Case Summary & Legal Holding

This judicial decision was delivered by the Sindh High Court on 2013-11-29. The matter involves proceedings between Messrs RAZIQ INTERNATIONAL (PVT) LTD. through Vice President and PANALPINA MANAGEMENT LTD., officially reported as 1989 CLC 1259. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.

Full Judgment Text & Judicial Ruling

Court Name: Sindh High Court Judge(s): Muhammad Ali Mazhar Title:Messrs RAZIQ INTERNATIONAL (PVT) LTD. through Vice President vs

PANALPINA MANAGEMENT LTD. Case No.: Suit NO.303 of 2012 Date of Judgment:2013-11-29 Reported As: PLD 2014 Sindh 175 Result: Order accordingly Judgment ORDER ' MUHAMMAD ALI MAZHAR J.---The plaintiff has filed this suit for Declaration, Injunction and Damages and prayed as under:-- I. Declaration that the termination of the Service Agreement dated 1-11-2010 by the defendant on 15-2-2012 is patently illegal, violative of service agreement itself read with section 202 of the Contract Act, therefore, the same has no value in the eyes of law, and is void ab initio, having no legal consequences, hence this Hon'ble Court may be pleased to set aside the termination dated 15-2-2012. II Declare that the defendant, under the garb of placement of plaintiff's name in the US Entity List, cannot terminate the Service Agreement executed by them with the plaintiff, as the , plaintiff has not committed any breach of the agreement. III. Grant mandatory injunction, suspend the operation of the impugned termination letter dated 15-2-2012, consequently this Hon'ble Court may be pleased to issue directions to the defendant to act upon the Service Agreement dated 1-11-2010 till final disposal of the suit. IV. Grant permanent injunction, restrain the defendant, its agents, representatives, attorneys, assigns or any person, persons, company or organization, claiming on their behalf, not to interfere in the lawful business activities/operations with and through the plaintiff as well as not to appoint any other freight forwarding, logistics and other related domestic ancillary services agent except the plaintiff, till final disposal of the suit. V. Grant money decree in favour of the plaintiff and against the defendant, in the sum of US $10 million, presently equivalent to about Pak Rs.9.2 billion, on account of damages due to the reasons fully explained in Paras 15 to 25 of the body of the plaint.

---

## Page 2

VI. Any other better relief(s) which this honourable Court may deem fit and proper under the circumstances of the case may be passed. VII. Cost of the suit. 2. The brief facts of the case as narrated in the plaint are that the plaintiff is engaged in the business of freight forwarding, logistic import and export. The defendant approached the plaintiff in the year, 1999 for doing business in Pakistan and Afghanistan territories and in this regard - agreement of service was entered into between the plaintiff and defendant. It was further contended that the defendant unilaterally and illegally terminated the service agreement on 15-2- 1012 by invoking Clause 20.2 of the agreement which could not be terminated as the plaintiff's valuable interest was created. It was further contended that the defendant on 15-2-2012 sent a shocking e-mail to the plaintiff in which it was mentioned that due to listing of the plaintiff's name on the list of Bureau of Industry and Security, US Department of Commerce, the defendant without hearing the plaintiff's point of view terminated the agreement. In paragraph-25 of the plaint, the statement of claim has been described while in Paragraph-29, the plaintiff has described the cause of action and stated that this court has territorial jurisdiction to proceed the case as office of the plaintiff is situated at Karachi, termination letter of Service Agreement was received at Karachi and business activities with the defendant under the aforesaid service agreement were largely initiated and being carried out from Karachi. 3. The learned counsel for the defendant has filed an application under Order VII, Rules 10 and 11, Civil Procedure Code for return/rejection of the plaint. In the supporting affidavit it is stated that the defendant is a Swiss company with its headquarters in Basil, Switzerland and it has no business office in Pakistan hence this court lacks adjudicatory jurisdiction. It was further stated that'' service of process yia DHL (courier service) is not an adequate service of process under the Swiss Laws. An affidavit of Dr. Maurice Courvoisier, a Swiss Law Expert, is also attached in which he has described the Swiss Laws as to how the process of service should have been effected. In the application, the learned counsel for the defendant heavily relied upon Clause 22 of the Service Agreement which is reproduced as under:--- "22. Dispute resolution and applicable law: 22.2 Any dispute that the parties are unable to resolve) within 30 (thirty) days after written notice of either party shall submitted to the exclusive jurisdiction of the competent courts, off, the City of Basel, Switzerland. 22.3 This Agreement shall in all respects be governed by, interpreted in accordance with the laws of Switzerlad and of its choice of law and conflict of law principles. 22.4 Either party acknowledges and agrees that a breach of he provisions of Sections 17 and 18 of this Agreement would cause the non-breaching party to suffer irreparable damage that could not be adequately remedied by an action at law fore, in addition to monetary damages (including reasonable attorney fees) and other legal remedies, the parties agree that of the parties shall be entitled to obtain equitable and injunctive relief as may be necessary to restrain any threatened, continuing or further breach by the other party, without showing or proving any actual damages sustained by the non-breaching party, in any competent jurisdiction at the sole discretion of the non-breaching party, notwithstanding Sections 22.2 and 22.3. 4. The learned counsel for the defendant robustly, focused on the exclusive forum selection clause and choice of law. He. argued, that the suit has been wrongly instituted in this court. It was further a that whole matter is to be examined from the perspective and outlook of private international laws as the defendant has its domicile and it has no business activity of any kind in Pakistan. Both parties consciously and out of their freewill chosen and agreed upon the exclusive jurisdiction of the competent court of Basel, Switzerland hence Service Agreement in question shall in all respect be governed by and interpreted in accordance with the laws of Switzerland. Learned counsel further argued that it is a settled law that wholly misconceived and deficient plaint is bound to be

---

## Page 3

returned to the plaintiff as per the stipulations as the exclusive foreign jurisdiction clauses commercial contracts are to be enforced essentially in order to preserve the sanctity of such international commercial contract are to be enforced essentailly in order to preserve the sanctity of such international commercial contracts.It is also a settled law that provisions of Order VII, Rule 10, C.P.C in and adjudication by a court without jurisdiction is coram-non-judice and when any court lacks pecuniary or territorial jurisdcition, the proper course is to return the plaint for presenting to the proper court. So far as the cause of action is concerned, the learned counsel argued that plain reading of plaint shows that suit is wholly misconceived and nothing but an attempt to waste precious time of- further argued that without prejudice to forum selection clause, the plaint other as under section 21 of Specific Relief Act, the present service agreement is not enforceable. It is a well settled law that in a service contract involving unique and distinct provision of service running minutes can never be specifically enforced. Plain reading of the plaint shows that the plaintiff has claimed money decree in the sum of US $ 10 million and if the suit is decreed, alleged non-performance of agreement shall stand compensated in terms of money hence no case of any injunctive relief is made out. Not only plaint is liable to be returned but injunction application is also liable to be dismissed with cost. In support of his arguments, he referred to following case-law:-- (1) 2007 CLD 1324 (Light Industries (Pvt.) Ltd. v. Messrs ZSIK" Strickmaschinen Gmbh). Exclusive Jurisdiction clause in an agreement. Such clause in a contract is part of consideration of the agreement between the parties on the basis of which parties enter into a contract and such consideration should not be ignored lightly merely at the whims of one of the parties to the contract. (2) 2009 CLD 1340 (Light Industries (Pvt.) Ltd. v. Messrs ZSK Strickrnaschinen Gmbh). Suit of plaintiff was stayed on the ground that there existed an exclusive foreign jurisdiction clause in the agreement. Covenants in the agreement and the contract had addressed the controversy as the same were not contrary to the public policy nor contravened the provisions laid down in Section 28 'Contract Act, 1872 nor the same violated procedural law. In view of relevant clause of the agreement, contractual relations being subject to foreign law and both the parties having agreed to fulfil all obligations of the contract in foreign court having exclusive jurisdiction, there was no ambiguity in the mind of contracting party. (3) 1987 SCMR 393 (State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem). Two or more courts having jurisdiction to try a suit. Agreement between parties, that any dispute arising between them shall be tried only by one of such courts, held, could not be considered contrary to public policy as it would neither contravene provisions laid down in Section 28, Contract Act, 1872, nor violate in any manner provisions of Section 9 or Section 20 of C.P.C. (4) 2002 CLD 1528 [CGM (Compagnie General Maritime) v. Hussain Akbar]. Choice was between Tribunal in Paris or Pakistan. Dispute would be governed by law of France on the basis of jurisdiction clause. French Tribunal would be less inconvenient and better place to decide the dispute under French law. Sanctity of contract had to be maintained and enforced. (5) 2012 SCC 9 (Momentous.Ca Corp. v. Canadian American Association of Professional. Baseball Ltd.). Unless there is "strong cause" to displace the forum that the parties have agreed should resolve their dispute, order and fairness are better achieved when parties are held to their bargains. Here, the motion judge did not err in the exercise of her discretion to dismiss the action under Rule 21.01(3)(a) of the Ontario Rules of Civil Procedure, based upon the foreign forum selection clause. (6) j2003] 1 SCR 450, 2003 SCC 27 (Z.I. Pompey Industries v. ECU-Line N.V). On an application for a stay to uphold a forum selection clause in a bill of lading, a court must not delve into whether one party has deviated from or fundamentally breached an otherwise validly formed contract. Such

---

## Page 4

inquiries would render forum selection clauses illusory since most disputes will involve allegations which, if proved, will make the agreement terminable or voidable by the aggrieved party. Issues respecting an alleged fundamental breach of contract or deviation therefrom should generally be determined under the law and by the court chosen by the parties in the bill of lading. (7) 407 U.S. 1 (92 S.Ct. 1907, 32 L.Ed.2d 513 (M/s. Brenmenand Unterweser Reederei, GmBH, v. Zapata Off-Shore Company). This approach is substantially that followed in other common law countries including England. It is the view advanced by noted scholars and that adopted by the Restatement of the Conflict of Laws. It accords with ancient concepts of freedom of contract and reflects an appreciation of the expanding horizons of American contractors who seek businessmen in all parts of the world. The choice of that forum was made in an arm's length negotiation by experienced and sophisticated businessm en, and absent some compelling and countervailing reason it should be honoured by the parties and enforced by the courts. The argument that such clauses are improper because they tend to 'oust` a court of jurisdiction is hardly more than a vestigial legal fiction. The threshold question is whether that court should have exercised its jurisdiction to do more than give effect to the legitimate expectations of the parties, manifested in their freely negotiated agreement, by specifically enforcing the forum clause. (8) [1990] 3 Supreme Court Cases 481 (British India Steam Navigation Co. Ltd. v. Shanmughavilas Cashew Industries and others). The parties to a contract in. International trade or commerce may agree in advance on the forum which is to have jurisdiction to determine disputes which may arise between them. The express choice of law made by parties obviates need for interpretation. The chosen court may be a court in the country of one or both the parties, or it may be a neutral forum. The jurisdiction clause may provide for a submission to the courts of a particular country, or to a court identified by a formula in a printed standard form, such as a bill of lading referring disputes to the courts of the carrier's principal place of business. (9) High Court of New Delhi. I.As. Nos.820/2012 and 3347/2012 in CS(OS) No.115/2012. (Pantaloon Retail (India) Ltd. v. Amer Sports Malaysia SDN BHD & ANR). Where jurisdiction of a court is invoked on the basis of jurisdiction clause in a contract, the recitals therein in regard to exclusive or non- exclusive jurisdiction of the court of choice of the parties are not determinative but are relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties the court has to decide the same on a. True interpretation of the contract on the facts and in the circumstances of each case. In the present case, Malaysian court has sufficient nexus and proximity to the dispute in hand as the defendant carries on business in Malaysia, the agreement was partly executed in Malaysia and the said Malaysian court cannot be said to be the one which is forum against the public policy or arbitrary in nature. Furthermore, as the presumption of law goes, it cannot be said that the parties were oblivious to their relative convenience or inconvenience at the time of entering into the contract and therefore, the mere financial inconvenience or expense is no ground for the parties to dispense with from their contractual obligations. Accordingly, the parties must hold their bargain and there are no strong reasons for exercising any further residual discretion in favour of the plaintiff. (10) AIR 2003 SC 1177 (Modi Entertainment Network v. W.S.G. Cricket Pte. Ltd.). It is a well settled principle that by agreement the parties cannot confer jurisdiction where none exists on a Court to which C.P.C. Applies, but this principle does not apply when the parties agree to submit to the exclusive or non-exclusive jurisdiction of a Foreign court. Thus, it is clear that the parties to a contract may agree to have their disputes resoled by a Foreign Court termed as a 'neutral Court' or 'Court of choice' creating exclusive or non-exclusive jurisdiction in it On the other hand, the learned counsel for the plaintiff argued that the plaintiff acquired the legal and vested right hence, the service agreement was unlawfully terminated under the garb of placing of plaintiff's name on the list maintained by the. Bureau of Industry and Security U.S. Department of Commerce. It was

---

## Page 5

contended that the defendant unilaterally and unlawfully terminated the service agreement. On 15-2-2012 the defendant sent an e-mail to the plaintiff in which it was averred that due to listing of plaintiff on the US Entity List, they terminated the service agreement. The plaintiff replied the e-mail but no positive response was received. Due to unlawful termination of plaintiff's service agreement the plaintiff is suffering loss of reputation as they were doing the business of billions of dollars with US, NATO, ISAF and U.K. Forces and other European countries dealing in domestic logistic. Learned counsel argued that Ms. Tahira Hassan was not duly appointed attorney of the defendant who has only notarized power of attorney in her favour. He also referred to an affidavit of Mr. Maurice Courvoisier, who is a practicing attorney, having expertise on international litigation and arbitration and all areas of civil and commercial law. Learned counsel argued that the opinion extended by the said counsel has no legal sanctity regarding the service of the process on the defendant. Learned counsel further argued that once the notice was received by the defendant and they made their arrangement and also engaged local counsel, this amounts to surrendering to the jurisdiction of this court hence no plea can be taken by the defendant that they were not properly served. Learned counsel pointed out his statement dated 7-12-2012 attached with few e-mails to show that the defendant refused to release the commission of the plaintiff on account of present litigation, while on the other hand the defendant's counsel argued that this court has no jurisdiction to entertain the suit in view of forum selection clause mentioned in the service agreement itself. Learned counsel further invited my attention to another statement dated 5-12-2012 with which he attached certificate of SECP dated 3-2-2009 issued by company Registration Office Lahore. The certificate was issued in the matter of Panalpina World Transport Ltd. Learned counsel argued that this very acknowledgement of filing return shows that the defendant is registered in Pakistan. Another email attached with this statement shows that the Maintiff's name was deleted from the U.S. Entity list by the U.S. Department of Commerce. 6. Learned counsel further pointed out appendix "A" of service agreement in which the defendant has been defined as PAM' being representative 'of its affiliated Companies, -which-has been defined as each "Panalpina Affiliate" and collectively the "Panalpina Affiliates". Learned counsel also pointed out the earlier agreement between the same parties executed on 15-1-1999 in which also it was provided that for the purppses of arbitration the disputes shall be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce Paris (ICC Publication No.350) by one or more arbitrators. Swiss law shall be applicable and the place of arbitration would be the city of Basle/Switzerland. He further referred to the termination letter dated 15-2-2012 and argued that since this termination letter was received at Karachi hence this court has jurisdiction. He further referred to Form 43 of the Companies Ordinance, 1984, which is a Return to show the address of the principal place of business in Pakistan of a foreign company or of any change therein. In this Form also the name of company is Panalpina World Transport Ltd. Having its business at Chappal Plaza, Hasrat Mohani Road, Karachi. He has also pointed out the company profile and organizational set-up of the Panalpina World Transport (Holding) Ltd. The document says that Panalpina World Transport (Holding) Ltd. (PWT) is the ultimate holding company of the Panalpina Group, which is the only listed company within the scope of consolidation. The learned counsel argued that there are various associated undertakings of the defendant's company and all are defined collectively as Panalpina Group and one of the affiliated companies Panalpina World Transport Ltd. Is existing in Pakistan, which is manifestly reflecting from the SECP documents, therefore, as one and the part of same group the defendant can be sued within the territorial limits and jurisdiction of this court notwithstanding the specific forum selection clause. 7. Learned counsel also referred to definition of associated companies provided under Section 2(2) of the Companies Ordinance, 1984, which defines that associated undertakings means any two or more companies or undertakings, or a company and an undertaking, interconnected with each

---

## Page 6

other. In the same sequence, he further referred to Section 3 of the Companies Ordinance, 1984, which envisions the meaning of subsidiary and holding company and makes emphasis that for the purposes of Ordinance a company or body corporate shall be deemed to be a subsidiary of another that other company or body corporate directly or indirectly controls, beneficially owns or holds more than fifty per cent of its voting securities or otherwise has power to elect and appoint more than fifty per cent of its directors. Though the learned counsel challenged the termination of service agreement and also relied upon the same terms and conditions of the agreement but for the purposes of challenging the termination notice he vigorously argued that despite forum selection clause this court has jurisdiction to entertain and decide the present suit, keeping in view the well presence of the defendant through its affiliated companies and their offices in Pakistan including Karachi. In support of his arguments he relied upon the following case-law:-- (1) 1999 YLR 2162 (Sunshine Corporation (Pvt.) Ltd.. And others v. Messrs E.D. Du Pont De Nemours & Co. And others). Provisions of Sections 16, 17, and 20 of C.P.C. Applicability. Some of the defendants were not residents in Pakistan, nor did they carry any business in Pakistan. Where Contracts between parties were acted upon locally, cause of action had arisen within the jurisdiction of High Court. Provision of Section 120, C.P.C. Was to enhance the jurisdiction instead of curtailment. (2) PLD 2010 Karachi 274 (Digital World Pakistan (Pvt.) Ltd. v. Samsung Gulf Electronics FZE and another). Provisions contained in Sections 16, 17 and 20, C.P.C. Would not apply to High Court in exercise of its original civil jurisdiction principles. The court in whose jurisdiction the cause of action has arisen has jurisdiction to entertain suit, irrespective of the 'residence of defendants. Where two courts may have jurisdiction in respect of the same claim, then it is the prerogative of the plaintiff that weighs more in determining the place of suing. (3) 2002 SCMR 1694 (Societe Generale De Surveillance S.A. v. Pakistan through Secretary, Ministry of Finance). Sections 20 and 34. Constitution of Pakistan (1973) Article 185(3). Leave to appeal was granted by the Supreme Court to consider, inter alia, the points as to whether the arbitration agreement between the parties was binding upon them notwithstanding the coming into force of the Bilateral Investment Treaty. (4) 2007 YLR 21 (Aziz Bibi and others v. Aijaz Ali and others) Sections 16, 17, 20, 120 and Order VII, Rule 10. For the purpose of determining the application under Order VII, Rule 10, C.P.C., contents of the plaint were to be taken on their face value. When the contents of the plaint spelt out that part of cause of action for filing the suit accrued at place "IC" and some of defendants at the time of filing of the suit were residents of place "K" for the purpose of deciding jurisdiction, the facts pleaded in the plaint were sufficient. (5) 2009 CLC 637 (Muhammad Aslam Mnotiwala v. Messrs Quice. Food Industries). Question of territorial jurisdiction would be decided on basis of case set up by plaintiff and not on basis of defence set up by defendant. Court at place "K", held, was competent to entertain and decide such suit. (6) 2010 CLC 1810 (A.R. Khan and Sons v. Federation of Pakistan and others). Article 199, C.P.C. And Section 20, C.P.C. Territorial jurisdiction of High Court. Person or authority by whose act petitioner aggrieved, if was within territorial limits of High Court or otherwise amenable to its jurisdiction, then such petition would be maintainable. When more than one High Court had jurisdiction in a matter, then aggrieved party could choose any court for initiating proceedings. (7) PLD 1961 (W.P.) Karachi 14 Messrs Husain Bros. v. Punjab Vegetable and General Mills Co.). The suit on a breach of contract can be filed at any place where the contract should have been performed in whole or in part. Such a suit can be filed at the place where the communication of the cancellation of the contract reaches the plaintiff. (8) 1989 CLC 1259. (Messrs Saif Nadeem Kawasaki Motors v. Faisalabad Development Authority). Appellant entered into a contract with respondent at F. Respondent revoked contract. Appellant

---

## Page 7

filed suit at L for damages. Plaint returned for presentation before Court at F. Plea that rescission of contract was part of contract and that revocation of contract was communicated at L. Held that Court at L had also territorial jurisdiction to try suit. (9) 2012 CLC 507 (Riaz Ahmed v. Habib Bank Limited). Original civil jurisdiction of High Court. Scope. Customer of bank filed suit against bank at place "K" before High Court where head office of the bank was situated. Plea raised by defendant-bank was that the concerned branch was located at place "P" in another province, therefore, the suit should be returned for filing the same before appropriate…

Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.

Related Legal Research & Directories

• Browse all judgments from Sindh High Court
• Browse Pakistani court decisions from the year 2013
• Search Pakistani statutes: Constitution of Pakistan 1973, PPC, CrPC, CPC & Family Laws
• Analyze this case with Al Wakeelo AI Legal Assistant