Summary: Background: The plaintiff, a private company, filed a suit regarding disputes arising from an agreement with the defendant, another private company, dated May 7, 2005. The defendant requested a stay of the proceedings under Section 34 of the Arbitration Act, 1940, based on clause 19.2.1 of the agreement, which outlined a dispute resolution process. This clause designated the Chief Executive Officer (CEO) of a third party, Pakistan Telecommunication Company Limited (PTCL), to make final and binding decisions on disputes. -----Issues: 1- Whether clause 19.2.1 in the agreement constitutes an arbitration agreement under Section 34 of the Arbitration Act, 1940. ----2- Whether the proceedings in the suit should be stayed in favor of arbitration as per the agreement. -----Holding/Reasoning/Outcome: The court held that clause 19.2.1 constituted an arbitration agreement despite the absence of specific terms like "arbitration" or "arbitrator." The court reasoned that the language and intent of the clause indicated an agreement to settle disputes through a binding decision by the CEO of PTCL, thus meeting the criteria of an arbitration agreement under Section 34 of the Act. Since both parties consented to the clause’s arbitration intent, the court granted the application, staying the proceedings and allowing the disputes to be referred to the PTCL CEO as outlined in the agreement. -----Citations/Precedents: Ch. Muhammad Saleem v. Muhammad Akram and others (PLD 1971 SC 516) The Province of the Punjab v. Messrs Irfan & Co. (PLD 1956 (W.P.) Lahore 442) Governor-General in Council v. Simla Banking & Industrial Co. (A.I.R. (34) 1947 Lahore 215) Shaikh Muhammad Umer v. Zakaria Adamjee Charitable Corporation (1988 MLD 1131) Messrs Jugotekhstil Impex v. Messrs Shams Textile Mills Ltd. (1990 MLD 857)

Summary: ''The Court should not pass restraining order against recovery of the amounts in terms of section 41 (b) of the Arbitration Act, 1940 without examining the three ingredients for grant of injunction i.e. prima facie case, balance of convenience and irreparable loss.'' --- Background: Pakistan Railways entered into an agreement with M/s Four Brothers International (Pvt) Ltd for operating a train service between Lahore and Karachi on a public-private partnership basis. The agreement, which was subject to terms and conditions including payment and performance guarantees, encountered disputes regarding payments and the execution of the contract terms. The respondent approached the civil court under Section 20 of the Arbitration Act for the appointment of an independent arbitrator, which led to an interim order against Pakistan Railways preventing them from recovering the agreed amounts.Issue: The main issue was whether the interim injunction granted by the civil court, which restrained Pakistan Railways from recovering the agreed amounts from the respondent, was justified under the principles governing the grant of injunctions.Holding: The Supreme Court allowed the appeals, setting aside the decisions of the Lahore High Court and the civil court which had granted the interim injunction in favor of the respondent.Reasoning: The Supreme Court found that the contract's financial commitments were binding and could not be negated by the respondent on the assumption that certain terms were based on assumed capacities and revenues. The court emphasized that the agreement's terms, including the continuation of the train service, must be read in conjunction with the entire agreement and do not absolve the respondent from their financial obligations. The court also highlighted that the principles for granting an injunction were not properly considered by the lower courts, as there was a prima facie case of default by the respondent in fulfilling their payment obligations under the contract.Rule: In contracts, especially those involving public welfare and services, financial commitments agreed upon by the parties cannot be disregarded on the basis of assumptions or external reports not binding to the contract. Furthermore, the grant of an injunction must be based on a proper examination of the prima facie case, balance of convenience, and irreparable loss, which were not adequately addressed in this case.Order: The Supreme Court directed the parties to proceed with arbitration by appointing their respective arbitrators, as per the agreement, to resolve the dispute.

Summary: In this case, the petitioner challenged a judgment and decree passed by the Additional District Judge, Multan, which had dismissed his appeal against a previous judgment and decree issued by the Civil Judge, Multan, in favor of the respondent No.1. The respondent No.1 had filed a suit for declaration and permanent injunction, claiming ownership of a piece of property and asserting that the petitioner and other respondents had no right to it. It highlighted that the appointment of arbitrators and the subsequent award were found to be in violation of Section 21 of The Arbitration Act, 1940, as not all parties involved had agreed to arbitration. Additionally, the judgment points out that the award lacked sufficient reasoning as required by Section 26-A of the same Act. As a result, the judgment sets aside the judgments and decrees of both lower courts and returns the case to the Civil Judge, Multan, for further proceedings, emphasizing that any future arbitration should be conducted in strict compliance with the law.

Summary: Background:Muhammad Yaqoob, the petitioner, along with his brother Yousuf Ali, claimed ownership of a property originally owned by Mst. Bibi Jan, which was allegedly gifted to their father in recognition of his services. This dispute led to the filing of a suit in 1997. After a lengthy trial, the parties agreed to settle through arbitration, nominating Syed Agha Rahat Hussain as the arbitrator. The trial court referred the matter to Hussain, but he delegated the decision to two other Ulamas, Muhammad Younus Najfi and Sheikh Nayar Abbasi Mustaffwi, who issued an award which was then endorsed by Hussain and submitted to the trial court. Yaqoob objected to this award, arguing that the arbitrator committed misconduct by not deciding the dispute himself and that the process lacked proper hearing and evidence collection. His objections were dismissed by both the Civil Judge and the Additional District Judge, leading to this revision petition.---Issues:Whether the arbitrators heard the parties and invited evidence before issuing the award.Whether the nominated arbitrator was authorized to delegate the decision to other Ulamas.Whether the trial court's dismissal of the objection petition without framing issues and recording evidence was lawful.Whether the first appellate court erred in upholding the trial court's decision.---Holding/Reasoning/Outcome:The court accepted the revision petition, setting aside the judgments/orders of the trial court and the first appellate court. The court found that:The trial court failed to properly address the objections by not framing issues and recording evidence, thus committing an illegality.The arbitrator, Syed Agha Rahat Hussain, was bound to follow the court?s instructions and decide the dispute himself, rather than delegating it to other Ulamas, which constituted judicial misconduct.The court ordered that the objection petition filed by the petitioner is accepted, and the impugned award dated 12.12.2013 is set aside. Consequently, the civil suit is remanded back to the trial court for a decision on the merits.---Citations/Precedents:Arbitration agreement between the parties dated 23.08.2013.Objection petition filed by Muhammad Yaqoob against the award dated 12.12.2013.Civil Judge Nagar's order dated 25.03.2014.Additional District Judge Hunza/Nagar's order dated 16.12.2014.Judgment:Impugned judgments/orders dated 25.03.2014 and 16.12.2014 are set aside.Objection petition is accepted, and the award dated 12.12.2013 is set aside.Civil suit No. 08/1997 (old) and 138/1999 (new) is remanded back to the trial court for a decision on the merits.Parties are left to bear their own costs.

Summary: Background: The appellant, an oil and gas exploration company, appealed a decision by a Civil Judge allowing the respondents' application under Section 20 of the Arbitration Act of 1940 to proceed. The Civil Judge, while acknowledging an objection raised by the appellant regarding the timeliness of the application, decided to leave the issue of limitation to be determined by the Arbitrator. The appellant contended that the application was filed beyond the limitation period prescribed by Article 181 of the Limitation Act of 1908 and that the Civil Judge should have resolved this issue rather than referring it to the Arbitrator. -----Issues: 1- Should the court have decided on the question of limitation before referring the matter to arbitration? -----2- Does the court have the authority to delegate the determination of limitation to the Arbitrator in an application under Section 20 of the Arbitration Act, 1940? -----Holding/Reasoning/Outcome: The High Court ruled in favor of the appellant, holding that the Civil Judge was obligated to decide on the limitation issue before referring the matter to arbitration. The court reasoned as follows: Under the Arbitration Act, the court has an exclusive responsibility to determine whether an application under Section 20 is filed within the stipulated limitation period before granting such an application and referring it to arbitration. Referring the limitation question to the Arbitrator was improper, as the determination of “sufficient cause” and timeliness under Section 20(4) falls within the exclusive domain of the court. The court also emphasized that whether a claim is timely for arbitration is separate from whether the application itself is timely filed under Section 20. The former is within the Arbitrator’s jurisdiction, while the latter must be decided by the court. The appeal was allowed, and the case was remanded to the Civil Judge to decide whether the application was filed within the prescribed time limit under Article 181 of the Limitation Act, 1908. -----Citations/Precedents: M. Imam-ud-Din Janjua vs. The Thal Development Authority, PLD 1972 Supreme Court 123 Rehmatullah and anothers vs. Salehan and others, 2007 SCMR 729 Syed Abbas Taqi Mehndi vs. Syeda Sbahat and anothers, 2010 SCMR 1840 Pakistan Insulations (Pvt) Ltd. vs. Messrs Ranhill Engineers and constructors DDFC Group of Companies, 2009 C L D 1077 Messrs Abdul Rauf Muhammad Hanif (Pvt) Ltd through Chief Executive vs. WAPDA through Chairman, PLD 2007 Lahore 335 Messrs Acsys Limited vs. Associated Press of Pakistan Corporation, 2004 C L C 1262 Oil & Natural Gas Commission Ltd vs. M/s. Dilip Construction, AIR 2000 Cal 140

Summary: Judgment does not suffer any error or illegality, whereas, thelearned Single Judge has passed a well-reasoned order, whereby the Suit hasbeen stayed by exercising discretionary powers in accordance with law, hence,the same does not require any interference by this Court. Accordingly instantHigh Court Appeal is hereby dismissed along with pending application,however, with no order as to costs.

Summary: Background: The dispute originated from a long-standing agency agreement that the plaintiff entered into with the predecessor of the defendant in 1994. The agreement, which was renewed periodically, contained an arbitration clause (Article 12) mandating that any disputes be resolved under the International Chamber of Commerce (ICC) arbitration rules. In 2000, the agreement was terminated by the defendant following a corporate sale that affected the relevant division. Partial arbitration proceedings were subsequently initiated, culminating in an award that dismissed certain claims. The plaintiff later filed a suit against multiple defendants in 2011, asserting that the termination was invalid and seeking financial compensation. -----Issues: 1- Whether the suit should be stayed under Section 4 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, due to the arbitration clause in the agreement. -----2- Whether the arbitration agreement is "null and void, inoperative, or incapable of being performed" as per Section 4(2) of the Act. -----Holding/Reasoning/Outcome: The court held that the arbitration clause within the agreement was valid and enforceable and decided to stay the suit proceedings. The arbitration agreement, including the prior partial arbitration, was determined to be binding on the plaintiff, who had previously participated in arbitration without contesting the award. The court clarified that only the arbitration clause (and not the entire agreement) needed to remain operative to warrant staying the proceedings. As there was no valid basis to claim the clause was "null and void, inoperative, or incapable of being performed," the suit was stayed under the terms of the 2011 Act. -----Citations/Precedents: P.L.D. 2006 Karachi 664 2009 Y.L.R. 334 2013 C.L.D. 291 1997 S.C.M.R. 988 P.L.D. 2013 S.C. 641

Summary: Arbitration Act (X of 1940)-------S. 20---Agreement between department of Provincial Government and Private LimitedCompany---Appointment of arbitrator---Arbitration clause in the agreement---Scope---TrialCourt appointed arbitrator who filed award which was made rule of court---Trial Court wasbound to consider whether arbitration agreement should be filed in the court or not---Arbitratorcould be appointed by the court if parties were agreed for the same---Mode, manner andmechanism for selection of arbitrator had to be adhered from the agreement if arbitration clausedid not name an arbitrator---Trial Court, in the present case, without considering the disputebetween the parties, and arbitration clause of the agreement, had unilaterally appointed arbitratorthus had conducted the proceedings without adhering to the clause of contract/agreement---TrialCourt was required to have first determined its competency/jurisdiction over the dispute prior toappointment of arbitrator which had not been done---Award given by the such arbitrator wasvoid ab initio---Parties must stick to the agreement/contract entered into between them in case of arbitration with intervention of court---If arbitration clause had named an arbitrator and hadprovided for the manner in which the arbitrator was to be chosen and appointed, parties werebound to act accordingly---Primary duty of arbitrator under the deed of reference was todetermine whether he had jurisdiction with regard to dispute arising out of an agreement---TrialCourt was bound to consider whether arbitrator had exceeded his jurisdiction or he hadjurisdiction to adjudicate upon the matter--- Trial Court had decided the question of competencyof reference as well as appointment of arbitrator without reference to the agreement---Impugnedorder passed by the Trial Court was set aside and award was rejected---Case was remanded to theTrial Court with the direction to first decide as to whether under the clause of agreement it hadjurisdiction to appoint an arbitrator other than provided in the clause of said agreement and thendecide the matter within a specific period---Appeal was accepted accordingly.

Summary: In this case, a contract was established in 1989 between the appellant, and respondent No.2, Multan Development Authority. Disputes arose due to allegations of contract breaches and non-payment. Arbitration proceedings were initiated, leading to an award in favor of respondent No.2. The appellant then filed a suit for declaration, the appeal by respondent No.2 was accepted, resulting in a judgment and decree. The primary issue addressed in the lower appellate court's judgment was the competence of the suit filed by the appellant. The court held that the suit was incompetent under Section 32 of the Arbitration Act, 1940, as it challenged the existence or validity of an arbitration agreement or award. The lower appellate court's reliance on Section 32 was found to be in error by the Lahore High Court. The Lahore High Court concluded that the lower appellate court's decision was flawed as it misinterpreted Section 32 of the Arbitration Act, 1940. Furthermore, other substantial issues in the case were not addressed. Therefore, the judgment and decree of the lower appellate court were set aside, and the case was remanded to the Additional District Judge, Multan, for a fresh decision on all relevant issues in accordance with the law.

Summary: PLJ 2015 Karachi 118 Present Muhammad Ali Mazhar J YUSUF MUHAMMAD SIDDIQ 16 others - - Plaintiffs versus MUHAMMAD RAFIQUE - - Defendant Suit No 465 of 2012 and CMA No 361 of 2014 decided on 2712015 Arbitration Act 1940 (X of 1940) - - - - - - S 34 - - Suit for partition - - Dispute relating to partnership business - - Failed to invoke arbitration clause in partnership deed - - Resolution of dispute through arbitration - - Power to exercise its discretion to stay legal proceedings - - Valid arbitration agreement - - Validity - - Party who wishes to refer to dispute to arbitration has to apply without delay to Court for stay of proceedings in breach of agreement to arbitrate dispute arose between parties must fall within scope of arbitration - - Issue of partition of property would be considered separately and or in isolation without recourse to arbitration which amounts to exasperate and frustrate arbitration clause - - Partners are not allowed to pick and choose as to which dispute convenient or feasible to be decided by arbitrator and or Court but it is for Court to decide keeping in view dispute resolution clause - - Each case has different facts and grant or refusal of stay is dependent - - Court can make an objective assessment and come to conclusion whether stay legal proceedings can be granted or refused [Pp 122 125] A B Mr Amel Khan Kansi Advocate for Plaintiffs Mr Muhammad Najeeb Jamali Advocate for DefendantJudgement Result:Order accordingly