Yangtze (London) Ltd v Barlas Brothers (Karachi)

CourtSupreme Court (Pakistan)
Date06 June 1961
Pakistan, Supreme Court.

(Cornelius C.J.; Rahman, Akbar and Hamoodur Rahman JJ.)

Yangtze (London) Ltd.
Barlas Bros. (Karachi) & Co.

State succession Treaties Effect of creation of new State out of part of territory of another State India and Pakistan Protocol and Convention concerning Foreign Arbitral Awards, 1927 Effect of Indian Independence (International Arrangements) Order, 1947 Devolution of treaty rights and obligations according to State practice Relevance of non-succession of Pakistan to membership of British India in international organizations Multilateral convention open to ratification only by States Members of League of Nations or United Nations Whether Indian Independence (International Arrangements) Order affected rights of third States The law of Pakistan.

The Facts.This was an appeal from the judgment and order of a Division Bench of the High Court of West Pakistan sitting at Karachi in Barlas Bros. (Karachi) & Co. v. Yangtze (London) Ltd., reported in International Law Reports, vol. 27, p. 35.1 The facts of the case are given in that report, but it is convenient to quote in full the judgment of the Supreme Court (which was given by Hamoodur Rahman J.) since it contains additional details. The facts as stated by the Supreme Court were as follows:

This is a certified appeal from the judgment and order of a Division Bench of the High Court of West Pakistan sitting at Karachi whereby an order of a learned Single Judge of the Chief Court of Sind directing that an award of the London Court of Arbitration be made a rule of the said Court and a decree be passed in terms thereof, was set aside.

The appellant, which is a company registered in England under the English Companies Act and carries on business in London, entered into various contracts during the years 1948 to 1950 with

the respondent firm carrying on business at Karachi for the purchase of sheep casings. These contracts were in the first instance made by cablegrams but some were sent in duplicate by the appellant to the respondent firm for it to sign and return one of the said forms

In relation to six of these contracts, however, differences and disputes arose between the parties, and the appellant in terms of the arbitration clause contained in each of the said printed contract forms referred the disputes relating to all the said six contracts to the arbitration of the London Court of Arbitration on April 12, 1951. The respondent firm, it appears, had not signed three out of the above-mentioned six contract forms with regard to which disputes were alleged to have arisen, though it does not deny having entered into the contracts which they purported to confirm. But when the London Court of Arbitration called upon the respondent firm to file its preliminary comments it denied having ever agreed to any arbitration or to have any knowledge of the nature of the disputes raised by the appellant and demanded photostatic copies of the confirmations of the said contracts in order to satisfy itself that they bore its signature.

The Court of Arbitration furnished the respondent firm with a copy of the appellant's letter concerning the disputes and photostatic copies of the three signed contracts and also informed the respondent firm that after its statement was filed the said Court would decide as to whether it had jurisdiction to arbitrate in respect of the disputes arising from the unsigned contracts. The respondent firm neither filed any statement nor gave any reply to [the] Court of Arbitration, which thereupon nominated an arbitrator and gave notice by registered post to the respondent firm to file its statement of defence. The latter refused to accept the registered notices and letters sent to it but in answer to a cablegram intimating that February 28, 1952, had been fixed as the date of hearing before the Arbitrator maintained that even the three signed contracts had become null and void as the appellant had failed to open the requisite letters of credit stipulated for in the said contracts.

The respondent firm was again informed that all questions of jurisdiction sought to be raised by it would be decided by the Arbitrator, but the said firm thereafter neither acknowledged any of the communications received from the London Court of Arbitration nor took any part in the proceedings before the Arbitrator. In the circumstances an ex parte award was made against the respondent firm on April 18, 1952, for 11,417 13s. 7d., with costs assessed at 378. This was the award which the appellant sought to enforce as a foreign award in the then Sind Chief Court under the provisions of the Arbitration (Protocol and Convention) Act, 1937, by applying on July 12, 1952, to file the said award in court in terms of Section 5 thereof. This application was opposed by the respondent firm on the grounds, inter alia, that the Arbitration (Protocol and Convention) Act, 1937, was not applicable to Pakistan and that in any event the award was not a foreign award within the meaning of the said Act. The Sind Chief Court took the view that the preamble to the Act itself clearly indicated that the Act applied to the Provinces and the Capital of the Federation of Pakistan and that the award was enforceable in Pakistan as the respondent firm had failed to show that it suffered from any of the defects, mentioned in Section 7 (2) of the said Act, which alone could render a foreign award, to which the Act applied, unenforceable. Hence it ordered the award to be filed and passed a decree in terms thereof.

The Preamble to the said Act reads as follows:

Whereas India was a State signatory to the Protocol on Arbitration Clauses set forth in the first Schedule, and to the Convention on the Execution of Foreign Arbitral awards set forth in the Second Schedule, subject in each case to a reservation of...

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