.H.Oil Mills (Pvt) Ltd..................................................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.-.-.
Adm. Suit No.33 of 2008
M/s Hoor Oil
Versus.
M.T. Transport and others…………………………………………Defendants
-.-.-.-.-.-.-.-.-.
Adm. Suit No.34 of 2008
M/s. Malik Ghee and Cooking Oil Mills Limited......................................Plaintiff.
Versus.
M.T. Transport and others…………………………………………Defendants
Dated……….March 2010
Ms. Rukhsana Ahmad, J.- By this single Order I intend to dispose off all three applications filed by the plaintiff and Defendants in the above suit. Initially when this case was heard on 12.02.2010, there were three listed applications alongwith issues before this Honourable Court, one being filed by the Plaintiff under Order 23 Rule 1 and Order 6 Rule 17 CPC read with section 151 CPC in which the plaintiff had prayed that the Court be pleased to enhance the suit amount in his case due to the value of the cargo RBD Palm oil being incorrectly calculated by him initially and that it was only after the completion of the discharge the surveyors appointed by the various parties who had inspected the lands tanks and found the consignment of the plaintiff to be short and therefore, the plaintiff had filed the present application.
The applications moved by the Defendants were under Section 4 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2007, wherein they sought stay of the proceedings of the present suit with a direction to the plaintiff to refer the matter to arbitration in accordance with the Arbitration Clause contained in the Bill of Lading/ Charterparty.
The third application was Under Section 151 CPC wherein Defendants sought recalling the order of arrest of the Vessel dated 15.10.2008 as well as discharge/ release of Bank Guarantee furnished in pursuant to the said order. The Court vide order dated 24.10.2008 had recalled the order of arrest of the Vessel upon furnishing of the bank guarantee.
The plaintiff at the onset of hearing on 12.02.2010 informed the Court that he was not pressing his application for hearing for the time-being as such the Court proceeded with the hearing of both the applications filed by the Defendants.
Before taking up the said application, I would briefly venture into the facts of the case.
The
suit has been filed by the Plaintiff Under Section 3 (2) (G) & (H) of the
ADMIRALTY JURISDICTION OF THE HIGH COURTS ORDINANCE OF 1980. It is the case of the Plaintiff that he
imported a consignment of RBD Palm Oil under Bill Of Lading from
Defendant
No 1 being the Vessel and Defendant No 2 being the Owners of the Vessel while
Defendant No 3 was the Manager/Operator of Defendant No 1 and Defendant No 4
was the Local Agent of Defendant Nos 2 &3 at
It
is contended by the Plaintiff that after the consignment was loaded the Vessel sailed from Dumai
a) Difference in price per M. Ton prevailing in the international market on the date of departure and then on the date of arrival.
b) Interest/mark up/ compensation @ 14 % per annum for 30 days on C&F value of the amount which remained stuck up due to delay in the delivery.
Plaintiff is said to have suffered loss due to the short landing of the consignment/ cargo and the Vessel’s delay in reaching its destination. Plaintiff states that as under the contract of affreightment and the provisions of law applicable to it, the Defendants No. 1 to 3 were under duty to take due and proper care of the consignment / cargo and deliver the same at the port of discharge within a reasonable time, thereby amounting to Breach of the condition of the said Bill of Lading which renders the Defendants liable in contract and alternatively in tort. The Plaintiff thereafter filed the suit and have prayed for Judgment and Decree against the Defendants for amount as calculated on losses alleged to have incurred by Plaintiff and also for arrest of Vessel which would be allowed to leave Port after discharging the entire consignment and on furnishing Bank Guarantee
The
Defendants being served with notice of the suit have filed joint Written
Statement and raised Preliminary Legal Objections to the suit that this court
lacked jurisdiction to entertain the suit as the terms of the Charterparty have
been incorporated in the relevant bills of lading which provides for settlement
of all disputes through arbitration in London England in accordance with the
English law. It was denied that the Defendant No. 2 and 3 carried on business
in
The Defendants have denied that there was any inordinate delay by the Defendant Vessel in arriving at Port Qasim Karachi and the claim lodged by the plaintiff is fictitious and malafide as the Charterparty contemplates multiple port discharges and pursuant to the Charterparty the Vessel arrived at several other ports discharging the cargo and there was no delay and there was no obligation in the bill of lading or Charterparty that the Vessel would arrive at a particular date, and in the instant case the Vessel as per Defendants reached Port Qasim Karachi Pakistan as per schedule. The Defendants stated that the Vessel at all material times maintained its class and was sea worthy and a problem which arose in it when it reached at Port Qasim was rectified immediately and it is denied that the Plaintiff has suffered any loss as claimed and his claim is totally misconceived and false and even if shortage of cargo is presumed then even by the terms of the Charterparty the Charter is responsible for the discharge of the cargo and the owners are not liable or responsible for the same. As such the Plaintiff is alleged to have no prima facie case against the Defendants as there was no cause of action against them and the suit be dismissed with costs.
On perusal of the case diary the application which had been moved by the plaintiff for arrest of the Defendant No.1 Vessel had been granted by the Court and the Vessel was detained by the relevant authorities at Port Qasim until the Defendants had not furnished security with the Nazir of the High Court and on the furnishing of the Bank guarantee the order of arrest of the Vessel was recalled and it was allowed to leave the Port.
An Application for stay of proceedings of the suit was filed by the Defendants No.1 and 2 with prayer for the matter to be referred to the arbitration in accordance with the Arbitration Clause contained in the Bill of Lading/ Charterparty as the proceedings in the suit are in respect of matters and/ or disputes arising out of or relating to contract of carriage of goods which contains an Arbitration Clause which obliges the parties thereto submit to arbitration for settlement in London England in conformity with the English Law. The Defendants stated that the Bill of Lading on the face of it clearly states the shipment is carried out under and pursuant to the terms of the Contract of Affreightment/ Charterparty dated 16th May 2008 between Granite Enterprises Limited as Omer VIRGOZ Oils and Forts Pte Limited, as such the Arbitration Clause of the Charterparty was invoked in the Bill Of Lading. The Defendant Advocate further argued that in addition the conditions of carriage contained in the Bill Of Lading clearly provided that all terms and conditions, liberties and exceptions of the Charterparty, dated as overleaf, including the law and arbitration clause were herewith incorporated. In view of the above submissions with context to the Arbitration Clause the instant suit filed by the Plaintiff is misconceived and not maintainable as the Plaintiff had voluntarily agreed to a forum provided in the Charterparty for adjudication of the dispute in relation to the carriage of goods in question and as such should be stopped from reneging the same, and the case is fit to stay the suit and refer the matter and disputes therein raised to Arbitration.
In
rebuttal the Plaintiff in his Counter Affidavit denied the allegations made
therein which are contrary to what has been stated by him in the Plaint. While
raising Preliminary Objections the Plaintiff has argued that there was no
pre-existing Arbitration Agreement between the parties and that the Defendants
had filed their Written Statement much before filing of the present Application
which displays an unequivocal intention to proceed with the suit and to give up
the right to have the matter disposed of by Arbitration and lastly the suit cannot be
partially stayed as against the Defendants No 1 & 2 and proceed against the
rest of the Defendants. Further the plaintiff has objected to the document/
Charterparty as it an unsigned proforma of a Tanker Voyage Charter Party and as
such it cannot be looked into. The document and the attached fixture note does
not bear the signature of the owner the Charterers or the Tanker Brokers and
the Plaintiff was never a signatory to the Charter Party Agreement and as such
the Arbitration Clause does not govern the claim of the Plaintiff. He has
contended that the Claim in the suit is for compensation as the Plaintiff had
sustained losses due to account of non-delivery and delay in delivery of their
consignment and the law in Pakistan is well-settled that the courts have
jurisdiction to entertain such suits and
that they do not recognize Arbitration and Jurisdiction Clauses to refer the
dispute to Courts/ Tribunals in foreign jurisdiction and such arbitration and
jurisdiction clauses are not valid against 3rd parties like
Stevedores, Tally Contractors, local shipping agent, Karachi Port Authorities and the final/ last
endorsees of the Bill of Lading who are not signatories to the relevant Charter
Parties though at times these are necessary parties to the suits and the Defendant
No. 4 who are the local agents of the ship owners in Pakistan have filed a Declaration
/ Bond Under Section 55 of the Custom Act by which they are personally liable
to satisfy all the claims in respect of the subject Vessel for losses suffered
by the importers in respect of the consignment comprised in the import manifest
of the Vessel. The Shipping agents are not party in the Bill Of Lading/Charter party
and thus cannot be proceeded with before
Foreign Arbitration Tribunal. Therefore the local agents are personally
liable under the Custom Act and are quite independent of the ship owners, as
such the Plaintiff could not be expected to proceed against the ship owners
before the foreign arbitrator and against the local agents under the Customs
Act in another Court in
It
has lastly been contended by the plaintiff that the present suit has been filed
under a special jurisdiction of this
The Defendants in their rejoinder have reaffirmed that there is a preexisting Arbitration Agreement between the parties as reflected in the Charterparty and the terms whereof have been incorporated in the Bills of Lading which provides for settlement of all disputes through arbitration in London in accordance with English Law. The provisions of the Ordinance, 2007 are quite clear and the contention raised by the plaintiff that because of the filing of the written statement by the defendants before moving the application U/S 4 does not give-up the right of the Defendants to have the matter disposed of by the arbitration. As to the third objection that the suit cannot be partially stayed against Defendants No.1 & 2 and proceed against the rest of the Defendants it has been submitted that the relief has been claimed by the plaintiff against all the Defendants jointly and severally and the basis of the claim is also the same and as such the plaintiff’s objection on this ground is untenable.
The Bill of Lading made a specific reference to the Charter party between Granite Enterprises Ltd. as Virgoz Oils and Forte P.T.E Ltd and though the Chartered Party makes a reference to dispute between the owners and the Charters or disputes under the Charter Party, since the terms of Charterparty have been specifically incorporated in the Bill of Lading the Arbitration Clause would cover disputes between the consignee/endorsee of the Bill of Lading and the owners and as to the objection relating to the absence of the signature on the Charterparty, it is replied that the attachment/annexure formed the Charterparty and no other document was to be prepared. Since the Bill of Lading makes express reference to the Chartered Party the Bill of Lading Holders/Endorsees are being deemed to have notice of the Chartered Party including the arbitration clause. The receivers have used the Bill of Lading to obtain delivery of the cargo and are as such bound by all the terms of the Bill of Lading and Charter Party. The advocate has argued in view of Article-II Rule 2 of the Schedule of the Ordinance 2007 which sets out the terms of the New York Convention of 1958 the absence of signature is not relevant. Article-II Rule 2 of the Schedule of the Ordinance 2007 is reproduced as under:-
The Term “agreement in writing” shall
include an arbitral clause in a contract
OR an arbitration agreement, signed by the parties OR contained in an
exchange of letters OR telegrams.”
The
Defendant’s advocate has denied that the Courts in
“4. Enforcement of arbitration agreements.—(1) A party to an arbitration agreement against whom legal proceedings have been brought in respect of a matter which is covered by the arbitration agreement may, upon notice to the other party to the proceedings, apply to the court in which the proceedings have been brought to stay the proceedings in so far as they concern that matter.
(2) On an application under sub-section (1), the court shall refer the parties to arbitration, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.
The objection of the plaintiff that such arbitration/jurisdiction clauses are not valid against third party Stevedores, Tally Contractors, Local Shipping Agents, Karachi Port Trust and the final last Endorsees of the Bill of Lading who are not signatories to the relevant Charterparty have been denied by the defendant as they are neither parties to the suit nor they are termed as necessary parties. The plaintiff have contended that defendant No.4 who are the local agents of the ship owners in Pakistan have filed a Declaration/Bond Under Section 55 of the Customs Act and is personally liable to satisfy all claims in respect of the subject Vessel for losses suffered by the Importers in respect of the consignments comprised in Port manifest of the Vessel and they are not party to the Bill of Lading/Charterparty and cannot be proceeded with or before Foreign Arbitration Tribunal. Defendant has rebutted this by stating that the basis of the plaintiff’s claim is against all the defendants, is the same including defendant No 4. In any case with respect to the provisions of the Ordinance which are quite clear and in the absence of the grounds mentioned in subsection (2) of Section 4 the suit is liable to be stayed.
As to the contention of the plaintiff that if the arbitration of Foreign Jurisdiction clause is enforced and the Application is allowed the plaintiff would be compelled to seek remedy in the foreign country and it would involve more expenses than the amount/claim in the suit. This contention raised by the Plaintiff is stated by the Defendant to be not relevant. In the end the Defendant has stated that the provision of Ordinance 2007 do not exclude its application to a suit under the Admiralty jurisdiction and it has been denied that the rights of the last endorsee of the Bill of Lading are not governed by the Chartered Party.
I have given due consideration to the arguments advanced by the learned counsel for the parties. The Defendant Advocate on the onset of his arguments has given much emphasis that his application is rightly falling within the definition of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance 2007 and has drawn this court’s attention to the definition of Bills of Lading found in “VOYAGE CHARTERS” third addition at 18.55 which is reproduced as under:-
18.55. Thus, when the bill of lading
specifically incorporates the charterparty arbitration clause it is no objection that the clause itself refers to
disputes between the ship owners and “charters”. or “dispute” under this
charter-party.
The learned Counsel has placed reliance on a Judgment given by the Queens Bench Division (Commercial Court) dated June 29th 1990 reported in the LLOYDS LAW REPORTS Pride Shipping Corporation Vs Chung Hua Pulp Corp where in J.Webster has held and allowed the incorporation of the Arbitration Clause and in another case decided by our High Court being Admiralty Suit 25 of 2005 M/s Farooq Oil Industry (Pvt) Ltd Vs M.T. Rashleigh decided by his Lordship Justice Khilji Arif Hussain, an application filed by the plaintiff for arrest of Vessel was dismissed as Plaintiff was unable to prove the quantum of damages / loss incurred, after reading the said order the Court has concluded the facts are not similar to the present case in hand.
Having perused the case law and the applications at hand, I have come to the conclusion that each case has to be adjudged on its own facts and causes arising there from. Though the Application of the Defendants does deem too fall within the parameters of referral to the Arbitration Clause but then again I feel it is the duty of this court to dispense judicially and quickly in interest of both the parties. Given the facts of the case and the claim lodged at hand I am inclined that it would be in the interest of both parties to proceed directly with the recording of evidence in the shortest time period, which would benefit both the parties and expedite the case towards an early decision and as such the Court is framing the following issues on which the parties will lead their evidence:-
1. Has the Plaintiff suffered any loss due to the delay in delivery of the cargo?
2. Was the Vessel/ Defendant No.1 arrival at Port Qasim unduly delayed?
3. Whether there was any short collection of the consignment/ cargo occurred to the plaintiff?
4. What should the Decree be?
For the reasons aforesaid I am of the view that while exercising the courts judicial discretion the applications filed by the Plaintiff and Defendants are dismissed with no order as to cost and the parties are directed to file their list of witnesses and documents within three weeks of passing of this order and are at liberty to proceed with recording of evidence before this Court or in the alternative by consent suggesting the name of the Commissioner for recording the same. This exercise should be completed within three months.
Judge