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Petitioner: Sajid Plastic Factory VS Respondent: MSC Bahamas & others
Court Name: Sindh High Court Judge(s): Muhammad Ali Mazhar, Agha Faisal Title: Sajid Plastic Factory vs MSC Bahamas & others Case No.: Admiralty Appeal No. 05 of 2014 Date of Judgment:2020-03-09 Reported As: PLD 2020 Sindh 568, PLJ 2021 Karachi 78, 2020 SHC 226 Result: N/A
Judgment Muhammad Ali Mazhar , J. This appeal has been brought to challen ge an order dated 11.6.2014, passed by the learned single judge (O.S) on CMA No.151 & 152 of 2012 in an Admiralty Suit No.12 of 2012. 2. Short-lived Facts The appellant is a sole proprietorship concern and engaged in the business of imports of various goods and variety of merchandize. The appel lant was consignee of goods through respondent No.9 whereas the respondent No. 1 to 4 are ships/vessels beneficially owned by the respondent No.5, the master shipping company . The respondent No.6 signed four bills of lading and the respondents No.7 & 8 are local agents. The respondents No. 7 & 8 received the payments and also referred to the respondent No.9 as shipper . The consignments i.e. scrap items weighing 509.24 Metric Tons against the consideration of US$400,908.55 through invoice 0810101 dated 08.10.2008 were shipped through respondent No.9. The appellant hired 24 containers of the respondent No.5 & 6 through respondent No.7. The respondent No.6 being the agent of the respondent No.5 signed four (4) bills of lading with company' s seal, containing the information about the Containers numbers and respective weight, Seal No and the booking reference etc. The respondent No.7 issued arrival advices on 11.11.2010, 01.12.2010 and 03.12.2010 informing therein that 24 containers of the appellant were transshipped from Salalah port to Port Bin Qasim. The appellant sought clearance of consignment filing GD on 14.11.2010 and in the course of shifting of the containers for examination of goods, the containers were weighed and it was found that the said containers were almost empty . The appellant agitated the matter before respondent No. 1 to 8 but of no avail. Feeling aggrieved, the appellant invoked the admiralty jurisdiction of this court under section 3(2)(g) & (h) and sued the respondents for recovery of damages of US $ 1455908.55 equivalent to Rs.131,031,331.00 which includes the Invoice Value of the Consignment/Cargo. The Respondents submitted to the jurisdiction and filed different applications, counter affidavits and fully participated in the proceedings. A ship arrest order was also passed on
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17.08.2012 and security in the sum of US$500,000/- has been submitted by the respondent No.1 to 8 with the Nazir of this court. The respondent No. 1 to 8 filed two application CMA 151/2012 seeking stay of suit and CMA 152/2012 seeking the return of the plaint. The learned Judge was pleased to stay the suit by allowing the application CMA No.151/2012 vide Impugned Order dated 11.06.2014 and CMA 152/2012 was disposed off having become infructuous. 3. The learned counsel for the appellant argued that while passing the impugned order , the learned judge has not taken into consideration the convenience of the parties but only considered the convenience of the respondent No.1 to 8, disregarding the facts that not only the parties, their counsels rather witnesses are also available in Karachi. The stay of suit amounts to denial of justice. The learned judge miscalculated the case of M.A. Chowdhary vs. MITSUI O.S.K Lines Limited (PLD 1970 SC 373) in which suit was never stayed. The learned judge also unheeded the law laid down by this court in M/S. Aslo Marines vs. M.T. Magda and another (PLD 1985 Karachi 745) and M/S. Mercantile Fire vs. M/s. Arcepey Shipping Company (PLD 1978 Karachi 273). It was further contended that the court has also disregarded the part of the material proceedings whereby M.V. MSC Clementina was ordered to be arrested vide order dated 17.08.2012 and was allowed to sail subject to furnishing security in the sum of 500,000 US$ with the Nazir of this court by means of Bank Guarantee bring forth by Standard Chartered Bank. He further argued that the learned single judge also disregarded the part of the material proceedings whereby vide order dated 24.08.2012, 24 containers lying at Karachi Port were inspected by an officer of this court. This order was passed by consent on CMA No.149/2012 filed by respondent No.1 to 8 and the said respondents also paid the inspection fee to the officer of this court. The Commissioner submitted his report on 05.09.2012. The court further ignored an order dated 27.03.2013 passed again with the consent of the parties for forensic examination of the 24 containers. This entire activity amounts to material participation of respondent No.1 to 8 in the suit. The learned single judge also unnoticed the direction in suit vide order dated 27.03.2013 that once the report of expert is submitted, the matter be put up in court for settlement of issues and if need be, the commissioner shall be appointed for recording evidence of the parties for early disposal of the case. The learned counsel for the appellant referred to following judicial precedents:- 1. 1987 SCMR 393 @ 395 (State Life Insurance Corporation of Pakistan vs. Rana Muhammad Saleem). Under section 28 of Contract Act every agreement by which any party thereto is restricted absolutely by the usual legal proceedings in the ordinary courts is void to that extent. 2. 2010 CLC 1267 @ 1270. (Messrs Unitrade Impex & others vs. Federation of Pakistan ) The first determining factor is that whether the civil court at Rawalpindi had no jurisdiction in spite of the fact that there was consent of both the parties. After going through the case law cited by the learned counsel of the petitioner and the respondent, it cannot be denied that the consent of the parties do not give jurisdiction to the Court, which had no jurisdiction. 3. PLD 1994 Lah. 525 @ 544 (Messrs.' Rupali Polyester Ltd vs. Dr. Nael G. Bunni). The principles which emerge that the jurisdiction vested in the Courts cannot be taken away even by express agreement of the parties and the arbitration agreement even where Rules of International Chamber of Commerce apply do not have the effect of depriving the Courts of their jurisdiction. 4. 1992 SCMR 1174 at 1178 (Messrs Kadir Motors (Regd) Rawalpindi vs. Messrs. National Motors Ltd, Karachi). The intention behind the said provision of law (Sec 28 of Contract Act) is that all those agreements which restrain a person to enforce his rights under a contract by usual legal proceedings in ordinary tribunals are void. It obviously implies that a party cannot be restrained to enforce his rights in ordinary Court of law but if by mutual agreement between the parties a particular Court having territorial or pecuniary jurisdiction is selected for the determination of their dispute, there appears to be nothing wrong or illegal in it or opposed to public policy . 5. Spiliada Maritime Corporation v Cansulex Ltd [1986]. The Spiliada was a ship owned by a Liberian company , flying the Liberian flag, and managed both in Greece and England. The vessel was to take sulphur from Vancouver to ports in India. The bills of lading said they were to be construed and governed by English law, When the case came to the House of Lords on a further appeal, Lord Goff outlined the
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principles behind when a stay or dismissal of proceedings could be granted. Where there is another available forum to hear the case, the burden of proof is on the claimant to show why the trial should take place in England. Factors such as convenience, expense, availability of witnesses and where the companies do business, could all be considered by the court. The Court summed up its decision underlying the principle that the Court should have regard to the interest of all the parties and to meet the ends of justice. The principles of appropriate forum are: i). To allow the plaintiff to keep the benefit of the security obtained by commencing the proceedings; ii). To allow proceedings to be commenced or continued where the claim is not barred by time; iii). To allow proceedings before a forum where practical justice should be done. The practical justice demands that the plaintiff is not to be deprived of having started the proceedings within limitation; iv). T o allow proceedings in the country or before the courts where there is access to the expert witnesses. 6. Eleftheria Case (1969) 1 Lloyd's Rep 237. The Eleftheria case/Brandon Rule. Despite an exclusive jurisdiction clause, the court can refus e a stay of proceedings, if exceptional circumstances amounting to strong cause are shown. The question in a comprehensive manner was first dealt with in the Eleftheria Case (1969) 1 Lloyd's Rep 237 where Brandon J held that the Plaintiff had the burden of proving a strong cause. While the court should, in coming to its decision, take into account all the circumstances of a case, the following were identified by Bran don J to be the matters pertinent to have regard to: (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Courts, and the defendants apply for a stay, the English Court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the Court should take into account all the circumstances of the particular case. (5) In particular , but without prejudice to (4), the following matters, where they arise, may properly be regarded: a. In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts. b. Whether the law of the foreign Court applies and, if so, whether it differs from English law in any material respects. c. With what country either party is connected, and how closely . d. Whether the defendants genuinely desire trial in the foreign country , or are only seeking procedural advantages. e. Whether the plaintiffs would be prejudiced by having to sue in the foreign Court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial 7. Gulf Oil Corp Vs. Gilbert, Doing business as Gilbert Storage & Transfer {330 US 501 (1947)}. The Supreme Court of United States of America while considering the questio n whether the United States District Court has inherent power to dismiss the suit pursuant to the doctrine of Forum Non Conveniens and, if so, whether that power was abused in this case. The Supreme Court prescribed the important consideration /factors of the convenient forum as under:- "If the consideration and weight of the factors requisite to given result are difficult to forecast or state, those to be considered are not difficult to name. An interest to be considered, and the one likely to be most pressed, is the private interest of the litigant. Important considerations are the relative ease of access to the source of proof, availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises if view would be appropriate to the action, and all other practical problems that make trial of a case easy , expeditious and inexpensive. There may also be questions as to the enforceability of a judgment if one is obtained. The court will weight relative advantages and obstacles to fair trial. It is often said that the plain tiff may not, by choice of an inconvenient forum, "vex", "harass", or "oppress" the defendant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy . But unless the balan ce is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed."
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8. Mac Shannon v. Rockware Glass ltd (1978) AC 795. Lord Diplock interpreted the majority speeches in the Atlantic Star as an invitation to drop the use of the words 'vexatious' and 'opp ressive' (an invitation which I gladly accept) and formulated his distillation of principle in words which are now very familiar . He resorted to: "In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the court that there is another forum to whose jurisdiction he is amenable in which justice can be done between the parties at substantially less inconvenience or expense, and (b) the stay must not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him if he invoked the jurisdiction of the English Court". 4. The learned counsel for the respondent No.1 to 8 not only supported the impugned order but further argued that the suit filed by the appellant is not maintainable as this court in its admiralty jurisdiction had no jurisdiction to entertain this matter . The learned counsel did not deny ownership of the carrier and the carriage of goods contract i.e. bill of lading executed but argued the respondents never committed any breach of the terms of the contract. The respondents successfully discharged their liability by discharging the cargo at the port of destination. The containers were delivered at the port of destination in the sealed condition and as such nothing happened in sea giving rise to any cause of action to the appellant. The appellant had purchased the cargo from the respondent No.9 hence the respondent No.1 to 8 has had no concern as it is clearly stated in the document itself that the carrier is not responsible for the particulars furnished by the shipper and neither the particular are checked by the carrier and in this regard Clause 14 of the bill of lading is very much clear . Two inspections were carried out by the orders of this court which revealed that the containers had been properly sealed and lying in the intact condition which proved that nothing happened in the sea. He further argued on the legal proceedings instituted by the respondents before the High Court of Justice, Queens Bench Division, Comme rcial Court, London, the stay is operating against the appellant therefore the present proceedings are not mainta inable and instead of defending the validly instituted proceedings in London, the appellant filed suit in this court and for this reason, an application was moved in the suit for staying the proceedings till the decision of already pending proceedings before the Queen' s Bench Division London with another application as an alternate to return the plaint for want of jurisdiction as per relevant clauses of the Bill of Lading does not have the jurisdiction to entertain this suit. 5. The learned Amicus Curiae submitted a brief note on the status of admiralt y jurisdiction of the High Court involving action in rem and foreign jurisdiction/international arbitration clauses that there is no fetter under the Admiralty Jurisdiction of the High Court ordinance, 1980 from exercising jurisdictio n in an action in rem against a vessel even if there is an express foreign jurisdiction clause between plaintif f and defendant(s). He referred to the following judicial precedents:- C.V. "Lamon Bay" and others v. Sadruddin and others, 2005 CLD 133 in which the learned division bench of this court held as under: This argument is based on the provisions of Code of Civil Procedure and completely ignores the nature and characteristics of an action in rem which is different from an ordinary civil suit. In exercise of Admiralty Jurisdiction which can be invoked by an action in rem, the Admiralty Court can exercise jurisdiction over all ships whether Pakistani or not, and whether registered or not and wherever the domicile of their owners may be. The Admiralty Court can exercise jurisdiction in respect of all claims, causes and questions specified in clauses (a) to (q) of subsection 2 of section 3 of the Ordinance wherever arising. If the claim is entertainable under the Admiralty Jurisdiction which can be invoked by an action in rem, then irrespective of the fact that the cause of action has arisen within the territorial jurisdiction of the Court or not and the parties are domiciled in a foreign country , an action in rem can be entertained. Port Qasim Authority & others vs. Official Assignee of Karachi & others, 2007 CLD 143 Karachi . The learned Judge described the concept of rem as follows: "When an action in rem is resorted to under the Admiralty Jurisdiction of this Court, it is in fact an action against property or ship and in case the plaintiff succeeds in its action, then the property or the ship is to be sold towards the satisfaction of the claim. The action in rem under the Admiralty Jurisdiction of this
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Court is legal proceedings against the corpus of the offending ship...........The object of such an action is to acquire jurisdiction over the ship as the owner of the vessel might be located overseas over which the Court may not have jurisdiction." (Pages 148-149) Booz-Allen & Hamilton Inc. vs. Sbi Home Finance Ltd., AIR 2011 SC 2507 = (2011) 5 SCC 532. The court observed regarding rem, personam and arbitration clauses (As per Mitsui case, foreign jurisdiction clauses are in the nature of arbitration clauses): "Consequently , where the cause/dispute is inarbitrable, the court where a suit is pending will refuse to refer the parties to arbitration, under section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes. The well recognized examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding up matters; Russell on Arbitration [22nd Edition] observed thus [page 28, para 2.007] "Not all matter are capable of being referred to arbitration. As a matter of English law certain matters are reserved for the court alone and if a tribunal purports to deal with them the resulting award will be unenforceable. These include matters where the type of remedy required is not one which an arbitral tribunal is empowered to give." The subsequent edition of Russell [23rd Edition, page 470, para 8.043] merely observes that English law does recognize that there are matters which cannot be decided by means of arbitration. Mustill and Boyd in their Law and Practice of Commercial Arbitration in England [2nd - 1989 Edition], have observed thus: "In practice therefore, the question has not been whether a particular dispute is capable of settlement by arbitration, but whether it ought to be referred to arbitration or whether it has given rise to an enforceable award. No doubt for this reason, English law has never arrived at a general theory for distinguishing those disputes which may be settled by arbitration from those which may not.... Second, the types of remedies which the arbitrator can award are limited by considerations of public policy and by the fact that he is appointed by the parties and not by the state. For example, he cannot impose a fine or a term of imprisonment, commit a person for contempt or issue a writ of subpoena; nor can he make an award which is binding on third parties or affects the public at large, such as a judgment in rem against a ship, an assessment of the rateable value of land, a divorce decree, a winding-up order ...." 6. It was further contended by the learned amicus curiae that right in rem is a right exercisable against the world at large as contrast from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property . Correspondingly , the judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and Judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself. Besides arrest of vessel, another related issue for the Court dealing with actions in rem (against the vessel) is after a security /bank guarantee for release of the vessel, how long should such guarantee be retained by the court in the event that the plaintif f does not proceed to the foreign tribunal. Almost in all of the reported case laws, once the issues in rem have been decided, the courts have then turned to the merit of the case that is the dispute between the parties. 7. Heard the arguments. According to the definition of "cause" postulated in the Admiralty Jurisdiction of the High Court Ordinance, 1980, the expression "cause" includes any cause, suits, action or other proceeding in the High Court in the exercise of its admiralty jurisdiction. The Sindh High Court and High Court of Balochistan within their respective territorial jurisdiction may exercise admiralty jurisdiction whereas the Lahore High Court and Peshawar
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High Court within their respective territorial jurisdiction may exercise said jurisdiction in cases in which any question or claim relating to aircraft is to be determined. The Admiralty jurisdiction of the High Court is stipulated under Section 3 of the Admiralty Jurisdiction of High Court Ordinance, 1980 in which the High Court has jurisdiction to hear and determine causes, questions or claims. For the ease of reference, Section 3 of the Admiralty Jurisdiction of High Court Ordinance, 1980 is reproduced as under:- 3. Admiralty Jurisdiction of the High Court.--- (1) The Sindh High Court and the High Court of Baluchistan shall have and exercise, within their respective territorial jurisdiction. Admiralty jurisd iction as is in this Ordinance provided and the Lahore High Court and the Peshawar High Court shall, within their respective territorial jurisd iction, have and exercise the said jurisdiction in cases in which any question or claim relating to aircraft is to be determined. (2) The Admiralty jurisdiction of the High Court shall be as follows, that is to say, jurisdiction to hear and determine any of the following causes, questions or claims--- (a) Any claim to the possession or ownership of a ship or to the ownership of any share therein or for recovery of documents of title and ownership of a ship, including registra tion certificate, log book and such certificates as may be necessary for the operation or navigation of the ship; (b) any question arising between the co-owners of a ship as to possession, employment or earnings of that ship; (c) any claim in respect of a mortgage of or charge on a ship or any share therein; (d) any claim for damage done by a ship; (e) any claim for damage received by a ship; (f) any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or of the wrongful act, neglect or default of the owners, charterers or persons in possession or control of a ship or of the master or crew thereof or of any other person for whose wrongful acts, neglects or defaults, the owners, charterers of persons in possession of control of a ship are responsible, being an act, neglect or default in the navigation or manageme nt of the ship, in the loading, carriage or discharge of goods on, in or from the ship or in the embarkation, carriage or disembarkation of persons on, in or from the ship; (g) any claim for loss of or damage to goods carried in a ship; (h) any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; (i) any action or claim in the nature of salvage of life from a ship or cargo or any property on board a ship or the ship itself or its apparel, whether services rendered on the high sea or within territorial waters or internal waters or in a port, including any claim arising by virtue of the appli cation by or under section 12 of the Civil Aviation Ordinance, 1960, (XXXII of 1960), of the law relating to salvage to aircraft and their apparel and cargo; (j) any claim in the nature of towage in respect of a ship or an aircraft, whether services were rendered on the high sea or within territorial waters or internal waters or in a port; (k) any…
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