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Petitioner: REDTONE TELECOMMUNICATIONS PAKISTAN (PVT.) LTD and 3 others VS Respondent: FEDERATION OF PAKISTAN through Secretary and 11 others
Court Name: Sindh High Court Judge(s): Munib Akhtar Title:REDTONE TELECOMMUNICATIONS PAKISTAN (PVT.) LTD and 3 others vs
FEDERATION OF PAKISTAN through Secretary and 11 others Case No.: Suit No.118 of 2014 Date of Judgment:2014-05-23 Reported As: PLD 2014 Sindh 601 Result: Order accordingly Judgment ORDER ' MUNIB AKHTAR, J.---By C.M.A. 986/2014 the plaintiffs seek interim injunctive relief against the defendant No.3. The defendants Nos.4, 6 to 10 and 12 support the plaintiffs' case (and herein after referred to as the "supporting defendants"). The suit was filed on 27-1-2014 and on the same day, the application was presented for ad interim orders. The matter came up before me and I granted certain ad interim relief in terms as stated in the order of that date. The application was thereafter heard over the several dates noted above, when it was reserved. The ad interim order had been renewed from time to time, and when the matter was reserved on 30-4-2014, it was directed that the said order would continue till announcement. 2. The plaintiffs, the supporting defendants and the defendants Nos.3 and 11 are all long distance and international licensees, referred to as "LDI operators". They hold licenses under the Pakistan Telecommunication (Re-organization) Act, 1996 ("Act") to "establish, maintain and operate a public fixed switched network for the provision of nation-wide long distance and international telephony service". The defendant No.2 ("PTA") is the regulatory authority under the Act. Exercising its powers under the Act, the PTA issued a policy directive on or about 13-8-2012. It was directed towards the LDI operators and other licensees under the Act. As presently relevant, the directive noted that with the consent of all the stakeholders, it had been agreed to: "... Establish one gateway for termination of international traffic in the form of International Clearing House (ICH) Exchange thereby all incoming traffic would be monitored and accounted for within the framework as provided in Deregulation Policy, 2003. For the said purpose all LDI's operators have agreed to form a consortium to be headed/led by PTCL [the defendant No.12], and to
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establish the ICH Exchange to provide an integrated setup for monitoring of incoming traffic at a unified location." 3. The directive required the LDI operators to, inter alia, enter into an agreement to give effect to the ICH Exchange mechanism. This agreement, referred to as the ICH Agreement was entered into at Islamabad on 30-8-2012. The plaintiffs, the supporting defendants and the defendants Nos. 3 and 11 are all party to this agreement ("Agreement"). Briefly stated, the plaintiffs' case is that all the LDI operators are and remain bound by the Agreement and must comply with its terms including, especially and in particular, the operation of the ICH Exchange. The supporting defendants take the same view. The grievance is that the defendant No.3 is now attempting to resile from the Agreement and essentially to walk away from it. The plaintiffs claim that even if one of the LDI operators were to do so, the entire mechanism and scheme envisaged by the policy directive and given effect to by and in the Agreement would unravel. They therefore seek declaratory and injunctive relief against the defendant No. 3, seeking to prevent it from acting in breach of or violating the policy directive or the Agreement. While the suit remains pending, they also seek interim injunctive relief by means of the present application. 4. The defendant No. 3 strongly contests the case sought to be made by the plaintiffs. Its case is that the Agreement has ceased to be of binding effect but that in any case any of the parties thereto can, in effect, terminate the same insofar as it applies to said party by giving due notice. It is averred that that notice was given or must be deemed given, and the defendant No. 3 is therefore not bound by the Agreement. The effect, admittedly, would be that this party would exit the ICH Exchange mechanism. 5. As noted above, the application presently before me was argued at length over several dates. Without intending any disrespect to the very able and comprehensive submissions that were made by all the learned counsel on the merits of the dispute, I will not touch upon or even set out those submissions herein. I will confine myself to a preliminary objection that was taken by learned counsel for the defendant No.3. This was based on clause 12 of the Agreement, which provides as follows: "The construction, interpretation and enforcement of this Agreement shall be governed by the laws of Pakistan. The courts of Islamabad shall have jurisdiction over any action arising out of or connected with this Agreement." ' Learned counsel contended that this Court lacked jurisdiction to entertain the present suit, and therefore to consider and decide the present application for interim injunctive relief. It was submitted that the plaint had to be returned to be presented at the courts of Islamabad, which, it was pointed out, in the present case would mean the Islamabad High Court in the exercise of its original civil jurisdiction under section 4 of the Islamabad High Court Act, 2010. Since this objection goes to the very root of the present proceedings, I intend to take it up without considering the dispute on the merits. The objection in any case raises an important question of law that requires close examination. Before doing so, I may note that learned counsel for the parties made submissions both on the merits of the dispute and the preliminary objection in a certain sequence of appearance. To a certain extent the objection was anticipated by some of the learned counsel and submissions made on it before learned counsel for defendant No. 3 formally took it up. However, I will start with the submissions of learned counsel for defendant No. 3 and then set out those of learned counsel for the plaintiffs and the supporting defendants. 6. Learned counsel for defendant No. 3 read out clause 12 of the Agreement and referred to section 21, C.P.C. He referred in particular to two judgments of the Supreme Court, State Life Insurance Co. Of Pakistan v. Rana Muhammad Saleem 1987 SCM R 393 and Kadir Motors v. National Motors Ltd. And others 1992 SCM R 1174. Learned counsel submitted that in view of the jurisdiction clause, the jurisdiction of all courts other than the specified one stood excluded. That court alone had
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jurisdiction, which vested solely in it. Elaborating the point, learned counsel submitted that a jurisdiction clause of the nature of clause 12 did not merely regulate the exercise of jurisdiction; it divested the excluded court of jurisdiction altogether. (Of course, there could be more than one excluded court. However, for convenience, I will use the singular.) It therefore followed, according to learned counsel, that there could no question of any purported exercise of jurisdiction by, e.g., making any ad interim orders or hearing an application of an interlocutory nature. All that the excluded court could do was to return the plaint for presentation before the nominated court. Referring to a submission made earlier by other learned counsel (see below), it was submitted that the position was fundamentally different from that obtaining when a suit was filed contrary to an agreement to arbitrate. Even if an application under section 34 of the Arbitration Act, 1940 was granted, the /is nonetheless remained with the court so that it could, e.g., consider an application for interim relief. It had, in other words, a residual jurisdiction that could be exercised in appropriate circumstances. However, in the case of an objection of the sort under consideration, the excluded court stood wholly denuded of any jurisdiction: Since the matter had to be sent to the nominated court, no /is could possibly remain with the excluded court. It neither had nor retained any jurisdiction that it could exercise. 7. Referring to the position in India, learned counsel relied on a recent decision of the Indian Supreme Court, Swastik Gases P. Ltd. v. Indian Oil Corp. Ltd. [2013] INSC 637, (2013) 9 SCC 32 ("Swastik Gases"). The decision was of a three member Bench, and the appeal was unanimously dismissed. Two judgments were delivered, one by Lodha, J. (with whom Joseph, J. Agreed) and the other by Lokur, J. Learned counsel submitted that the jurisdiction clause before the Indian Supreme Court was in the same terms as the present clause 12. Reliance was placed in particular on para 31 of the Lodha, J's judgment. Since this case was also cited by the other side, and is of importance in explaining the position in India, it will be appropriate to set out para 31 to the extent presently relevant: "31. In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur ... The question is, whether parties by virtue of clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur ... For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like 'alone', `only', 'exclusive' or 'exclusive jurisdiction' have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties - by having clause 18 in the agreement - is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend section 28 of the Contract Act in any manner." ' Learned counsel submitted that Lokur, J. Also came to the same conclusion, and referred to paras 9 and 28 of his judgment. It was submitted that since the jurisdiction clause in the present case was in the same terms, the cited decision was on all fours. This Court had no jurisdiction to entertain or continue with the suit in any manner whatsoever. The jurisdiction lay only with the
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Islamabad High Court. Learned counsel referred to the plaintiffs' claim that since they sought relief not merely on the basis of the Agreement but also the policy directive issued by PTA, this Court had jurisdiction. Referring to Lahore Stock Exchange Ltd. v. Frederick, J. Whyte Group (Pakistan) Ltd. PLD 1990 SC 48, learned counsel submitted that the words used in clause 12 were of wide amplitude and had to be broadly construed and applied. It was submitted that the plaint ought to be returned for presentation before the Islamabad High Court and the ad interim order vacated and recalled as being an order without jurisdiction. 8. Learned counsel for defendant No.12, one of the supporting defendants, submitted that this Court had the jurisdiction to try the Suit, notwithstanding clause 12. It was submitted that the clause did not use any words such as "only", "exclusively" or the like as would indicate that the nominated court was the only forum where the action could be brought. Learned counsel submitted that jurisdiction clauses were sometimes inserted into contracts by way of abundant caution and were not intended to have the effect as contended by learned counsel for defendant No. 3. The present clause 12 was of such a nature, i.e., it merely made clear and explicit what was even otherwise the case, namely that the Islamabad courts had jurisdiction (because the Agreement was executed there). Had the parties so intended, they would have used suitable language in the clause confirming exclusivity but they had patently chosen not to do so. In the alternative, learned counsel submitted that the purpose of a jurisdiction clause such as the one at hand were merely to regulate jurisdiction. It could not oust jurisdiction, and this Court therefore could continue hearing the matter. Learned counsel emphasized that the Islamabad High Court would not be in any better position to try the suit and hear any applications made therein than this Court and there was no reason to allow the objection that had been taken. Learned counsel also submitted that Order VII, Rule 10, C.P.C. Had no application to the case at hand and that the plaint ought not to be returned in terms thereof. 9. In support of his submissions, learned counsel relied on M.A. Chowdhury v. Mitsui O.S.K. Lines Ltd. PLD 1970 SC 373. The contracts were for the carriage of goods by sea and the bills of lading had a jurisdiction clause that conferred exclusive jurisdiction on a foreign court. The question was whether the jurisdiction of Pakistani courts was thereby ousted? Learned counsel relied in particular on the observations at pg. 389, and then to the conclusion on pg. 394, where the Supreme -Court held that foreign jurisdiction clauses: "...Are really in the nature of arbitration clauses which come within the exceptions to section 28 of the Contract Act and, therefore, should be dealt with in the same manner as other arbitration clauses. In the case of an arbitration it has to be remembered that the jurisdiction of the Courts is not altogether ousted, for, the Courts merely stay their hands to allow the parties to resort to the form of adjudication to which they have previously agreed. By only staying the actions before them the Courts still retain to themselves the jurisdiction to resume the case if the arbitration, for any reason, fails or the parties find it impossible to comply with the form of adjudication to which they had agreed." ' Learned counsel contended on the foregoing basis that the jurisdiction of the excluded court (which, in the present case, would be this Court) was, likewise, not ousted and it retained the jurisdiction to hear and decide (among other matters) the present application. Learned counsel also referred to Indian decisions, being those of the Supreme Court, in some detail. Reference was made, in particular, to A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem AIR 1989 SC 1239. The jurisdiction clause before the Indian Supreme Court did not use any words of exclusivity. It was observed as follows (pp. 1246-7): "21. ... From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. ...As regards construction of the ouster clause when words like 'alone', 'only ', 'exclusive' and the like have been
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used there may be no difficulty. Even without such words in appropriate cases the maxim 'expressio unius est exclusio alterius'expression of one is the exclusion of another may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed. 22. ... The question then is whether it can be construed to have excluded the jurisdiction of the Court at Salem. In the clause 'any dispute arising out of this sale shall be subject to Kaira jurisdiction' ex facie we do not find exclusive words like 'exclusive', 'alone ', 'only' and the like. Can the maxim 'expressio unius est exclusio alterius' be applied under the facts and circumstances of the case? ... Under the facts and circumstances of the case we hold that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the Court at Salem which Court otherwise had jurisdiction under law through connecting factor of delivery of goods there at was expressly excluded." ' Reliance was also placed on R.S.D. V. Finance Co. Pvt. Ltd. v. Shree Vallabh Glass Works Ltd. AIR 1993 SC 2094, where it was observed as follows (pg. 2098): "The endorsement 'Subject to Anand jurisdiction' does not contain the ouster clause using the words like 'alone', 'only', 'exclusive' and the like. Thus the maxim 'expression unius est excusio alterius' cannot be applied under the facts and circumstances of the case and it cannot be held that merely because the deposit receipt contained the endorsement 'Subject to Anand jurisdiction' it excluded the jurisdiction of all other Courts who were otherwise competent to entertain the suit." ' Learned counsel also referred to the latest decision, Swastik Gases. Reference was made to the relevant paragraphs from both judgments. Learned counsel submitted that in the present case, clause 12 also did not use any words of exclusivity. While the Agreement was obviously connected to Islamabad, it also had "connecting factors" with Karachi, and the clause did not "clearly, unambiguously and explicitly" exclude those connecting factors. This Court therefore had the jurisdiction to hear the matter and, it was contended, in the facts and circumstances of the case, ought to do so. It was prayed that the preliminary objection be rejected. 10. Learned counsel for defendants Nos. 4 and 6 to 10 (who were all supporting defendants) also prayed that the objection be dismissed. Referring to the prayer clause in the plaint, learned counsel submitted that one of the reliefs sought (in relation to the MTR-I rate) was peculiar to the policy directive and relatable exclusively to it. ("MTR-I" is an acronym for "mobile termination rate- international".) The Agreement had nothing to do with it. Therefore the plaint dealt with matters other than and in addition to the Agreement and was not merely confined to the latter. These matters were integral and essential to the plaintiffs' case. The jurisdiction clause on the other hand was limited in scope only to the Agreement. It therefore had no application in the facts and circumstances of the case. Learned counsel submitted that a jurisdiction clause like the one at hand was merely permissive in nature and did not have the effect of ousting the jurisdiction of the other court(s). Reliance was placed on M.A. Chowdhury v. Mitsui O.S.K. Lines Ltd. PLD 1970 SC 373 to submit that the excluded court retained a jurisdiction akin to that exercised by a court staying proceedings before it under section 34 of the Arbitration Act. It was emphasized that words of exclusivity had not been used. Learned counsel also submitted that the principle of forum non conveniens, developed in relation to private international law, applied in the same manner in the present case, i.e., even when both forums were domestic courts. For this reason as well, the plaintiffs ought not to be referred to the courts at Islamabad. It was submitted that the clause had been inserted in the Agreement merely to ensure that should a suit be brought at Islamabad by
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any of the parties, the defendants to such an action would not be able to take the plea of forum non conveniens. But this, it was contended, was a different matter from ousting the jurisdiction of the other courts. Reliance was placed on a decision of the US Court of Appeals for the 2nd Circuit, Global Seafood Inc. v. Bantry Bay Mussels Ltd. 659 F.3d 221 (2011). 11. Learned counsel for the plaintiffs naturally took a stand in strong opposition to the preliminary objection. While adopting the submissions by other learned counsel, it was submitted that the conduct of the party raising the objection (i.e., the defendant No. 3) also had to be kept in mind. It appears that after the Agreement had been entered into, certain proceedings in relation thereto had been started by the Competition Commission of Pakistan on the ground that it violated competition law. Those proceedings had been challenged before this Court in Suit 271 of 2013, and the defendant No. 3 had been one of the defendants therein. No objection to the jurisdiction of this Court had then been taken. Learned counsel also emphasized that the prayer clause was not restricted to the Agreement, but related to matters beyond and in addition thereto. The jurisdiction clause did not therefore come in the way. It was further submitted that the instant suit had been filed because of the urgency and nature of the case and that this Court was therefore fully competent to hear and decide the interim application. 12. Exercising his right of reply, learned counsel for defendant No.3 submitted that the decision in M.A. Chowdhury v. Mitsui O.S.K. Lines Ltd. PLD 1970 SC 373 was not applicable since there a foreign court was involved whereas in the present case the matter related to the jurisdiction of domestic courts. Referring to the Indian cases, learned counsel submitted that the Islamabad courts had the closest "connecting factor" with the Agreement and was therefore the proper forum even on the basis of the principles enunciated by the Indian Supreme Court. Equally, even if the principle of forum non conveniens were applicable in the context of domestic litigation, the proper forum was again Islamabad. As regards the earlier suit filed against the Competition Commission, learned counsel submitted that that related to an entirely separate matter, which was of a fundamentally different nature. Learned counsel reiterated that the plaint had to be returned to be presented at Islamabad and since this Court was divested of jurisdiction altogether, the ad interim order had to be vacated and recalled. On the presentation of the plaint at the proper forum, the proceedings would be begun afresh and the matter dealt with by the nominated court in such manner as it deemed appropriate. 13. I have heard learned counsel as above, examined the record with their assistance and considered the case-law. The first point to be noted may seem obvious but its importance is perhaps somewhat overlooked: a jurisdiction clause such as clause 12 is part of a contract. It is a simply a contractual term, rooted in the contract itself. English law, in line with its treatment of arbitration clauses, appears to regard a jurisdiction clause as a separate agreement in its own right (see Dicey, Morris & Collins on The Conflict of Laws, 15th ed., 2012, para 12-112). I do not find it necessary to consider whether the law in this country ought to travel the same path. A jurisdiction clause is therefore subject to the same considerations, in accordance with contract law, as any other provision of the contract. It stands or falls with the main contract. In addition, jurisdiction clauses are also subject to all the rules of substantive law applicable to contracts. One such rule, important in the present context, is as follows: "no one can by consent either vest a Court with jurisdiction which it does not otherwise possess or take away its jurisdiction which it does possess" (M.A. Chowdhury v. Mitsui O.S.K. Lines Ltd. PLD 1970 SC 373, 389). In my view, this rule puts paid to the submission by learned counsel for defendant No. 3 that a jurisdiction clause divests the excluded court of all jurisdiction in respect of disputes under, relating to or arising out of the contract, and vests it absolutely and solely in the nominated court. This would conflict directly with the rule just stated and the jurisdiction clause therefore cannot possibly have any such effect. The position of a
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jurisdiction clause was explained thus in State Life Insurance Co. Of Pakistan v. Rana Muhammad Saleem 1987 SCM R 393: "The civil Courts exercise their jurisdiction under the Code of Civil Procedure. If they do not possess such jurisdiction under the Code it cannot be conferred on them through mutual agreement of the parties to a dispute. But in a situation where two or more Court have jurisdiction to try a suit under the Code of Civil Procedure, then an agreement between the parties that the dispute arising between them shall be tried only by…
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