Yangtze (London) Ltd v Barlas Brothers (Karachi)

CourtHigh Court of Sindh (Pakistan)
Date18 February 1959
Pakistan, Karachi Court of Appeal.

(Kaikaus and Wahiduddin JJ.)

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

Treaties Operation of Requirement of Incorporation in municipal law The law of Pakistan.

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 The law of Pakistan.

The Facts.Barlas Bros. (Karachi) & Co. (the appellants) carried on business in Karachi, exporting sheep casings, while Yangtze (London) Ltd. (the respondents) carried on the business of importing sheep casings and had an office in London. A number of contracts were entered into between the parties for the sale and purchase of sheep casings, and disputes arose in respect of six such contracts. The contracts each provided that all disputes arising out of the contract were to be referred to the London Court of Arbitration. The respondents referred the disputes to that Court, and although the appellants refused to take part in the proceedings an award was made in favour of the respondents by which the appellants were to pay 11,417 3s. 7d. and 378 as costs.

In 1923 a multilateral Protocol on Arbitration Clauses1 was signed, and in 1927 a multilateral Convention on the Execution of Foreign Arbitral Awards2 was signed. Both the United Kingdom and India signed the Protocol and Convention. Effect was given in India to the Protocol and Convention by the Arbitration (Protocol and Convention) Act, 1937. Purporting to act under this statute, the respondents submitted an application to the Chief Court of Sind (in Pakistan) for the award to be filed and a decree to be passed on it. The Court ordered the award to be filed. The appellants lodged an appeal on the ground, inter alia, that as Pakistan was not a signatory to the Protocol and Convention, the Arbitration (Protocol and Convention) Act, 1937, was not applicable to Pakistan, notwithstanding that India was a signatory and that Pakistan consisted of territory which previously constituted part of India.

Held: that the appeal must be allowed. When a new country is created it is an entirely separate international entity and is not bound by agreements entered into by the State out of whose territories it is created merely because its territories were previously comprised in that State.

The Court said: In this appeal the first question raised is that the Arbitration (Protocol and Convention) Act, 1937, is not applicable to Pakistan at all, and it is at least not applicable so far as awards delivered in England are concerned. In order that these objections may be appreciated reference has to be made in some detail to the provisions of this Act. Some time in the beginning of 1937 a number of States entered, through the League of Nations, into a Protocol for recognising the validity of arbitration clauses or agreements between parties who were subject to the jurisdiction of the different contracting States, and for giving effect to awards delivered on the basis of such arbitration clauses. India was one of the signatories to this Protocol, and the Arbitration (Protocol and Convention) Act, 1937, was passed in order to give effect to this Protocol. The Preamble to this Act says:

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 the right to limit its obligations in respect thereof to contracts which are considered as commercial under the law in force in the Provinces and the Capital of the Federation

And whereas it is expedient, for the purpose of giving effect to the said Protocol and of enabling the said Convention to become operative in the Provinces and the Capital of the Federation, to make certain further provisions respecting the law of arbitration:

It is hereby enacted as follows:

The awards to which this Act was to apply are defined in section 2, which runs:

2. In this Act Foreign award means an award on differences relating to matters considered as commercial under the law in force in the Provinces and the Capital of the Federation, made after the 28th day of July 1924,

(a)in pursuance of an agreement for arbitration to which the Protocol set forth in the First Schedule applies, and

(b) between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Second Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and

(c) in one of such territories as the Central Government, being...

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