Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: M/s Tradhol International SA Sociedad Unipersonal VS Respondent: M/s Shakarganj JUDGMENT
Court Name: Lahore High Court Judge(s): Jawad Hassan Title:M/s Tradhol International SA Sociedad Unipersonal vs M/s Shakarganj
JUDGMENT
Reported As: 2023 LHC 2392 Result: Order Accordingly Judgment
JUDGMENT JAWAD HASSAN, J. This judgment will decide an application for recognition and enforcement of a foreign arbitral award in Pakistan under the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (the "Act") and its Schedule, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the "NY Convention") and a guide on UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the " NY Convention Guide"). This Court while enforcing the foreign arbitral award dated 04.04.2017 (the "Final Award") passed by the London Court of International Arbitration (the "LCIA") will discuss in detail the provisions regarding recognition and enforcement of a foreign arbitral award in Pakistan under the "Act" and its Schedule, the "NY Convention"[1] which will then supplement and support the jurisprudence developed by the superior court of Pakistan which are binding under Article 189 and 201 of the Constitution of Islamic Republic of Pakistan, 1973 (the "Constitution"). From its inception, the "NY Convention Guide" has been conceived to comprehend how the "NY Convention" is actually interpreted by national courts. The aim of the "NY Guide" is to canvass the richness of the national case law on the Convention in an objective manner. I. Context 2. This is an application (the "Application") filed under Sections 3, 5 and 6 of the "Act" on behalf of M/s Tradhol International SA Sociedad Unipersonal (the "Tradhol") for recognition and enforcement of the "Final Award" passed by the "LCIA". In this Application, M/s Shakarganj Limited (the
---
## Page 2
"Shakarganj") has filed objections under Section 7 of the "Act" read with Article V of the "NY Convention". II. The Parties before the Arbitration in LCIA and in this Court 3. (1) The "Tradhol" is involved in the business of ethanol trading and distribution having its registered Head Office at 28224 Puzuelo De Alarcon, Carretera De Humera 43, Madrid, Spain. The "Application" is being filed through Muhammad Ali Seena, who is the authorized attorney of the "Tradhol International" by means of power of attorney dated 21.06.2017. (2) The "Shakarganj" is a public limited company established under the company laws of Pakistan and carrying on its business at 10th Floor, BOP Tower, 10-B, Block E-III, Main Boulevard, Gulberg III, Lahore. It is engaged in manufacturing, marketing and export of ethanol amongst other products. III. Execution of Contractual Agreement between the Parties. (1) On 11.11.2015, a contractual agreement for delivery upto 30,000 metric tons of different ethanol was executed between the "Tradhol" and the "Shakarganj" on a discount of US$ 20 per metric ton starting from 10.01.2016 (the "Agreement"). It was agreed that the "Tradhol" was entitled to recover the amount of US$ 600,000 and US$ 12,500 as payment to make goodwill. (2) On 13.11.2015, an email was exchanged between the "Tradhol" and the "Shakarganj" regarding singing of the "Agreement". (3) The "Agreement" was governed by English Law and contained an arbitration clause whereby the parties agreed to refer all disputes under the "Agreement" to arbitration; which reads as follows: "Any dispute arising out of this contract, shall be settled provided that they are not settled in an amicable way by TRI AND SHJ by arbitration at the London Court of International Arbitration ("LCIA") in accordance with English law. Each party shall appoint an arbitrator and the two appointed arbitrators shall appoint a third arbitrator, who shall act as Chairman of the Tribunal, in accordance with the Rules of the LCIA". IV. Arbitration Proceedings (1) It is to be noted that failure on the part of the "Shakarganj" to fulfil express obligations prompted the "Tradhol" to approach the "LCIA" on 18.01.2016 with a request for appointment of Mr. Roger Rooks as an arbitrator which was accordingly done. (2) When the "Shakarganj" failed to appoint an arbitrator, the "LCIA" appointed Ms. Sarra Kay as arbitrator as a consequence whereof the Tribunal was completed on 08.03.2016 through appointment of Mr. David Martin Clark as its third member. (3) On 17.03.2016, the "Tradhol" submitted its claim before the Tribunal and defence statement of the "Shakarganj" was ordered to be sought till 14.04.2016, but the same was not delivered in time. (4) Therefore, on 10.05.2016, the Tribunal ordered the "Shakarganj" to file statement of defence by not later than 24.05.2016 and said date was subsequently extended to 20.06.2016 for compliance of Tribunal's order. (5) On 26.06.2016, the "Shakarganj" requested the Tribunal for extensions of time through email which reads as follows: I, Mian Ali Ashfaq LLM (London), am writing you in capacity of General Counsel of Shakarganj Mills Limited. It is with reference to your order dated 29 May 2016 which have received via courier on 13 June 2016. The tribunal as per the order has allowed till 20th June to deliver our defense and counter claims submissions. In view of the short time, since receipt of the order and keeping in view the large magnitude of documents involved, we request you to kindly allow till 10th July 2016 for delivery of our defense and counter claim submissions as well as for the effective compliance of your order.
---
## Page 3
(6) On 19.07.2016, the "Shakarganj" complied with Tribunal's order dated 14.07.2016 by paying GBP 10,000.00 to the "LCIA" but thereafter challenged its jurisdiction by filing a suit in the Civil Court Lahore on 25.07.2016 and did not take part in arbitration. (7) On 30.09.2016, the "Shakarganj" informed the Tribunal that there was no arbitration agreement and refused to recognize the jurisdiction of the Tribunal. (8) On 30.11.2016, the Tribunal issued 'Award on Jurisdiction' with following observations: 45. WE FIND, HOLD AND AWRD that we have jurisdiction to determine our own jurisdiction. 46. WE FIND, HOLD AND AWARD that we have jurisdiction to determine the substantive dispute between the parties. ACCORDINGLY, we hereby reserve jurisdiction to ourselves to determine the substantive dispute between the Parties and make such further award or awards as may be required in order to address the dispute between the Parties in this reference. 47. WE FURTHER AWARD AND DIRECT that Respondents shall bear and pay costs of this our Award on Jurisdiction, together with interest thereon at the rate of 4.5% (four point five percent) per annum, commencing from the date of this Award until payment in full. These costs (other than the parties' legal or other costs incurred by the parties themselves) have been determined by the LCIA Court, pursuant to Article 28.1 of the LCIA Rules, to be as follows: Tribunal's Fee 10,180.00 (ten thousand one hundred and eight British Pounds) 48. WE FURTHER AWARD AND DIRECT that Respondents shall bear their own costs of this reference and shall pay the Claimants their recoverable costs of this reference, together with interest thereon at the rate of 4.5% (four point five percent) per annum, commencing from the date of this Award until payment is full. 49. This Award is final as to the matters with which it deals. (9) On 16.01.2017, the 'Award on Jurisdiction' was clarified by the Tribunal to the extent of costs, which reads as follows: "Now we, the said Roger Rooks, Sarra Kay and David Martin-Clark, having carefully and conscientiously read and considered the request for clarification/correction submitted to us, having conferred with one another and being agreed, do hereby clarify our Award of 30 November, 2016, as follows: The wording in paragraph 48 of the Award is intended to award the Claimants their recoverable costs in relation to the Award of the Tribunal on Jurisdiction. It is not intended to award the Claimants their recoverable costs of the whole reference LCIA 163235". (10) Thereafter, on 04.04.2017, the Tribunal issued the "Final Award" on merits with the following observations: "Now we, the said Roger Rooks, Sarra Kay and David Martin-Clark, having carefully and conscientiously read and considered the submissions and documents submitted to us, having conferred with one another and being agreed, DO HEREBY - for the reasons set out above MAKE, ISSUE AND PUBLISH this our AWARD as follows: A) WE FIND, HOLD AND AWARD that Tradhol's claim succeeds in the amounts of (i) USD612,500.00 (six hundred and twelve thousand, five hundred United States dollars); (ii) GBP31,580.12 (thirty-one thousand, five hundred and eighty pounds sterling and twelve pence) and (iii) USDS,000.00 (five thousand United States dollars); B) WE AWARD AND DIRECT that Sharkarganj pay to Tradhol the sums set out in A) above, together with interest thereon at the rate of 4.5% (four point five per cent) per annum and pro rata, compounded at three-monthly rests, commencing as follows: 1) on the amount of USD600,000.00, on and from 12 January 2016; ii) on the amount of USD12,500.00, on and from 1 April 2016 and iii) on the amounts of GBP31,580.12 and USD5,000.00, on and from the date of this Award and in all cases continuing until payment in full; C) WE HEREBY ORDER AND DIRECT that:
---
## Page 4
(i) Sharkarganj shall discontinue the legal proceedings they have brought as against Tradhol in the Court of Senior Civil Judge, Lahore, bearing Suit No. /2016 between Sharkarganj as the Plaintiff and (among others) Tradhol, as a Defendant No 1; and (ii) Sharkarganj shall refrain and be prohibited from instituting or continuing any equivalent proceedings against Tradhol in Lahore or elsewhere. D) WE HEREBY GIVE OUR CONSENT, for Tradhol to take such steps as they see fit before the English High Court to secure the enforcement of the Tribunal's Award on Jurisdiction and/or this, our Second Final Arbitration Award including (without limitation) the Orders set forth in paragraph C) and/or the arbitration agreement set forth in the Agreement and/or all or any proceedings for contempt of the English High Court. E) WE FURTHER AWARD AND DIRECT that Sharkarganj shall bear and pay the costs of this our Award in the sum of 23,425.97 (twenty-three thousand, four hundred and twenty-five pounds sterling and ninety-seen pence) together with simple interest thereon at the rate of 4.5% (four point five percent) per annum, commencing from the date of this Award and continuing until payment in full. F) WE FURTHER AWARD AND DIRECT that Sharkarganj shall bear their own costs of this reference. G) This Award is final as to the matter with which it deals but we hereby reserve our jurisdiction to determine any further issue or grant any further relief which may be required. V. Matter before this Court 4. Now the "Applicant" through the "Application" has sought enforcement of the "Final Award" by passing a judgment and decree to the sum of the following: a) i) US$ 612,500 (United States Dollars Six Hundred and Twelve Thousand Five Hundred) ii) GBP 31,580.12 (Pounds Sterling Thirty One Thousand, Five Hundred and Eight and Twelve Pence). iii) US$ 5,000 (United States Dollar Five Thousand) b) Interest at the rate of 4.5% per annum and pro rata, compounded at three monthly rests, commencing as follows: i) On the amount of US$ 600,000, on and from 12 January, 2016 ii) On the amount of US$ 12,500, on and from 1 April, 2016 iii) On the amount of GBP 31,580.12 and US$ 5,000, on and from the date of Award and in all cases continuing until payment in full. c) Decree in the sum of GBP 23,425.97 being the cost of the award with simple interest thereon @4.5% per annum commencing from the date of the award until payment in full. d) Costs of this suit/application. VI. Tradhol's submission before this Court for the enforcement of "Final Award". 5. Barrister. Iftikhar ud Din Riaz, ASC, argues that the "Tradhol" has filed this "Application" by complying with requirements stipulated in Section 5 of the "Act" read with Article IV of the "NY Convention" and has sought recognition and enforcement of the "Final Award" from this Court under Section 6 of the "Act" as this section empowers this Court to recognise and enforce the award in the same manner as a judgment or order of a court in Pakistan. He further stated that the "Final Award" passed by the "LCIA" is final in all aspects as it has been passed on merits after having examined all the documents and record produced before it. Barrister Iftikhar ud Din Riaz, ASC while referring to Section 7 of the "Act" read with Article V of the "NY Convention" stated that none of the impediments against the enforceability of the "Final Award" are attracted in this case. VII. Shakarganj's Objections before this Court. 6. Ms. Deeba Tasneem Anwar, Advocate for the "Shakarganj", objected to the maintainability of the "Application" on the grounds that the "Agreement" has neither been executed by the competent person nor the "Shakarganj" has authorized any person to sign the same. He also stated that the "Shakarganj" challenged the "Agreement" before the Civil Court in Pakistan and interim relief, in this
---
## Page 5
respect, was also granted to it that too was communicated to the Tribunal and "Tradhol" but, in utter disregard, the Tribunal continued with arbitration proceedings during the continuance of relief granted and passed the "Final Award". It has further been objected that the "Shakarganj" was neither party to the "Agreement" nor the "Final Award". Thus the "Final Award" is not in accordance with the laws of Pakistan and therefore is unenforceable under Article V 1(a) as well as Article V 2(b) of the NY Convention read with Section 7 of the "Act". VIII. Moot Points for Determination 7. It is to be noted that the entire case of the Respondent revolves around two objections. Firstly, the "Shakarganj" has claimed that the "Final Award" is unenforceable as the "Shakarganj" has neither executed the "Agreement" nor it has authorized any person to sign the same. Thus the "Shakarganj" is availing the benefit of Article V 1(a) of the "NY Convention" while emphasizing that the "Agreement" was 'not valid' or 'invalid'. Secondly, the "Shakarganj" has claimed that the "Final Award" is unenforceable as the "Shakarganj" had already challenged the "Agreement" before the Civil Courts in Pakistan, which had granted an interim relief, and the Tribunal ought to have awaited the final determination of the issues before the Civil Court but continued with arbitration proceedings and passed the "Final Award". Thus, the "Shakarganj" is availing the benefits of Article V 2(b) of the "NY Convention" while emphasizing that the enforcement of the "Final Award" would be contrary to the "public policy" of Pakistan. 8. In view of the submissions of the "Tradhol" and the objections filed by the "Shakarganj", the following moot points are necessary for determination of this Court: 1. Whether this High Court has jurisdiction to enforce a foreign arbitral award? 2. Whether the "Applicant" has furnished documents in accordance with requirements of Section 5 of the Act? 3. Whether the "Final Award" is unenforceable under Article V 1(a) of the NY Convention read with Section 7 of the "Act" because the "Agreement" was invalid? 4. Whether the "Final Award" is unenforceable under Article V 2(b) of the NY Convention read with Section 7 of the "Act" because its enforcement would be contrary to public policy of Pakistan? 5. Whether the doctrine of pro-enforcement bias is applicable in the Courts in Pakistan? Moot Point No.1 (Jurisdiction of High Court for enforcement of award) 9. At the outset, when confronted to counsel for the "Shakarganj" about participation in proceedings before the "LCIA" coupled with compliance of Tribunal's order dated 14.07.2016 and filing of civil suit before Civil Court, Lahore and not before this Court, Ms. Deeba Tasneem Anwar, Advocate admitted that the "Shakarganj" filed civil suit before the Civil Court, Lahore after appearing before the "LCIA". Barrister Iftikhar ur Din Riaz, ASC argued that the civil court has no jurisdiction for the enforcement of the "Agreement" for the reason that the High Court has exclusive jurisdiction to deal with such matter during pre-arbitration, pro-arbitration and post arbitration. Before discussing this issue at length, it is to be noted that Section 3 of the Act deals with jurisdiction of the Court and is reproduced hereinbelow: 3. Jurisdiction of the Court.--- (1) Notwithstanding anything contained in any other law for the time being in force, the Court shall have exclusive jurisdiction to adjudicate and settle matters related to or arising out from this Act. (2) An application to stay legal proceedings pursuant to the provisions of Article II of the Convention may be filed in the Court, in which the legal proceedings are pending. (3) In the exercise of is jurisdiction, the Court shall--- (a) follow the procedure as nearly as may be provided for the Code of Civil Procedure, 1908 (Act V of 1908); and
---
## Page 6
(b) have all the powers vested in a civil court under the Code of Civil Procedure, 1908 (Act V of 1908). The "Act" has defined the "Court" in Section 2(d) as follows: (d) "Court" means a High Court and such other superior court in Pakistan as may be notified by the Federal Government in the official Gazette; and 10. Accordingly, it follows from the above sections that the "High Courts" have exclusive jurisdiction to adjudicate and settle the matters relating to or arising out from the "Act". The notified Courts in Pakistan, in order to protect the sanctity of foreign arbitral awards as defined under Section 2(d) of the "Act" are the High Court and such other superior Courts as may be notified by the Federal Government. If the parties have any issue with the foreign agreements or the awards, they can only refer the matter to the Court as defined under Section 2(d) of the "Act" and not any other Court which is not notified. To protect the confidence of investors, the Courts (the High Court under Section 2(d) of the "Act") can then, if need be, deal the matter of pre-arbitration, pro arbitration and post arbitration. If we examine the jurisdiction of this Court as defined under Section 3 of the "Act" which states that the Court shall exercise exclusive jurisdiction to adjudicate and settle matter relating to or arising out from this "Act", the Court has to enforce (i) foreign arbitral award and (ii) foreign agreements; although foreign agreements are not defined under the "Act" but the agreements are defined under Article II of the "NY Convention" therefore, any issue with regard to enforcement of foreign arbitral award or foreign agreement, as defined under the "Act" and the Article II, is arisen, then this can further be examined under Section 3(2) of the "Act" where again in proceeding regarding the stay application may be filed in the Court. The word "Court" is defined in capital which means the High Court and has been referred in various sections of the "Act" which again means the High Court but under Section 4, the word "court" is not in capital but it still means it is in capital and would be the High Court notified by the Federal Government. Section 3 of the "Act" gives exclusive jurisdiction to this Court in terms of Section 2(d) of the "Act" and the section ibid starts with 'notwithstanding anything contained in any other law for the time being in force' the Court shall exercise exclusive jurisdiction to adjudicate and settle matters related to or arising from the "Act". If Section 3 of the "Act" be read with Section 4 of the "Act" it makes it clear that jurisdiction is only confined to the High Court because Section 4(1) of the "Act" do mentions the word "court" and it is intertwined with Section 3 of the "Act" under the doctrine of intertwined as developed by this Court in the case of "TARIQ IQBAL MALIK Versus M/s MLTIPLIERZ GROUP PVT. LTD. and 04 others" (2022 CLD 468) by holding that "It may even be said that both Sections 256 and 257 of the Act are in pari materia and thus must be construed together. The ultimate outcome of the said provisions being intertwined with one another leads to the conclusion that in order to invoke Section 257 of the Act, it is mandated that any complainant must have some form of link or nexus to the affairs of a Company. Section 256 of the Act categorically clarifies that the link or nexus required to have the affairs of any company investigated is the holding of membership in such company in the manner as is categorically mentioned in Section 256 of the Act". 11. Further in the case of "Malik MEHBOOB Versus COMMISSIONER, RAWALPINDI and others" (PLD 2023 Lahore 97), the Court held that "that sections 5, 15 and 19 are closely tied with each other and are intertwined and the same cannot be separately applied in the case of the Petitioner. As learned counsel for the Petitioner stated that while passing the impugned order the Respondent has not considered the provision of section 15(2) of the Act, which according to doctrine of intertwined cannot be applied separately and without fulfilling the requirement of section 15(1) ibid. In the recent judgment of this Court passed at Rawalpindi Bench, reported as "Tariq Iqbal Malik v. Messrs Multiplierz Group Pvt. Ltd. and 4 others" (2022 CLD 468) has also developed the doctrine of intertwined.
---
## Page 7
12. Accordingly, the High Court has jurisdiction to entertain the instant matter. It is to be noted that the "Shakarganj" during the pendency of arbitration proceeding approached the Civil Court, Lahore by filing civil suit and the said suit was dismissed with the observation that it has no jurisdiction to entertain it. As discussed above, the word "C", the Court means the High Court only under the "Act" to entertain such petition for enforcement of arbitral awards not the Civil Court. Moot Point No.2 (Furnishing of documents) 13. When confronted to counsel for the "Shakarganj" whether it has filed any document as per Section 5 of the "Act", she stated that the "Shakarganj" has only filed reply but no document has been filed. Section 5 of the "Act" deals with furnishing of documents by the party applying for recognition and enforcement of the award and is reproduced as follows: 5. Furnishing of documents.--- (1) The party applying for recognition and enforcement of foreign arbitral award under this Act shall, at the time of application, furnish documents to the Court in accordance with Article IV of the Convention. Article IV of the "NY Convention" is also reproduced hereinbelow for clarity: Article IV 1. To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:- (a) The duly authenticated original award or a duly certified copy thereof; (b) The original agreement referred to in article II or a duly certified copy thereof. 2. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent. 14. Barrister Iftikhar ud Din Riaz, ASC for the "Tradhol" has filed the affidavit of "Henry Norris Adams", Notary whereby certified copies of documents have been referred and same has been done Apostille and also find mention in the "Final Award". The Court has to only examine the documents filed before in order to enforce such award under the doctrine of pro-enforcement bias. 15. As per the "Tradhol", it has complied with requirements of Section 5 of the "Act" read with Article IV of the " NY Convention" by producing certified copy of LCIA's Award on Jurisdiction of 30th November, 2016 (Pages 52 to 62 of the "Application"), certified of Memorandum of Clarification to the LCIA's Award on Jurisdiction dated 16th January, 2017 (Pages 63 to 66 of the "Application") and certified copy of LCIA's Second Final Arbitration Award dated 04th April, 2017 (Pages 67 to 91 of the "Application"). Certification of aforementioned documents is mentioned in Affidavit of the Tradhhol English Solicitor (Pages 11 to 16 of the "Application"). Since the "Final Award" has been rendered by the Tribunal on the basis of the "Agreement" and considering the defence with regard to its validity therefore, it would be a reasonable basis for the Court to proceed with the "Application" under the "Act" read with the "NY Convention". Moot Point No.3. (Invalidity of Agreement) 16. The foremost objection raised by the "Shakarganj" is regarding the execution of the "Agreement" coupled with…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.