Summary: (a) Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011----Ss. 6 & 7—Recognition and enforcement of a foreign arbitral award—Jurisdiction of Pakistani courts—Scope—Foreign arbitral award dated 30.06.2019 was rendered by an arbitrator appointed under the ICC Rules in an arbitration seated in Paris, France—National Highway Authority (NHA) challenged the award in the Paris Court of Appeal, which dismissed the appeal on 14.09.2021—Subsequently, NHA sought to set aside the award before the District Court, Islamabad, under Ss. 30 & 33 of the Arbitration Act, 1940—Held, Pakistan courts lacked jurisdiction to set aside the foreign award as the curial law governing the arbitration was French law, not Pakistani law—Article V(1)(e) of the New York Convention limits setting aside authority to the courts of the seat of arbitration—The High Court is only empowered to recognize and enforce or refuse enforcement under the 2011 Act—Award was duly recognized and ordered to be enforced against NHA. (b) Arbitration Act, 1940----Ss. 30 & 33—Application for setting aside a foreign arbitral award—Maintainability—Scope—NHA sought to set aside the foreign arbitral award under Ss. 30 & 33 of the Arbitration Act, 1940, before the District Court, Islamabad—Held, provisions of the 1940 Act were inapplicable to foreign awards, as the 2011 Act provides an exclusive framework for recognition and enforcement of foreign awards—Reliance placed on Orient Power Company (Pvt.) Ltd. v. Sui Northern Gas Pipelines Ltd. (PLD 2019 Lahore 607) and Taisei Corporation v. A.M. Corporation Co. (Pvt.) Ltd. (2018 MLD 2058)—District Court correctly dismissed NHA’s application for lack of jurisdiction. (c) New York Convention, 1958----Art. V(1)(e)—Grounds for refusal of enforcement—Challenge to arbitrator’s impartiality—Scope—NHA alleged bias on part of the arbitrator due to his previous professional associations—Held, Court of Appeal, Paris, had already adjudicated and rejected this claim—Under Gol Linhas Aereas SA v. Matlin Patterson Global Opportunities Partners (Cayman) II LP [2022] UKPC 21, an issue decided by the courts at the seat of arbitration creates issue estoppel—NHA was estopped from re-litigating the arbitrator’s impartiality in Pakistani courts—Mere dissatisfaction with arbitral findings does not constitute a valid ground for refusing enforcement. (d) Execution of Foreign Arbitral Awards—Procedure—Decree Requirement—Scope—NHA argued that the execution petition was premature as no formal decree was issued—Held, no requirement under the 2011 Act or New York Convention for issuance of a decree prior to enforcement—High Court’s recognition of the award suffices for execution—Reliance placed on Louis Dreyfus Commodities Suisse S.A. v. Acro Textiles Mills Ltd. (PLD 2018 Lahore 597) and POSCO International Corporation v. Rikans International (PLD 2023 Lahore 116)—Order recognizing the foreign award shall be enforced as a judgment. (e) Contract Law—Extension of Time (EOT) Claims—Arbitral Review—CWE’s claims for costs associated with EOT-1, EOT-2, and EOT-3 were upheld in arbitration, awarding Rs.3,435,255,571.32 with interest at 6% p.a.—Dispute Board and Engineer had already determined EOT-related claims—Held, arbitral award was based on agreed contractual mechanisms, including FIDIC conditions—NHA’s argument regarding re-evaluation of quantum dismissed, as judicial review of merits is not permissible in recognition proceedings—Reliance placed on Jess Smith and Sons Cotton LLC v. DS Industries (2019 CLD 23). (f) Corporate Law—Bank Guarantee—Obligations and Release—Bank guarantee of Rs.338,000,000/- was furnished by CWE to NHA—Arbitrator ordered its unconditional return—NHA resisted cancellation—Held, retention of bank guarantee was unjustified post-award—Reliance placed on Shipowner v. Time Charterer, Oberlandesgericht (6 Sch 3/98, XXV Y.B. COM. ARB. 641 (2000))—High Court ordered immediate return and cancellation of the guarantee. Disposition:Execution application allowed—Foreign arbitral award dated 30.06.2019 recognized and enforced—NHA directed to pay Rs.3,435,255,571.32, US$10,703.88, GBP£657,704.75, and US$161,708.59 plus 6% p.a. interest—Bank guarantee cancelled—NHA’s appeal (FAO No.94/2021) dismissed with costs.

Summary: Background: The National Highway Authority (NHA) awarded a contract for the rehabilitation of a national highway. After the completion of the project, road rutting occurred, leading to a dispute between the NHA and the Contractor. The NHA argued that the rutting was due to defective workmanship by the Contractor, while the Contractor contended it was due to design flaws and premature opening of the road by the NHA. The Contractor agreed to carry out repair works and submitted a payment claim, which was rejected by the Engineer and the Dispute Adjudication Board (DAB) but allowed by the Arbitrator. The Contractor filed an application to make the arbitration award a rule of the Court, which the NHA objected to but was dismissed by the Civil Judge for being time-barred. ----Issues: 1- Whether the NHA's objections to the arbitration award were dismissed correctly for being time-barred. 2- Whether the Arbitrator extended the scope of Clause 20.1 of the contract by accepting a claim filed beyond the stipulated timeline. 3- Whether the Arbitrator had the power to award financing charges prior to the date of the award. 4- Whether the rutting was due to the Contractor's defective workmanship or NHA's premature road opening. ----Holding/Reasoning/Outcome: Dismissal of Objections: The Court held that although the NHA received notice on 17.11.2021 and filed objections on 07.01.2022 (beyond the 30-day limitation), the NHA was aware of the award's existence. Therefore, the dismissal was appropriate, and NHA suffered no prejudice as the Civil Court scrutinized the award before making it a rule of the Court. ---Scope of Clause 20.1: The Arbitrator's interpretation of Clause 20.1 was upheld. The clause's timeframe for submitting a fully substantiated claim was not violated since the repair works were ongoing, and the ---Contractor had kept the NHA informed. The Arbitrator found that the spirit of Clause 20.1 was satisfied. ----Financing Charges: The Arbitrator awarded financing charges at the rate stipulated in the contract. The Court found this to be in line with Clause 14.8 of the FIDIC Contract, which allows for such charges without formal notice or certification. The Arbitrator’s award of financing charges from the date when the payment certificate should have been issued was deemed correct. ----Defective Workmanship vs. Premature Road Opening: The Arbitrator concluded that the rutting was due to NHA's premature opening of the road and design flaws, not the Contractor's defective workmanship. This conclusion was based on a meticulous analysis of the evidence, and the Court found no error apparent on the face of the award. ----Citations/Precedents: M/s Joint Venture KG/Rist vs. Federation of Pakistan (PLD 1996 SC 108) Oil and Gas Development Company Limited vs. M/s Marathon Construction Company and another (2013 CLD 1483) Mian Corporation vs. M/s Lever Brothers of Pakistan Limited (PLD 2006 SC 169) Henry Boot Construction Ltd vs. Alstom Combined Cycles Ltd [2005] 1 W.L.R. 3850 CA Lahore Development Authority vs. Khalid Javed Co. (1983 SCMR 718) Defence Housing Authority, Islamabad vs. Multi-National Venture Development Private Limited (2019 CLD 566)

Summary: Enforceability of an interim award rendered under the ICC Rules and its implications under the New York Convention (NY Convention) --- arbitration dispute between the National Highway Authority (NHA) and CWE --- The case involves a dispute between the National Highway Authority (NHA) and China Water and Electric Corporation (CWE) arising from a construction contract. The dispute was subject to arbitration under the International Chamber of Commerce (ICC) Rules.The primary issue revolves around the enforceability of an interim award rendered under the ICC Rules and its compatibility with the provisions of the New York Convention (NY Convention). ---- The court ultimately decides to recognize and enforce the Interim Award, directing NHA to pay a specified amount along with interest. The court concludes that the Interim Award shall be executed as though it is a decree, and NHA is ordered to comply by a specified date. --- The court, after meticulous consideration of the arguments presented by both parties, rendered a decision that significantly shapes the landscape of arbitration enforcement within the jurisdiction. The crux of the court's decision lies in its interpretation of the enforceability of the Interim Award under the New York Convention (NY Convention) and the pertinent domestic legislation, the 2011 Act.Firstly, the court emphasized the absence of any explicit provisions in the 2011 Act or the NY Convention that categorically preclude the enforcement of interim awards. This crucial observation served as the foundational premise for the court's subsequent analysis. It countered the argument that only final awards could be subject to recognition and enforcement, asserting that the silence in the legal framework did not preclude interim awards from the ambit of enforcement.The court delved into the nature and scope of the Interim Award, dissecting its role in the overall arbitration process. It underscored that the Interim Award specifically addressed the question of whether NHA was obligated to promptly implement the Dispute Board's decision, setting it apart from the final determination of underlying merits. This distinction, the court argued, aligned with the contractual obligation (clause 20.4 of the General Conditions of Contract) that required the prompt implementation of the Dispute Board's decision, irrespective of the pending arbitration proceedings on the merits.Building on this foundation, the court rejected the notion that the binding nature of the Interim Award was offset by the fact that the arbitration proceedings were still pending. It drew a parallel with analogous cases, such as the Persero case, which involved FIDIC-form contracts and similar obligations for prompt implementation of Dispute Board decisions. The court underscored that, akin to the contractual obligation to promptly give effect to a Dispute Board's decision, an interim award mandating prompt payment was equally binding.Moreover, the court referenced various legal precedents from different jurisdictions, including the United States, Singapore, and Egypt, where interim awards were recognized and enforced, even if they did not conclusively settle the entire dispute. This international perspective, the court argued, aligned with the objectives of the NY Convention, promoting predictability in international commercial dealings and consistency among jurisdictions.In dissecting the arguments put forth by the parties, the court scrutinized the decision in Resort Condominiums International Inc. v. Ray Bolwell and Resort Condominiums Pty. Ltd., where the Supreme Court of Queensland, Australia, refused to enforce an interim award. The court distinguished this decision, asserting that the Australian court's approach, emphasizing the finality of awards, was inconsistent with the prevailing trend in other jurisdictions, including the United States.The court elucidated the nuanced difference between interim measures and interim awards. It noted that while interim measures could be rescinded, suspended, varied, or reopened by the tribunal, interim awards were not inherently subject to such modifications. The court deemed this distinction pivotal in understanding the enforceability of interim awards, especially in cases where the arbitration process was still ongoing.Furthermore, the court highlighted the commercial sensibility of interpreting contractual clauses, such as those empowering arbitrators to render interim awards, in a manner that upholds their enforceability. It rejected the argument that only those interim awards that conclusively decided a dispute without susceptibility to change in the final award could be enforced. Such an interpretation, the court contended, would essentially nullify the parties' agreement to adopt the ICC Rules, which specifically empower arbitrators to issue interim awards of a temporary nature.Having laid down these foundational principles, the court navigated through the specifics of the case. It noted that the burden of proof lay with NHA to demonstrate the grounds listed in Article V(1) of the NY Convention for refusing recognition and enforcement. Crucially, the court found that NHA had failed to discharge this burden. As a result, the court concluded that the Interim Award should be recognized and enforced, treating it as though it were a decree.The court did not consider the rendering of the final award as rendering the Interim Award infructuous. Instead, it opted to independently decide CWE's application for the enforcement of the Interim Award, reinforcing the principle that the enforceability of interim awards is distinct from the finality of the entire arbitration process.In its conclusive directives, the court ordered NHA to pay a specified amount along with interest, emphasizing that this amount shall be executed by the court as though it were a decree. The court set a timeline for the payment, ensuring that NHA promptly complied with the obligations stipulated in the Interim Award.This comprehensive decision by the court, rooted in a nuanced interpretation of domestic and international arbitration laws, contractual obligations, and a pragmatic understanding of the commercial context, marks a significant precedent. It provides clarity on the enforceability of interim awards, particularly those dealing with preliminary issues, and sets a precedent for the recognition of such awards as binding and executable. This decision, with its thorough legal analysis, establishes a framework that harmonizes international arbitration practices with domestic legal principles, contributing to the evolution of arbitration jurisprudence in the jurisdiction.

Summary: Against order dated 01.03.2019 passed by Learned Civil Judge (west) Islamabad wherein application u/s 11 of the arbitration Act 1940 for filing of the award has been made Rule of Court

Summary: ''Discussion: (1) The resolution of disputes through arbitration often proves to be speedier than Court litigation which is also a form of alternative dispute resolution. (2) Section 13, 30 & 35 of the Arbitration Act, 1940. (3) What is misconduct of Arbitrator for setting aside the award by the Court.'' --- Facts:The respondent initiated a suit for specific performance based on an agreement to sell dated 27.05.2004 against the petitioner and another party. The petitioner sought arbitration per the agreement, leading to the appointment of an Arbitrator.The Arbitrator proceeded ex-parte and announced an award on 27.02.2017, which the petitioner sought to set aside, arguing he was not given a proper defense opportunity. The trial court set aside the ex-parte proceedings but upheld the award. The petitioner's appeals were dismissed by the Islamabad High Court, maintaining the award.---Issue:Whether the Arbitrator's conduct in proceeding ex-parte and the subsequent upholding of the award by the trial and appellate courts were justified.---Holding:The Supreme Court dismissed the petitions, refusing leave to appeal, and upheld the decision of the Islamabad High Court.---Rationale:The Court found no dispute regarding the Arbitrator's appointment and noted that the Arbitrator was nominated at the petitioner's behest.The Court determined that the petitioner was given opportunities to participate in the arbitration proceedings but failed to do so, leading to ex-parte proceedings rightfully initiated by the Arbitrator.The petitioner failed to demonstrate any misconduct by the Arbitrator or any significant legal or factual errors in the award that would merit its setting aside.The Court emphasized the principle that arbitration, as a chosen forum by the parties, should not be lightly interfered with by the courts, except where clear cases of misconduct or legal errors are evident.---Decision:The Supreme Court found the arbitration process and the subsequent judicial reviews to have been conducted appropriately, without any procedural or substantive errors that would warrant overturning the award.

Summary: 1. Specific Relief Act, 1877—Temporary Injunction—License versus Lease (a) Concession Agreement—Nature and enforceability --- A Concession Agreement granting exclusive rights to carry out a project does not constitute a lease if it fails to transfer rights in rem or exclusive possession of the property. Instead, it amounts to a revocable license under the Easements Act, 1882. --- A license cannot be specifically enforced as per Section 21(d) of the Specific Relief Act, 1877, and an injunction cannot be granted under Section 56(f). (b) Temporary injunction—Grant prerequisites --- To secure a temporary injunction, the applicant must demonstrate: (i) A prima facie case; (ii) Irreparable harm; and (iii) Balance of convenience in their favor. --- In this case, the petitioner failed to establish a prima facie case as the Concession Agreement lacked exclusive possession or a transfer of property rights. (c) Implied termination of license --- Revocation of a license may occur implicitly through actions inconsistent with the agreement, such as granting possession to a third party. 2. Easements Act, 1882—Revocability of License --- Section 60 of the Easements Act, 1882, establishes that a license is revocable unless it is coupled with a transfer of property or involves work of a permanent character executed by the licensee. --- Expenses incurred for preparatory work, such as surveys, do not qualify as works of a permanent character. 3. Necessary and proper parties in legal proceedings --- Failure to implead a party (e.g., IMEX Associates) whose rights may be adversely affected by the relief sought renders the case incomplete. An injunction impacting such a party’s rights cannot be granted in their absence. 4. Arbitration and concurrent litigation --- Issues concerning possession and the validity of third-party agreements are pending arbitration. An injunction during arbitration proceedings is unnecessary, as arbitral awards can address the rights and claims of the petitioner and respondent adequately. Disposition The writ petition was dismissed as the petitioner: (i) failed to establish a prima facie case due to the revocable nature of the license; (ii) did not demonstrate irreparable harm since damages could suffice; (iii) lacked balance of convenience, as public interest required ongoing operations by IMEX Associates; and (iv) failed to implead a necessary party (IMEX Associates). Case Citations Sharif Ullah Khan v. Pakistan International Airlines Limited (2023 CLC 372) Abdullah Bhai and others v. Ahmad Din (PLD 1964 SC 106) Ali Asghar v. Raja M. Asghar (2021 CLC 1348) Muhammad Tobria v. The Board of Trustee (2021 YLR 2278) Held The petition seeking an interim injunction was dismissed. Arbitration remains the appropriate forum to resolve disputes regarding possession and validity of agreements. Temporary injunctions cannot be granted where the legal and equitable requirements are unmet.

Summary: Background: A contractual agreement for the supply of ethanol was entered into between two companies in 2015. The agreement included a clause for arbitration in the London Court of International Arbitration (LCIA) under English law. A dispute arose when one party (the respondent) allegedly failed to fulfill its obligations under the agreement, leading the other party (the applicant) to approach the LCIA. The LCIA tribunal, formed in 2016, passed a final arbitral award in favor of the applicant in April 2017. The applicant then sought recognition and enforcement of this foreign arbitral award in Pakistan under the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011. The respondent filed objections, primarily challenging the validity of the agreement and the enforceability of the arbitral award in Pakistan. -----Issues: 1- Whether the Lahore High Court has jurisdiction to enforce a foreign arbitral award under the 2011 Act. 2- Whether the applicant met the document submission requirements under Section 5 of the 2011 Act. 3- Whether the foreign arbitral award was unenforceable due to the invalidity of the agreement under Article V(1)(a) of the New York Convention. 4- Whether the enforcement of the arbitral award would be contrary to public policy under Article V(2)(b) of the New York Convention. 5- Whether the doctrine of pro-enforcement bias applies in Pakistan's courts. -----Holding/Reasoning/Outcome: The Court held that it has exclusive jurisdiction to enforce foreign arbitral awards under Section 3 of the 2011 Act, as only the High Courts in Pakistan are empowered to handle such matters. The Court found that the applicant had fulfilled all document submission requirements by providing certified copies of the award and agreement in accordance with Article IV of the New York Convention. The respondent's challenge to the validity of the agreement, based on an alleged lack of authority of its signatories, was dismissed. The tribunal had determined that the individuals signing the agreement had at least ostensible authority, and the Court held that the arbitration agreement was valid under English law. The Court rejected the argument that enforcement of the award would violate public policy. It emphasized that public policy objections must be narrowly construed, and enforcement would not be contrary to the basic notions of morality and justice in Pakistan. The Court reiterated the pro-enforcement bias embedded in the New York Convention, holding that foreign arbitral awards should be enforced unless exceptional circumstances apply. Consequently, the arbitral award was recognized and enforced, with the court converting the application into execution proceedings. -----Citations/Precedents: Redfern and Hunter on International Arbitration, Sixth Edition Justice Jawad Hassan, Role of Judiciary and Jurisprudence in Domestic and International Arbitration (2018) CLD Journal Hitachi Limited vs. Rupali Polyester (1998 SCMR 1618) Enka Insaat Ve Sanayi AS v Insurance Company Chubb [2020] UKSC 38 Kabab-Ji SAL v Kout Food Group [2021] UKSC 48 Orient Power Company (Private) Limited vs. Sui Northern Gas Pipelines Limited (2019 CLD 1069) POSCO International Corporation vs. Rikans International (2023 CLD) Louis Dreyfus Commodities Suisse SA vs. Acro Textile Mills Ltd. (PLD 2018 Lahore 597) Dhanya Agro-Industrial (Pvt.) Limited vs. Quetta Textile Mills Ltd. (2019 CLD 160) M.C.R. (Pvt.) Ltd. Franchisee of Pizza Hut vs. Multan Development Authority (2021 CLD 639)

Summary: Having agreed to arbitration clause in the lease agreement the appellant cannot wriggle out of the arbitration proceedings merely by stating that arbitration proceedings are not in terms of the arbitration clause for the reason that the parties could not be allowed to approbate and reprobate and having themselves agreed to have the matter decided through arbitration while entering into the lease agreement, the appellant could not be later on allowed to take a contradictory stand.

Summary: (The scope of interference in the Award of an Arbitrator. The imposition of costs for frivolous and vexatious litigation) The case involves a dispute between the National Highway Authority (petitioner) and M/s Sambu Construction Co. Ltd. (respondent) regarding additional work performed by the respondent for the rehabilitation of a national highway. The main contention in the Supreme Court was whether the arbitrators had conducted themselves improperly under Section 30(a) of the Arbitration Act, 1940. The petitioner argued that the minutes of the pre-bid meeting should not be considered part of the contract and that the arbitrators wrongly relied on them. However, the respondent contended that the pre-bid meeting minutes formed an integral part of the contract, as reflected in the signed contract documents. After examining the record and considering the arguments, the Supreme Court concluded that the minutes of the pre-bid meeting were indeed part of the contract document. The court highlighted that the scope of judicial review of an arbitration award is limited and should not involve a re-assessment of evidence. The court found no jurisdictional, procedural, or substantive error in the award that warranted interference. Furthermore, the court addressed the issue of alleged misconduct by the arbitrators. It stated that misconduct refers to a failure to perform essential duties or conduct inconsistent with those duties, resulting in a substantial miscarriage of justice. However, the petitioner's objections were deemed to pertain more to the merits of the case rather than misconduct, and no specific grounds for misconduct were presented. The court dismissed the petitioner's claims of misconduct. Lastly, the court expressed concern over the petitioner's prolonged litigation, spanning more than ten years, which it deemed vexatious. It emphasized the importance of alternate dispute resolution (ADR) and discouraged parties from challenging arbitration awards in court, as it defeats the purpose of ADR. The court imposed costs of Rs. 300,000 on the petitioner and emphasized the need to discourage frivolous litigation.

Summary: An order/judgment passed by the first appellate Court under Section 39 of the Arbitration Act, 1940 would be challenged through Civil Revision under Section 115 C.P.C.