IN THE HIGH COURT OF SINDH AT KARACHI

H.C.A. No.140 of 1986

H.C.A. No.141 of 1986

H.C.A. No.142 of 1986

[ Mohd. Amin Mohd. Bashir Ltd v. Ralli Brothers & Coney Limited ]

PRESENT:

            Mr. Justice Arshad Hussain Khan

                                      Mr. Justice Amjad Ali Sahito       

Appellant                   :           Through Mr. Rashid Anwar, Advocate

Respondent               :           Nemo

Date of hearing         :           27.10.2026

Date of Decision      :           03.11.2026

JUDGMENT

ARSHAD HUSSAIN KHAN J;                   Through this common judgment, we intend to decide High Court Appeals Nos.140, 141 and 142 of 1986, arising out of the common judgment and decrees dated 06.07.1986 passed by the learned Single Judge of this Court on the Original Side in Suits Nos.321, 320 and 322 of 1975, respectively, instituted under Sections 5 and 6 of the Arbitration (Protocol and Convention) Act, 1937 (“the 1937 Act”). By the impugned judgment, the learned Single Judge rejected the objections raised by the Appellant and directed that the foreign arbitral awards rendered under the Rules and Bye-Laws of the Liverpool Cotton Association Ltd. (“LCA”) be filed and decrees passed in terms thereof. Aggrieved thereby, the Appellant has preferred these High Court appeals under Section 3 of the Law Reforms Ordinance, 1972. Since all three appeals arise from a common judgment and involve substantially identical questions of law and fact, they are being decided together.

2. Succinctly, the facts giving rise to these appeals are that the Appellant, Messrs Mohd. Amin Mohd. Bashir Ltd., Karachi, agreed through cable correspondence in November 1972 to sell Pakistan American Seeds cotton to the Respondent, Messrs Ralli Brothers & Coney Ltd., Liverpool, under three separate contracts involving 2,000 bales (HCA No.140 of 1986), 4,500 bales (HCA No.141 of 1986) and 900 metric tons (HCA No.142 of 1986). Although the contract notes forwarded to the Appellant were neither signed nor returned, partial shipments were made and payments received under two contracts. Subsequently, following the devaluation of the US dollar, the Appellant demanded an increase of 11.12% in the agreed prices on 28.02.1973, which the Respondent declined. Thereafter, the Respondent nominated Liverpool as the port of destination for the unshipped cotton on 11.05.1973 and invoked arbitration under the Rules of the LCA on 15.05.1973, nominating Mr. R.J. Anderson as its arbitrator and calling upon the Appellant to nominate its arbitrator. Upon the Appellant's failure to do so, despite notice dated 25.05.1973, Mr. J.H.S. Griffiths was appointed as arbitrator on its behalf by the ex-President of the LCA under Rule 304(5)(b). The Appellant also failed to respond to subsequent communications dated 12.06.1973 and 04.07.1973, whereafter the arbitral proceedings culminated in the respective awards.

3. In HCA No.140 of 1986 (Suit No.321 of 1975), the arbitrators initially awarded US$51,566.95 as damages, calculated at 50.15 US cents per lb., together with interest at 10% per annum from 01.09.1973 until payment and £75 towards arbitration fees. On appeal, the LCA Technical Appeal Committee enhanced the damages to US$58,185.93, along with interest and costs. In HCA No.141 of 1986 (Suit No.320 of 1975), the award dated 07.08.1973 determined damages at US$290,101.50, calculated at 50.40 US cents per lb., with interest at 10% per annum, which were subsequently enhanced on appeal to US$310,385.37, calculated at 48.80 US cents per lb., together with interest. Similarly, in HCA No.142 of 1986 (Suit No.322 of 1975), where no shipment had been made, the initial award of US$499,804.86, calculated at 50.45 US cents per lb., with interest, was modified on appeal to US$540,678.37, calculated at 49.25 US cents per lb., together with interest and costs.

4. Learned counsel for the Appellant, while assailing the impugned judgment and decrees, contends that the learned Single Judge failed to appreciate that no valid arbitration agreement existed between the parties, as the contracts for sale of cotton were admittedly concluded through an exchange of cables containing no arbitration clause, whereas the subsequent contract notes incorporating the arbitration provisions were unilaterally issued by the Respondent and neither signed nor accepted by the Appellant. He submits that under Sections 2(1)(a) and 8 of the 1937 Act, the burden rested upon the Respondent, being the party seeking enforcement, to establish the existence of a binding arbitration agreement, which it failed to discharge. According to him, the mere fact that an arbitration agreement need not necessarily be signed does not dispense with the requirement of establishing consensus between the parties, particularly when the contract notes expressly required signature and return and the Appellant had refused to sign them. In support, he relies upon Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd. ([1981] 1 Lloyd's Rep 253) and Jayaar Impex Ltd. v. Toaken Group Ltd. (trading as Hicks Brothers) ([1996] 2 Lloyd's Rep 437), emphasizing the independent nature of an arbitration agreement and the necessity of establishing consent to arbitration. He further contends that the alleged arbitration clause was uncertain, as it made the place of arbitration dependent upon the destination of cotton without identifying the arbitral institution or governing rules, whereas Liverpool was nominated unilaterally by the Respondent after the dispute had arisen, rendering the clause unenforceable under Section 29 of the Contract Act, 1872. Learned counsel also challenges the reliance placed by the learned Single Judge upon Article 140 of the Articles of Association of the LCA, submitting that membership of the Association could not substitute an arbitration agreement between the contracting parties within the meaning of Section 2(1)(a) of the 1937 Act. He maintains that the dispute essentially concerned revision of prices following devaluation of the US dollar, which was not arbitrable, and that the reference to arbitration was premature. It is further contended that the appointment of an arbitrator by the ex-President of the LCA was contrary to the prescribed procedure, that no Umpire was validly appointed, and that the independence of the arbitral tribunal was questionable, particularly when the Respondent's Managing Director was serving as President of the LCA. The ex parte proceedings are also challenged as violative of the principles of natural justice. Learned counsel further submits that the awards did not qualify as enforceable foreign awards under Section 2(1)(a), (b) and (c) of the 1937 Act, as Pakistan had neither ratified the Geneva Protocol of 1923 nor acceded to the Geneva Convention of 1927, and no valid notification establishing the requisite reciprocity between Pakistan and the United Kingdom had been produced. According to him, the notification dated 08.01.1938, notwithstanding the deeming provision contained in Section 2(2), could not cure these deficiencies. Reliance in this regard is placed upon Yangtze (London) Ltd. v. Barlas Brothers (PLD 1961 SC 573). Lastly, he submits that the awards were unstamped, the damages had been erroneously assessed, the decrees expressed in US dollars were legally impermissible, and their enforcement would be contrary to public policy. He accordingly prays that the impugned judgment and decrees be set aside and the appeals allowed.

5. The record reveals that none has entered appearance on behalf of the Respondent for a considerable period. Since the present appeals pertain to the year 1986 and have remained pending for nearly four decades, we find no justification for deferring their adjudication any further merely on account of the continued non-appearance of the Respondent. Accordingly, we have proceeded to hear and decide these appeals with the assistance of learned counsel for the Appellant and on the basis of the material available on record. We have examined the memoranda of appeal, considered the submissions advanced by learned counsel for the Appellant, and carefully perused the impugned judgment and decrees as well as the relevant record.

6. This Court has recently examined substantially similar questions in its judgments dated 28.09.2026 in HCA Nos.136 to 138 and 192 of 2004 along with HCA No.446 of 2003, and dated 19.10.2026 in HCA Nos.326 of 1998 and 141 of 2000 (“the earlier judgments”), which likewise concerned enforcement of foreign arbitral awards rendered under the Rules of the LCA in terms of the 1937 Act. In those judgments, this Court considered the restricted right of appeal under Section 6(2), the grounds for refusing enforcement under Section 7, and the applicability of the Act with reference to Section 2 and the notification dated 08.01.1938.

7. The foremost question requiring determination is whether the present appeals are maintainable. Section 6(2) of the 1937 Act expressly provides that no appeal shall lie against a decree passed upon a foreign award except insofar as the decree is in excess of, or not in accordance with, the award. In the earlier judgments, this Court held that the 1937 Act, being a special law, restricts the right of appeal and that Section 3(1) of the Law Reforms Ordinance, 1972 cannot enlarge such right, keeping in view the principle recognized in Brother Steel Mills Ltd. v. Mian Ilyas Miraj (PLD 1996 SC 543). We see no reason to depart from that view. In the present cases, the Appellant has not demonstrated that the decrees exceed or depart from the respective awards. Rather, the objections concern the existence of an arbitration agreement, constitution and jurisdiction of the arbitral tribunal, validity of the proceedings, assessment of damages and enforceability of the awards, none of which brings the appeals within the limited exception contemplated under Section 6(2). The appeals are, therefore, not maintainable.

8. Even otherwise, without prejudice to the foregoing conclusion regarding maintainability, we consider it appropriate to briefly examine the objections urged by learned counsel for the Appellant in the light of the limited grounds prescribed under Section 7 of the 1937 Act. The jurisdiction of a Court dealing with enforcement of a foreign arbitral award is confined to the statutory requirements and grounds of refusal. Such proceedings do not constitute an appeal against the arbitral determination, nor do they permit a fresh appraisal of evidence or reconsideration of the merits of the dispute.

9. As regards the objection concerning the absence of a valid arbitration agreement, the learned Single Judge, upon examining the contractual correspondence, partial performance of two contracts and the governing Articles of Association of the LCA, found that the Respondent was a member and the Appellant an associate member of the Association, and that Article 140 provided for arbitration of disputes arising from cotton transactions between such members. The learned Single Judge accordingly concluded that the parties were bound by the arbitration provisions notwithstanding that the formal contract notes had not been signed. Learned counsel for the Appellant, however, contends that the burden of establishing a binding arbitration agreement rested upon the Respondent under Sections 2 and 8 of the 1937 Act, and that neither the unsigned contract notes nor membership of the Association satisfied that requirement. Reliance in this regard has been placed upon Bremer Vulkan (supra) and Jayaar Impex (supra), emphasizing the independent nature of an arbitration agreement and the necessity of establishing consent to arbitration. While these principles are not disputed, the learned Single Judge had considered the contractual dealings and membership relationship of the parties before concluding that the arbitration provisions were binding upon them. The objection concerning uncertainty of destination was also rejected in view of the subsequent nomination of Liverpool as the port of destination. The cited authorities, however, do not concern the restricted right of appeal under Section 6(2) of the 1937 Act and, therefore, do not advance the Appellant's case on maintainability.

10. Similarly, the learned Single Judge examined the objections concerning the constitution of the arbitral tribunal and the alleged denial of opportunity of hearing. Upon considering the relevant correspondence and the governing Rules and Articles of Association of the LCA, it was found that the Appellant had been called upon to nominate an arbitrator but failed to do so, whereafter the appointment was made by the ex-President of the Association in accordance with the applicable provisions, the President being interested in the dispute and the Vice-President unavailable. The learned Single Judge also considered the objection regarding appointment of an Umpire and found no irregularity invalidating the proceedings. As regards the ex-parte proceedings, the record reflected that notices and communications had been addressed to the Appellant, who nevertheless declined to participate. In these circumstances, the objections were rejected. No sufficient basis has been shown for disturbing those `````` findings within the limited statutory framework governing enforcement of foreign awards.

11. The objection concerning the status of the awards as foreign awards under Section 2 of the 1937 Act was examined by the learned Single Judge with reference to Yangtze (London) Ltd. v. Barlas Brothers (supra), the notification dated 08.01.1938 and the subsequent amendment introducing Section 2(2). Learned counsel for the Appellant has additionally contended that an award founded upon the Articles of Association of the LCA, rather than an arbitration agreement between the contracting parties, would not satisfy Section 2(1)(a) of the 1937 Act read with the Geneva Protocol. The questions concerning the applicability of the Act, the effect of the notification and the statutory requirements for enforcement have already been considered in the earlier judgments of this Court. Although the objections now urged concern the foundational requirements for enforcement, they do not establish that the decrees exceed or are inconsistent with the respective awards so as to attract Section 6(2).

12. The remaining objections concerning stamp duty, assessment of damages, the relevant date for determining market price, the effect of devaluation of the US dollar, the currency in which the awards were expressed and public policy were also considered by the learned Single Judge. The objection concerning stamp duty was rejected with reference to Nan Fung Textiles Ltd. v. Sadiq Traders Ltd. (PLD 1982 Karachi 619), whereas the objections relating to damages and contractual performance concerned matters determined by the arbitral tribunal and the Technical Appeal Committee. No ground for refusing enforcement under Section 7 of the 1937 Act has been demonstrated.

13.       In view of the foregoing discussion, and following the principles laid down in the earlier judgments of this Court, we hold that the present appeals do not fall within the limited exception provided under Section 6(2) of the 1937 Act and are, therefore, not maintainable.

14. Consequently, HCA Nos.140, 141 and 142 of 1986 are dismissed as not maintainable, along with all pending applications, with no order as to costs. The impugned common judgment dated 06.07.1986 and the decrees passed in Suits Nos.321, 320 and 322 of 1975, respectively, shall remain undisturbed. A copy of this judgment shall be placed on the record of each connected appeal.

JUDGE

JUDGE

Naveed PA