ICC Awards

Langue : anglais

Version du Règlement : 1988

Demandeur : entrepreneur (Roumanie)

Défendeurs : maîtres d'ouvrage (îles Caïmans, Pakistan), garant (Arabie Saoudite)

Lieu de l'arbitrage : Paris, France

Le litige se rapporte à un contrat conclu entre les maîtres d'ouvrage et l'entrepreneur concernant la construction d'une installation industrielle au Pakistan. L'entrepreneur n'ayant pas procédé à la livraison à la date convenue, les maîtres d'ouvrage résilièrent le contrat et prirent possession de l'installation, prétendant être en droit de retenir les sommes dues à l'entrepreneur et d'assurer l'achèvement du projet aux frais de ce dernier. Ils réclamaient également des dommages-intérêts pour rupture de contrat. Le demandeur engagea une procédure d'arbitrage aux fins d'entendre dire que le contrat était toujours en vigueur et que l'installation lui appartenait jusqu'à sa réception officielle. Il réclamait aux défendeurs l'intégralité du prix du contrat ainsi que des dommages-intérêts. Dans leur réponse, les défendeurs 1 et 2 soulevèrent l'incompétence du tribunal arbitral au motif que, en engageant une procédure devant les tribunaux pakistanais, le demandeur avait renoncé à son droit de recourir à l'arbitrage. Ce point ainsi que d'autres questions litigieuses relatives à la compétence furent examinés par le tribunal arbitral, qui, par une décision prise à la majorité, rendit la sentence partielle dont des extraits sont ci-dessous rapportés.

With respect to issue 4:

'Conclusion

(a) The Arbitrators are satisfied that, for the reasons hereinafter set out, the Claimants elected to litigate in the Courts of Pakistan the merits of the same dispute as it now seeks to arbitrate before the ICC.

(b) The Arbitrators consider and determine that they do not have any jurisdiction to determine the issues between the Claimant and Defendants Nos. 1 and 2 on the ground that the Claimant thereby waived any right to arbitrate.

. . .

Narrative

The Claimants commenced Suit ? in the High Court of Sind . . . against . . . and Defendant No. 2, the suit being headed "Suit for Permanent Injunction" on . . . On . . . the Claimants commenced Suit ? in the High Court of Sind . . . (Original Civil Jurisdiction) against Defendant No. 2 and three personal Defendants (not, or not now, parties to this arbitration), the suit being headed "Suit for Permanent Injunction".

On . . . Defendant No. 2 commenced Suit ? against the Claimant, the suit being headed "Suit for declaration and Injunction". At a date in . . . Defendants Nos. 1 and 2 commenced Suit ? against the Claimant, the Suit being headed "Suit for Recovery of Damages" of an amount stated.

Various steps were taken by the Claimant in the suits commenced by it . . . and in the Suits commenced against them . . ., including applications for stay of the latter under S. 34 of the (Pakistani) Arbitration Act 1940 as described later in this Award.

The Arbitrators have to decide:

(a) Whether the Claimant elected to litigate in the courts of Pakistan the merits of the same dispute as it now seeks to arbitrate before the I.C.C.

(b) Whether the Claimant has thereby waived any right to arbitrate;

(c) Whether the Arbitrators for that reason have any jurisdiction to determine the issues between the Claimant and the Defendants.

Applicable Law

The Arbitrators have first to decide by what law these questions are to be determined. The nature of the proceedings in Pakistan, and of the relief sought in those proceedings, will necessarily be determined by Pakistani Law, but the effect of recourse to these proceedings on the arbitration will (in the opinion of the Arbitrators) necessarily be determined by English Law, by virtue of Article 26 of the Turnkey Contract, and para. (h) (1) of the Terms of Reference.

The Claimant has advanced the following arguments:

(a) The choice of law clause (Article 26) in the Turnkey Contract applies only to the substance of the dispute, not to the procedure; whereas

(b) the question whether the Claimant has forfeited its right to arbitrate by starting legal proceedings in Pakistan is procedural.

(c) Article 25 (arbitration) and Article 26 (applicable law) are separate clauses; they are not "in one and the same article-in which case there would be a presumption that English Law governed also the arbitral procedure."

(d) the fact that the parties chose Paris as the place for the arbitration indicates that procedural questions should be governed by French law.

However, . . . the Claimant's Memorial on Jurisdiction states: "In the present case, the question which law applies to the procedure does not even require an answer for the simple reason that both under French and English Law applications for interim relief do not affect the right to arbitrate. Moreover, the same principle is valid under Pakistani law. And finally, Article 8.5 of the I.C.C. Rules also acknowledge[s] that the right to arbitrate and the application to a national court for interim relief are compatible. Given this certainty, the only question that needs to be answered here is that concerning the nature of the proceedings instituted by [Claimant company] before the High Court of Sind in Karachi. This question is governed by Pakistani law."

Defendants Nos. 1 and 2 in reply contend:

(a) "the choice of law clause in the Turnkey Contract (Article 26) is not restricted to substantive law but provides for the application of English Law not only to the Turnkey Contract but also to 'the legal relations between the parties'", and English Law therefore applies to both procedural and substantive matters.

(b) In any event, the question as to the waiver of a right to arbitrate has to be decided according to the substantive law of the contract.

(c) However the central issue for determination, the nature of the Claimant's suits in Pakistan[,] has to be determined by the law of Pakistan.

The Arbitrators consider that the question of loss (waiver) of the right to insist on arbitration has to be decided by the law of England, the proper law of the contract containing the arbitration clause. The governing decision in English Law is Adams v. National Bank of Greece and Athens SA (1961) AC 255. The reference to the law of Pakistan to determine the nature of the proceedings commenced by the Claimant in Pakistan, and of the relief sought thereby, derives from English choice of law rules, which will refer that question to the law of Pakistan.

The governing English authority on loss of the right to arbitrate is World Wide Shipping v. Daiichi Chuo Kisen Kaisha (The "Golden Anne") (1984) 2 Lloyd's List Reports 489. It is apparent from this case that the determining question is whether the conduct of the Claimant in commencing and prosecuting the Suits in the Pakistani courts amounted to a repudiation of the arbitration agreement which repudiation was accepted by the Defendants. Did the Claimant thereby evince an intention not to be bound by the arbitration agreement? Or did the Claimant's conduct fall short of the clear and unequivocal conduct necessary to establish repudiation? . . . Is an implied agreement to abandon the arbitration agreement to be inferred? . . .

Under English Law, the commencement of an action claiming a permanent injunction will (in the absence of a sufficient countervailing factor) be almost irresistible objective evidence of an intention to repudiate or waive the arbitration agreement, and this will be so whether or not such action is combined with or accompanied by a claim for a temporary injunction. On the other hand an action claiming only a temporary injunction will not constitute such evidence. Such a rule of law is in accordance with the law of many other countries, and with the principle underlying Article 8.5 of the Rules of the I.C.C.: ". . . the parties shall be at liberty to apply to any competent judicial authority for interim or conservatory measures, and they shall not by so doing be held to infringe the agreement to arbitrate or to affect the relevant powers reserved to the arbitrator". The inference would be that to apply for relief which does not fall within the words "interim or conservatory measures" could infringe the agreement to arbitrate. The Claimant in its Memorial on Jurisdiction page 34 appears to concede this: "If [Claimant company] had sought final determination of its rights in Pakistani courts it would know better than to incur the expense of arbitrating in Paris."

It could not plausibly be argued for the Claimant that it was through ignorance of the local law that the Claimant, as a foreigner in a strange land, had mistakenly commenced a type of action which would or might be held to constitute a repudiation or waiver of the Arbitration agreement. In 1985 the Claimant had itself been a party to the case of . . . in the High Court of Sind in which it was held that under Pakistani Law the filing of a suit for a permanent injunction amounted to an abandonment of the right to arbitrate. . . . [T]he Court said: "In this way the dispute arose. This dispute could either be resolved through Court or by reference to arbitration. This was the stage when either party could launch an action and this was the time to exercise the option for forum of settlement of the dispute. [Claimant company] took the initiative and exercised their option by choosing the forum of court and by filing Suit . . . in this Court. [Claimant company's] position in the situation may be described as 'the die was cast the bell had rung, the toss was won the song was sung' . . ." . . . "The learned counsel attempted to face this situation by saying that Suit . . . was a suit for limited relief namely, (an) injunction from the Court to compel the defendants to abide by clause 20 of the contract and abstain from removing the machinery in terms thereof. But the learned counsel over-looks the fact that whatever may be the nature and extent of the relief, it would not entitle his client to probate and reprobate and change the forum of litigation to suit his own convenience. Nor indeed the argument of the learned counsel that he could not get the relief of injunction from arbitration has any force, because the same relief could be obtained under section 41 of the Arbitration Act. "We would, therefore, hold that by filing the Suit . . ., [Claimant company] have made a choice of forum and it was for [the defendant in the case] to invoke the arbitration clause if they had so desired. They have filed the written statement and for all intents and purposes the arbitration clause stands exhausted."

Pakistani legal provisions

Under Pakistani Law there are four sets of legal provisions which may need to be considered in order to determine the nature and effect under Pakistani Law of legal proceedings such as those commenced by the Claimant:

(a) The Specific Relief Act (1 of 1877) Part II of Preventive Relief Chapter IX of Injunctions Generally.

(b) Code of Civil Procedure (V of 1908) Order XXXIX Temporary Injunctions and Interlocutory Orders.

(c) The Arbitration Act (Act No. X of 1940) as amended by Ordinance No. XI of 1981.

(d) The Arbitration (Protocol and Convention) Act 1937.

The Specific Relief Act 1871

(a) Section 52 of the Act provides that preventive relief is granted at the discretion of the court by injunction, temporary or perpetual. By Section 53 temporary injunctions are such as are to continue until a specified time, or until further order of the Court; they may be granted at any period of a suit and are regulated by the Code of Civil Procedure 1908 (V of 1908). A perpetual injunction can only be granted by the decree made at the hearing and upon the merits of the suit; the Defendant is perpetually enjoined from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the plaintiff. The object of an injunction (according to the text book on the Act by Desai revised by Bajwa) at p. 111 is: "To restrain the undue exercise of rights, to prevent threatened wrongs, to restore violated possessions and to secure the permanent enjoyment of the rights of property. The specific relief afforded by means of injunctions is called preventive relief. It is a remedial order, but is preventive rather than curative. Its general purpose is to restrain the commission of some wrongful act of the party enjoined".

(b) At p. 112 the author continues:

Kinds of Injunctions: An injunction may be temporary, i.e. such as continues until a specified time pending a litigation, or perpetual, i.e. made at the final hearing on the merits, perpetually enjoining the defendant to abstain from injuring the plaintiff's right. The division is in respect of their duration. The principles regulating the granting of these are mainly the same; but then the person seeking a temporary or interlocutory injunction has not to make out a case which would be required in case of a perpetual injunction. A temporary injunction can at the first continue till the final hearing of the suit; it may be dissolved at any prior stage: if it is affirmed at the final hearing and it is embodied in the decree it becomes perpetual. It is thus provisional in its nature and does not conclude a right, its object and effect being merely to preserve the property in dispute in status quo until further orders of the Court. It is enough, for the plaintiff to show that he has a fair question to raise as to the existence of the right which he alleges and can satisfy the Court that the property should be preserved in its present actual condition until such question can be disposed of. He must show that injunction is the appropriate relief and that unless the defendant is at once restrained by an injunction, irreparable injury or convenience may result to the plaintiff before the suit can be decided on its merits. There should only be the alternative of interference of probable destruction of the property; if the suit shows a substantial question between the parties, the title to the injunction may be good, although the title to the relief prayed may ultimately fail. The granting of this, i.e. temporary injunction, is regulated by the Civil P.C. Order XXXIX Rules 1 and 2 whereas the subject of perpetual injunction is dealt with by Sections 54 to 57, Specific Relief Act. A perpetual injunction is said to be mandatory (Sec. 55) when it related to the doing and not necessarily forbearing, or when it orders the doing of a particular thing in order to prevent the breach of an obligation e.g. when the building of one person is an obstruction to the light and air entering through plaintiff's window. It is a perpetual injunction. A perpetual injunction differs from a temporary one in three respects:

(i) The restraint imposed by the latter is not a perpetual one as in the case of the former:

(ii) it does not conclude the right as a perpetual one does:

(iii) it is given at any stage of the case whereas the former is given at the hearing on the merits."

(c)The Act continues by Chapter X sections 54 and 55:

"Of Perpetual Injunctions.

54. Perpetual injunction when granted . . .

55. Mandatory injunction . . ."

Mr. Desai in his text book at p. 123 comments as follows: "Nature of a mandatory injunction: This relief is applicable to the breach of any obligation whether arising out of contract or tort. It may be perpetual or temporary, though in very rare cases a temporary injunction of this nature is issued. An injunction is in its nature prohibitory but a mandatory injunction is restitutory and prohibitory . . ."

(d) It is apparent from the provisions of Sections 52 that the application of the terms "perpetual injunction" and "final injunction" are equivalent, one indicating the duration of the injunction and the other the fact that a further injunction is not called for. In contrast "provisional" and "temporary" are equivalent in those cases where a further order is required, though in the case where the injunction is for a limited period it may come to an end automatically without further order.

Code of Civil Procedure Order XXXIX

(a) Rules 1 and 2. Order XXXIX Rule 1 of the code provides as follows:

"1. Cases in which temporary injunction may be granted: Where in any suit it is proved by affidavit or otherwise - (a) that any property in dispute in a suit is in danger of being wasted, damaged or alienated by any part[y] to the suit, or wrongfully sold in execution of a decree; or (b) that the defendant threatens, or intends, to remove or dispose of his property with a view to defraud his creditors.

The Court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal or disposition of the property as the Court thinks fit, until the disposal of the suit or until further orders".

(b) Mr. Desai in his text book at pp. 614-5 states as follows: ". . . Injunctions are of two kinds, temporary and perpetual. Temporary injunctions are regulated by rules 1 and 2 of this order: perpetual injunctions are regulated by Sections 55 to 57 of the Specific Relief Act, 1 of 1877. . . . A perpetual injunction can only be granted by a final decree made at the hearing and upon the merits of a suit. A temporary or interim injunction on the other hand, may be granted on an interlocutory application at any stage of a suit without considering the merits. The injunction is called temporary, for it endures only until the suit is disposed of or until the further order of the Court.

(c) Order XXXIX Rule 2 provides as follows:

"2. Injunction to restrain repetition or continuance of breach: (1) In any suit for restraining the defendant from committing a breach of contract or other injury of any kind, whether compensation is claimed in the suit or not, the plaintiff may, at any time after the commencement of the suit, and either before or after judgement, apply to the Court for a temporary injunction to restrain the defendant from committing the breach of contract or injury complained of, or any breach of contract or injury of a like kind arising out of the same contract or relating to the same property or right. (2) The Court may by order grant such injunctions, on such terms, as to the duration of the injunction, keeping an account giving security or otherwise, as the Court thinks fit. (3) In case of disobedience, or of breach of any such terms, the Court granting an injunction may order the property of the person guilty of such disobedience or breach to be attached, and may also order such person to be detained in the civil prison for a term not exceeding six months, unless in the meantime the Court directs his release. (4) No attachment under this rule shall remain in force for more than one year, at the end of which time, if the disobedience or breach continues, the property attached may be sold, and out of the proceeds the Court may award such compensation as it thinks fit, and shall pay the balance, if any[,] to the party entitled thereto".

Arbitration Act 1940/1981

The Act provides as follows:

"S. 20. Application to file in Court arbitration agreement:

1) Where any person (has) entered into an arbitration agreement before the institution of any suit (with) respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to Court having jurisdiction in the matters to which the agreement relates, that the agreement be filed in Court.

. . .

5) Thereafter, the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable".

"Chapter V General

26. Save as otherwise provided in this Act, the provisions of this Chapter shall apply to all arbitrations . . .

34. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings . . .

41. Subject to the provisions of this Act and of rules made thereunder -

(a) the provisions of the Code of Civil Procedure, 1908 shall apply to all proceedings before the Court, and to all appeals, under this Act, and

(b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court:

Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters . . ."

"The Second Schedule (see Section 41). Powers of Court

1. The preservation, interim custody or sale of any goods which are the subject matter of the reference.

2. Securing the amount in difference in the reference.

3. The detention, preservation or inspection of any property or thing which is the subject of the reference or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon or into any land or building in the possession of any party to the reference, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purposes of obtaining full information or evidence.

4. Interim injunctions or the appointment of a receiver.

5. The appointment of a guardian for a minor or person of unsound mind for the purpose of arbitration proceedings".

Arbitration (Protocol and Convention) Act 1937

This Act was to give effect to the 1923 Geneva Protocol on Arbitration Clauses (and the 1927 Convention on Execution of Foreign Arbitral Awards). Article 3 provides as follows:

"3. Notwithstanding anything contained in the (Arbitration Act, 1940), or in the Code of Civil Procedure, 1908, if any party to a submission made in pursuance of an agreement to which the Protocol set forth in the First Schedule as modified by the reservation subject to which it was signed by India applies, or any person claiming through or under him, commences any legal proceedings in any Court against any other party to the submission or any person claiming through or under him in respect of any matter agreed to be referred, any party to such legal proceedings may at any time after appearance and before filing a written statement or taking any other steps in the proceedings, apply to the Court to stay the proceedings: and the Court, unless satisfied that the agreement or arbitration has become inoperative or cannot proceed, or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make and (sic) order staying the proceedings.

The Claimant has argued . . . that the power under the Arbitration Act 1940 to grant interim relief does not apply to foreign arbitrations. In the case relied on by the Claimant (G.M. Pfaff A.G. v. Sartaj Engineering Co. Ltd. PLD 1970 Lahore 84) the Court held that the 1937 Act, not the 1940 Act, applied to applications to stay proceedings. The Defendants . . . have cited authorities which show that Pakistani courts have not followed this decision, or have indicated that either Act might be used, but in any case the 1937 Act does not contain any provisions relating to interim relief similar to those under S. 41 of the Arbitration Act 1940. In a case relative to appeals under S. 39 of the Arbitration Act 1940 (Barlas Bros. (Karachi) & Co. v. Yangtse (London) Ltd. PLD 1958 (W.P.) Karachi 24, 25-26) the Court said:

"The meaning of 'save in so far as is otherwise provided by any law for the time being in force' (S 47 of the 1940 Act) comes to this that you have to see whether any other law has some provision contrary to that laid down in the Arbitration Act X of 1940; if so, that provision will prevail, but if not, the provisions of the Arbitration Act X of 1940 will apply.

We cannot see anything in the (1937 Act) which prohibits the application of section 39 of the Arbitration Act X of 1940 and we think that it applies, in particular the provision that an appeal lies against an order setting aside or refusing to set aside an award".'

There follows a description of the four suits.

In suit ?, Claimant sought relief in the form of an injunction against the defendants prohibiting/restraining them from forcibly taking over possession of the factory. In suit ?, Claimant sought a decision prohibiting and restraining the defendants from disposing of or encumbering the factory and from asserting ownership over the plant. The issues framed for consideration in this suit included whether the plant had been successfully completed, whether reliable material had been provided, whether termination was in compliance with the Contract, whether Claimant had any lien over the factory and whether the defendants were entitled to dispose of or encumber the project. The purpose of suit ? was to have the termination of the Contract declared justified and to prevent Claimant from entering or interfering with the plant. Suit ? was a plea for damages in connection with alleged breaches of contract, in response to which Claimant applied for a stay of proceedings, which was granted.

'Submissions on proceedings brought by Claimant

. . .

(a) The parties to the suits ? and ? were different from those in the Arbitration (para. 6).

(b) Suit ? was intended to provide "urgent and immediate relief to stop . . . and [Defendant 2] from forcibly taking over the plant". (para. 7)

(c) Suit ? was filed "to stop Defendants . . . from selling out [Defendant 2] and leaving the country". (para. 8)

(d) "The reason why [Claimant company] brought these suits was not in order to get a 'final determination of the merits' from the Court (which in any case could not have been more than a partial determination), but to make sure that the 'final determination of the merits' to be made by the arbitral tribunal would be effective. The arbitral tribunal was not authorized by the parties to take any provisional measures itself. Given the fact that a permanent injunction, by virtue of Art. 53 of the Pakistani Specific Relief Act 1977 'can only be granted at the hearing and upon the merits of the suit', and realizing full well that it would take quite a while before the arbitral tribunal would reach that stage (Suit ? having been filed before the arbitration was instituted, and Suit ? well before Defendants had filed their Answer and Counterclaim) [Claimant company] also needed to apply for temporary injunctions, to bridge the time gap until the arbitrators would have decided the merits and thereby would have made it possible for the Court to order the requested permanent injunctions."

. . .

Submissions (b) and (c)

It was not necessary, in order to provide the relief which the Claimant alleges that it sought, to institute Suits for Permanent Injunction under the Specific Relief Act 1871. It would have been possible to limit the relief sought from the Pakistani courts to Temporary Injunctions under CPC Order XXXIX or temporary relief under the Arbitration Act 1940, which would not amount to decisions on the merits and would not prejudice the arbitration. The Claimant did in fact additionally seek temporary relief in Suit ?, but withdrew the application under CPC Order 39, leaving the "plaint" for permanent relief continuing.

Submission (d)

For the reason given, a suit for Permanent Injunction under the Specific Relief Act 1871 was not an appropriate means of making sure that the final determination on the merits to be made by the arbitral tribunal would be effective. Though the arbitral tribunal could not itself take provisional measures (a fact recognized by I.C.C. Rule 8.5), there were procedures under the Code and Statutes cited under submission (b) and (c) for obtaining such measures. The Claimant did in fact make application for temporary injunctions, but continued to persist in the Suits for permanent injunctions. Such injunction can be granted only at the hearing of the suit and upon the merits of the suit[,] which would involve a continuance of the suit and a determination by the Court of the merits.

Such a proceeding cannot be described as an interim or conservatory measure within Article 8.5 of the I.C.C. rules.

Provisional and final relief

In Submissions 10 and 12 of the Memorial on Jurisdiction the Claimant reveals a misunderstanding of the nature of injunctive relief under Pakistani (and English) law. In para. 10 on page 22 the Claimant speaks of "suits for provisional or preventive relief, such as procedure to obtain an injunction". In paragraph 12 the Claimant alleges that "any injunction is a provisional remedy, and (that) by its very nature a provisional remedy cannot lead to a waiver of the right to arbitrate". In paragraph 13 the Claimant says "a perpetual injunction comes in aid of a decision (in this case the arbitral tribunal) on the merits of the dispute".

Where a perpetual (or permanent) injunction is sought from a court the injunction is itself the remedy sought. It is a remedy which differs from damages only in that it is preventive rather than compensatory. This is clear from Article 53 (quoted at p. 24 of the Claimant's Memorial) of the Preventive Relief Act: a perpetual injunction can only be granted "at the hearing and upon the merits of the suit", that is to say upon the merits as determined by the Court at the hearing of the suit. A suit for a permanent injunction is not an adjunct to a decision on the merits reached by some other tribunal. A suit for an injunction may be capable of being stayed (for instance by an application under S. 34 of the 1940 Arbitration Act), in which case the decision on the merits would be taken by the Arbitrators and the remedies would be such as the Arbitrators have power to give, but unless the action is stayed the proceedings in court will prevail over the arbitration. (Doleman v. Ossett (1912) 3KB257). This is why, if the action is not stayed on the application of the other party, the party who has invoked a decision of the court on the merits will (unless there are sufficient countervailing factors) be held to have deprived himself of his right to arbitrate. (See the English authorities cited . . . above, especially The Golden Anne). A suit for a permanent injunction is, as the Defendants submit . . ., "a request for a final remedy that can only be granted after a full hearing on the merits". The remedy is in no sense provisional.

The facts in the present case are different from those in The Golden Anne. There the World Pride did not bring Daiichi into the proceedings in the first place: it made a cross claim. The Judge said (p. 495 column 1) "I have not been persuaded that by making a cross-claim against Daiichi, World Pride have evinced an intention not to be bound by the Arbitration agreement. The position might have been different if it had been World Pride who had brought Daiichi into the proceedings in the first place. But it was not". Here it was the Claimant who started proceedings for a Permanent Injunction (which raise substantially the same issues as those in the arbitration) against [Defendant 2], and have been and still are persisting in them.

The Arbitrators do not accept the submission . . . that by failing to apply for a stay of Suits ? and ? [Owners] acknowledged that the suits are compatible with an arbitration agreement. A party to an arbitration agreement who is sued in the courts is not obliged to apply for a stay: it may prefer to have the issues decided by the courts. In the present case it seems clear that in fact [Owners] did prefer to have the issues decided by the Pakistani courts, as is evident from the fact that [Owners] themselves commenced two suits (? and ?) in the Pakistani Courts raising issues which are covered by the Arbitration Clause in Art. 25.1 of the Turnkey Contract. . . .

Summary

For the reasons here summarized the majority arbitrators conclude that the Suits ? and ? brought by Claimant were suits for permanent injunctions:

(a) The Suits are entitled "Suit for permanent injunction".

(b) The remedies sought by the Suits were not just temporary injunctions pending the final hearing of the Suits by the Court;

(c) But the remedy sought was a final hearing of the issues raised including the issues whether the purported termination of the Turnkey Contract was legitimate and whether the Project could legitimately be taken over without following the prescribed procedure;

(d) Though interim relief was also sought from the Court under 2 CPC 39, the claims for final injunctions under [S]pecific [R]elief [A]ct 1971 continued after interim relief was no longer pursued;

(e) No attempt was made by the Claimant to use the [A]rbitration [A]ct 1940/1981 sections 20 or 41;

(f) On the facts of this case, unlike those distinguished by the Court in Lloyd v. Wright and in The Golden Anne, there were no countervailing factors such as those on which the Courts based their decisions in those cases;

(g) The conduct of the Claimant in bringing and continuing those Suits was inconsistent with the language used in the applications under section 34 of the [A]rbitration [A]ct in respect of the Suits brought by [Owners];

(h) The conduct of the Claimant is consistent only with a waiver or repudiation of the right of the Claimant to bring to arbitration the claims against [Defendant 1] and [Defendant 2] which are listed in the terms of reference, most of such claims being brought jointly against both [Defendant 1] and [Defendant 2].

In order to determine whether the Claimant was entitled to the permanent injunctions sought against the Defendants in Suits ? and ? (who included Defendant No. 2 in this Arbitration) it would be necessary for the court to determine whether or not under the terms of the Contract the Defendants were entitled to terminate the Contract and take possession of the [factory], and whether they had the right to sell/alienate/encumber or part with the possession of the plant and property on the site. . . .

The determination by the Court of these issues, which was necessary for a decision as to whether the Claimant was entitled to the relief sought in ? and ?, would be a final determination on the merits. The issues raised in Suit ? are in the Arbitrators' opinion correctly stated in the Order made by the Court on [date] framing issues.

A comparison of these issues with the Issues in this Arbitration as listed in the Terms of Reference shows that they are substantially the same as those raised in the Arbitration, namely the rights of the parties under the Turnkey Contract, and in particular the legitimacy or otherwise of the purported termination of the Contract on [date] and the actions by the Defendants Nos. 1 and 2 which followed.

. . .

Consequently . . . the Majority Arbitrators decide Issue No. 1.4 in favour of the Defendants Nos. 1 and 2.

. . .

In view of the determinations made by the Arbitrators, this award is a final award in favour of all the Defendants.

. . .

On page . . . of the Claimant's Memorial on Jurisdiction there appears Request for Order:

"The Arbitral Tribunal is respectfully requested, in light of the fact that, in contravention to the arbitration clause, [Owner] has filed procedures on the merits of this case, as is amply set out in this Memorial, of which procedures in any case Suit ? is still pending, to issue an order directing [Owner] to move for a withdrawal or stay of the proceedings in this and any other cases it has filed in Pakistani Courts on the merits of this dispute, at such time as the Tribunal may think proper for such order".

The Arbitrators doubt whether they have any power to make such an order, or whether such an order if made would be effective. However in any case in the light of the other determinations made this question does not arise, and the Arbitrators decline to make the order requested.'

L'arbitre dissident soutenait la compétence du tribunal arbitral aux motifs (i) que les procès intentés par le demandeur devant les tribunaux pakistanais avaient pour objet des mesures conservatoires s'inscrivant dans une situation d'urgence et visant uniquement à obtenir une réparation provisoire et qu'ils ne traitaient donc pas au fond du même litige que celui dont le tribunal arbitral de la CCI avait été saisi ; (ii) que les procès démontraient l'intention claire et non équivoque du demandeur de préserver son droit à l'arbitrage et non d'y renoncer ; et (iii) que, alors même qu'il serait jugé que le litige sur lequel les tribunaux pakistanais devaient statuer était le même que celui soumis au tribunal arbitral, les actions engagées par le demandeur devant les tribunaux pakistanais n'étaient pas dirigées contre le défendeur n° 1, à l'égard duquel le tribunal arbitral restait donc compétent.