MS Mughal Iron & Steel Industries Limited Vs Metro Metals Northwest inc.

JUDGMENT SHEET

IN THE LAHORE HIGH COURT, LAHORE.

JUDICIAL DEPARTMENT.

I.C.A. No.17021/2025.

M/S Mughal Iron & Steel Industries Limited Versus Metro Metals Northwest

Date of Hearing 09.09.2026.

Appellant by Mr. Muhammad Ahsan Bhoon and Mirza Nasar Ahmad, Advocates.

Respondent Mr. Muhammad Umer Akram Ch., Rana Haseeb Naazir and Ms. Minahil Fatima, Advocates.

AHMAD NADEEM ARSHAD, J:- Through the instant

Intra-Court Appeal, the appellant has called-in-question the judgment dated 29.01.2025 passed by the learned Single Judge in C.O.S. No.42300 of 2022, whereby the learned Single Judge-in-Chambers, while exercising jurisdiction under section 6 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 (“the Act, 2011”), recognized and enforced the foreign arbitral award in favour of the applicant/respondent and directed that the award amount be executed as a decree of this Court. The decree-sheet was also directed to be drawn accordingly.

2.The controversy has its genesis in a commercial transaction between the parties. The record shows that the parties entered into a Sales Contract dated 24.02.2020, pursuant to which the appellant was to purchase approximately 30,000 MT of scrap metal from the respondent.

The contract contained an arbitration clause. Disputes subsequently arose between the parties concerning, inter alia, payment, letters of credit and

the appellant's obligation to receive the cargo. The respondent consequently invoked the agreed arbitral mechanism. The record further reflects that proceedings were instituted before the competent forum in the United States District Court for the District of Oregon, Portland Division, United States of America, the dispute was referred to arbitration and a final award was eventually rendered in favour of the respondent.

3.The respondent thereafter approached this Court under section 6 of the Act, 2011 seeking recognition and enforcement of the foreign arbitral award. The appellant resisted the application by relying upon grounds referable to Article V of the New York Convention, as incorporated in the Schedule to the Act, 2011. Amongst the objections raised were that the award was allegedly not enforceable in the absence of confirmation by the competent court in the United States; that the award allegedly travelled beyond the scope of the arbitration agreement;

that the arbitral proceedings were conducted without proper notice; and that the tribunal allegedly failed to take into account the appellant's position concerning the letters of credit and its contractual obligations.

4.The learned Single Judge-in-Chambers, after considering the objections, concluded that the defence raised by the appellant did not furnish a legally sustainable basis for refusal of recognition and enforcement under Article V of the Convention/Schedule to the Act, 2011. The learned Single Judge-in-Chambers accordingly rejected the objections, recognized the award as binding and enforceable, granted judgment in the award amount, awarded costs and converted the

proceedings into execution proceedings in terms of Order XXI Rule 10,

C.P.C.

5.Learned counsel for the appellant has assailed the impugned judgment principally on the grounds that the learned Single Judge-in- Chambers failed to properly appreciate the objections raised against enforcement; that the award could not be enforced without further proceedings/confirmation in the jurisdiction where it was made; that the arbitral tribunal allegedly exceeded the scope of the arbitration agreement; that the appellant was not afforded a proper opportunity of participating in the arbitral proceedings; and that the award was founded upon an erroneous appreciation of the contractual arrangement, particularly the obligations relating to letters of credit and delivery of the cargo. Validity and execution of the Sales Contract was disputed by maintaining that it was not signed by a duly authorized person and also raised an objection of public policy.

6.Learned counsel for the respondent, on the other hand, has supported the impugned judgment and submitted that the appeal is, in substance, an attempt to reopen the merits of the foreign award under the guise of objections to its enforcement. It is argued that section 6 of the Act, 2011 read with Article V of the New York Convention prescribes a deliberately narrow supervisory jurisdiction; that none of the statutory grounds has been established by the appellant; and that the learned Single Judge-in-Chambers correctly declined to convert enforcement proceedings into a retrial of the commercial dispute.

7.Section 6 of the Act, 2011 empowers this Court to recognize and enforce a foreign arbitral award unless it refuses the

application under Section 7 of the Act, 2011. Section 7 permits refusal only upon the grounds enumerated in Article V of the Convention, which is set out in the Schedule to the Act, 2011. Section 8 of the Act, 2011 gives the Convention primacy over any inconsistent provision. Section 6 of the Act, 2011 reads as under:-

"6. Enforcement of foreign arbitral award.-(1) Unless the Court, pursuant to section 7, refuses the application seeking recognition and enforcement of a foreign arbitral award, the Court shall recognise and enforce the award in the same manner as a judgment or order of a court in Pakistan.

(2)A foreign arbitral award which is enforceable under this Act, shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in Pakistan.”

The court can refuse the enforcement and recognition of the award only in terms of section 7, which too is relevant and provides that:

"7. Unenforceable foreign arbitral awards.- The recognition and enforcement of a foreign arbitral award shall not be refused except in accordance with Article V of the Convention."

It is clear upon a reading of section 7 above that the recognition and enforcement of a foreign arbitral award shall not be refused except in terms of Article V of the Convention. It follows ineluctably that ordinarily the court will grant recognition and enforcement to a foreign arbitral award and any refusal is hedged in by the mandate of Article V of the Convention which forms part of the Act, 2011. This is the intention of the legislature and encapsulates what has been described as the underlying theme of the Convention which "can be said to have a pro-

enforcement bias and a strong case can be made out that the grounds under Article V are to be applied restrictively and construed narrowly".

8.Sections 6 and 7 of the Act, 2011 are the pivot around which the entire Act, 2011 revolves. These provisions direct themselves to the recognition and enforcement of the award and not the arbitration agreement. This is the crucial aspect which needs to be hammered in. The enumeration made in section 7 captures the entire intention of the legislature. This enumeration will be kept in view by the court and take precedence over any other construction sought to be put on the scheme of the Act, 2011 or on the basis of the New York Convention which is appended as a schedule. The schedule will have relevance so far as it is referred to in the primary enactment itself. The ineluctable inference upon reading of section 7 is that the only grounds of refusal for recognition and enforcement of the award shall be those given in Article V of the Convention and no other. By necessary corollary, therefore, any challenge premised on Article II read with Article IV stand ousted.

Sections 6 and 7 of the Act, 2011, when read in combination, oblige the court to recognize and enforce an award unless it finds the award to run foul of Article V of the Convention.

9.Article V of the New York Convention exercises a gravitational pull on the decision to be rendered on an application of this nature and must be reproduced in order to understand its precise scope and sweep:-

“Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:-

(a)The parties to the agreement referred to in Article II were, under the -law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b)The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

(c)The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration, can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(d)The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e)The award has not yet become binding on the parties, or has been set aside or suspended by a competent, authority if the country in which, or under the law of which, that award was made.

2.Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:-

(a)The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or

(b)The recognition or enforcement of the award would be contrary to the public policy of that country."

10.The principal question requiring determination is: Whether the appellant has been able to demonstrate any ground recognized by Article V of the New York Convention, as incorporated in the Schedule to the Act, 2011, warranting refusal of recognition or enforcement of the

foreign arbitral award? In our considered view, the answer is in the negative. The statutory scheme is fundamental to the determination of the present appeal. The Act, 2011 was enacted to give effect in Pakistan to Pakistan's obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958. Section 6, read with section 7 and Article V of the Convention, does not confer upon the enforcing Court a general appellate jurisdiction over the foreign award. Rather, it embodies a strong legislative policy in favour of recognition and enforcement, subject only to the narrowly defined exceptions contained in Article V. The grounds for refusal of recognition and enforcement of a foreign arbitral award are those stipulated in Article V of the New York Convention and that the Court seized of an enforcement application is not to undertake a general re-examination of the award as if sitting in appeal over the arbitral tribunal. The principle assumes even greater significance in international commercial arbitration.

The very purpose of the Convention is to secure predictability, finality and effectiveness of arbitral awards and to prevent the courts of the enforcing State from becoming a second appellate forum on questions already determined by the tribunal.

11.The approach adopted by the learned Single Judge-in- Chambers is also consistent with the principle of minimal judicial interference in arbitration recognized by the Hon’ble Supreme Court of Pakistan in “Taisei Corporation and another v. A.M. Construction Company (Pvt.) Ltd. and others” (2024 SCMR 640). The authority emphasizes that arbitration is a consensual mechanism for private resolution of disputes and that courts are required to respect the parties'

decision to have their disputes determined by an arbitral tribunal, subject to the safeguards expressly preserved by law. The judicial role is therefore supervisory rather than appellate. In the said judgment it was held as under:-

"This approach of minimal interference and support for the arbitral process is enshrined in the concept of "pro- enforcement bias", which refers to the inclination of legal frameworks, such as the New York Convention and national laws, to facilitate the enforcement of arbitral awards. This bias underscores the commitment to uphold the integrity of arbitration as a means of settling international disputes by limiting the grounds on which enforcement can be refused and placing the burden of proof on the party resisting enforcement."

12.Likewise, “Orient Power Company (Private) Limited v. Sui Northern Gas Pipelines Limited” (2021 SCMR 1728), underscores that where interconnected contractual arrangements and an arbitration agreement form part of a coherent commercial transaction, the intention of the contracting parties and the efficacy of the agreed dispute-resolution mechanism are material considerations. The authority reinforces the principle that arbitration clauses are not to be approached narrowly or defeated by an artificial fragmentation of the contractual relationship.

13.The first substantial objection concerns the contention that the foreign award could not be recognized or enforced in Pakistan unless it had first been converted into, or confirmed by, a judgment of a court in the United States. We are unable to agree. The statutory concept is recognition and enforcement of a foreign arbitral award. The award does not cease to be an arbitral award merely because it has not been converted into a judgment in the country where the arbitration took place.

The Act, 2011 and the Convention prescribe the conditions upon which

an award may be recognized and enforced in another Contracting State.

Indeed, the learned Single Judge-in-Chambers specifically considered this objection and found it insufficient to prevent enforcement. The appellant has not demonstrated before us any provision of the Act, 2011 which makes prior conversion of every foreign arbitral award into a judgment of the courts of the seat an indispensable precondition for enforcement in Pakistan. The argument, if accepted, would introduce an additional condition not found in Article V of the Convention and would unnecessarily impede the pro-enforcement policy embodied in the Act,

14.The appellant has also attempted to demonstrate that the tribunal travelled beyond the scope of the arbitration agreement by determining questions arising from the parties' Sales Contract and their obligations relating to letters of credit, shipment and delivery. This objection also does not persuade us. The arbitration agreement arose from the parties' commercial contract and the dispute submitted to arbitration concerned the parties' respective rights and obligations arising from that contractual relationship. The fact that determination of the dispute required consideration of the letters of credit, shipment arrangements, contractual conditions and alleged breaches does not, by itself, transform the award into one rendered outside the scope of the arbitration agreement. More importantly, the appellant seeks, through this objection, a reconsideration of the factual and contractual findings made by the arbitral tribunal. That is impermissible at the enforcement stage.

Article V(1)(c) is not a gateway through which every alleged error of law, fact or contractual interpretation can be converted into an objection

to enforcement. There must be a real and demonstrable excess beyond the submission to arbitration. No such jurisdictional excess has been established before us. The learned Single Judge-in-Chambers was therefore justified in declining to revisit the merits of the contractual dispute.

15.A substantial part of the appellant's objections concerns the alleged non-opening, inadequacy or non-availability of the requisite letters of credit and the consequences which, according to the appellant, followed therefrom. The record shows that these very matters were placed before the arbitral tribunal. The appellant's case essentially requires this Court to examine whether the tribunal correctly appreciated the contractual condition relating to the letters of credit, whether the cargo ought to have been shipped, whether the respondent was entitled to damages and whether the appellant committed a breach. Those are questions falling within the merits of the dispute. Once the parties have chosen arbitration and the dispute has been adjudicated by the agreed tribunal, the enforcing Court does not undertake a rehearing on those questions merely because one party remains dissatisfied with the tribunal's conclusions. The distinction between reviewing the legality of enforcement and reviewing the correctness of the award must be maintained. The former is permitted within the boundaries of Article V;

the latter is not. The learned Single Judge-in-Chambers correctly maintained that distinction.

16.We have also considered the appellant's contention that the Sales Contract dated 24.02.2020 was not validly executed on its behalf and that the signatures appearing thereon were not those of a duly

authorized person. The objection, though couched as one concerning the validity of the arbitration agreement within the contemplation of Article V(1)(a) of the New York Convention, cannot be examined in isolation from the subsequent conduct of the appellant. The material placed before us discloses that, after the execution of the Sales Contract, the appellant itself repeatedly acted upon and expressly referred to the said contract. In particular, the appellant addressed its letter dated 29.03.2020 to the respondent with reference to the Sales Contract; its counsel thereafter continued correspondence with the respondent and its counsel on the basis of the same contractual arrangement; and, significantly, the appellant instituted Civil Suit No.15023 of 2020 founded upon the Sales Contract itself. In the said suit at para No.3 of the plaint maintained as under:-

"That briefly the facts necessitating the filing of instant suit are that the plaintiff Company entered into a Sales Contract No. MISG0320 dated 24.02.2020 with defendant, for the import of shredded scrap total 26,000 MT @ US305per MT (Total 7,930,000/-US) and PNS 4,000 MT @ US310perMT (Total 1,240,000/-US). All requisite documentation in this regard was duly fulfilled. The defendant appointed the U.S. Bank N.A. as its Negotiating Bank whereas the Plaintiff Company in order to fulfill the mandatory requirements for international transactions, got issued the requisite Letters of Credit through six Pakistani Banks against payment of due commissioning amounts to said Pakistani Banks, being the Issuing Banks."

The subsequent conduct of a party, particularly when it is contemporaneous with the transaction and directly referable to the very instrument whose execution is later denied, is a relevant circumstance in determining whether such denial can legitimately furnish a ground for refusing enforcement. The appellant has taken this objection for the first

time in the appeal and never denied the validity and effectiveness of the Sales Contract before the learned Single Judge-in-Chambers.

17.The plea of denial of signatures, therefore, cannot be considered merely by placing the disputed instrument before the enforcing Court and inviting it to undertake a fresh evidentiary inquiry into its execution. The question before us is not whether this Court, sitting in enforcement jurisdiction, would independently arrive at a different conclusion regarding the authenticity of the contractual instrument, but whether the appellant has established, within the confines of Article V(1)(a), a legally sustainable basis to displace the arbitral determination and the consequences flowing from the parties' own subsequent conduct. The principle that a litigant cannot approbate and reprobate the same transaction assumes particular significance in the present circumstances. Having itself invoked, relied upon and litigated upon the Sales Contract, the appellant cannot, merely after an adverse arbitral result, disown the same instrument for the purpose of defeating enforcement. Such a course would not only disregard the evidentiary significance of its own contemporaneous conduct but would also permit a party to approbate the contractual arrangement when advantageous and disavow it when its consequences become adverse. The record, as summarized in the brief facts, further shows that the appellant's civil proceedings were stayed vide order dated 10.07.2026 in view of the arbitration clause contained in the Sales Contract, which is a circumstance lending further weight to the conclusion that the contractual arrangement was not an unknown or alien instrument to the appellant.

18.The surrounding circumstances also reinforce this conclusion. The appellant admittedly communicated with the respondent concerning performance of the Sales Contract and, according to the material before us, did not merely remain a stranger to the transaction but took a position concerning payment, letters of credit and acceptance of the cargo. In addition, the respondent shipped the cargo on 18.03.2020 and that the appellant subsequently communicated its refusal to accept delivery. These matters were thereafter placed before the arbitral tribunal in the context of the parties' contractual rights and obligations. The objection as to execution or signatures, viewed against this factual background, essentially invites this Court to reassess the evidentiary material underlying the tribunal's determination. That is precisely the exercise which the enforcement Court is not permitted to undertake.

Article V provides a limited safeguard against enforcement in specified circumstances; it does not confer an appellate jurisdiction enabling the Court to re-weigh the evidence, reassess admissions and correspondence, or substitute its own factual conclusion for that reached by the arbitral tribunal. Unless the appellant demonstrates, by cogent material, that the arbitration agreement was legally incapable of binding it in the sense contemplated by Article V(1)(a), a mere subsequent repudiation of an agreement upon which it had itself acted cannot be elevated into an independent ground for refusal of enforcement. This conclusion is also consonant with the principle that the judicial role in international commercial arbitration is supervisory rather than appellate.

19.Nor does the present case disclose any circumstance warranting refusal of enforcement on the ground of public policy.

20.The Hon’ble Supreme Court of Pakistan in Orient Power Company’s case, with regard to public policy observed as under:- “99. Article V of the New York Convention lays down instances where courts may refuse recognition and enforcement of an arbitral award brought before them, more specifically, Article V(2)(b) states that recognition and enforcement may be refused if the award would be contrary to "public policy" of "that country". Thus, since recognition and enforcement of the award is being sought in Pakistan, it is the public policy of Pakistan that one must adhere to while perusing the award, which, in turn requires a discussion on what amounts to a violation of public policy under the laws of Pakistan.

100.It is noteworthy that neither the New York Convention nor the corresponding Foreign Arbitral Awards Act has defined public policy. This was purposefully done by the drafters of the Convention so as to allow each country to derive its own notions of public policy, as it would be unrealistic and utopian to expect all States to adhere to one harmonized ideal of public policy.

101.The dilemma of defining public policy has adequately been by Albert Van Den Berg in his book titled 'The New York Arbitration Convention of 1958. Towards a Uniform Judicial Interpretation' wherein he states that the reason why the concept of public policy is so difficult to grasp is that the degree of fundamentality of moral conviction or policy is conceived differently for every case in the various States. Indeed, this is true, and to that effect both Parties have relied on a great many cases from different jurisdictions to illustrate the views taken by courts and commentators on the interpretation of public policy.

102.Owing to paucity of judicial commentary and literature alike in Pakistan, we find it necessary to expound upon the meaning of public policy, more specifically within the realm of international commercial arbitration.

103.Perusals of the Travaux préparatoires (preparatory works) of the New York Convention clearly indicate that the public policy exception was never meant to be given a wide scope of application. Article 1(2) (e) of the Geneva Convention, the predecessor to the New York Convention contained the provision of public policy in such a way that not only a violation of public policy of the country of

enforcement hindered recognition and enforcement; an award could also be contrary to public policy if it was contrary to the "principles" of the law of the country in which it was seeking enforcement. The reference to principles of law was omitted by the International Court of Commerce (ICC) Draft of 1953, and Article IV(1)(a) of this draft was limited to only a violation of public policy. In the final discussions leading up to the adoption of the New York Convention, Working Party III was instated to present its report on 3 June, 1958. The wording "incompatible with the public policy of the country in which is award is sought to be relied upon” was recommended, the reasoning behind the same was that the public policy criterion should not be given a broad scope of application. The Convention adopted the draft of Working Party III, which now reads as Article V(2) (b) under the New York Convention.

104.Article V(2) (b)'s defense of public policy is one ground that is frequently invoked by a party resisting enforcement of the award, but rarely is it granted. We find that it would be remiss if we did not echo the Learned High Court in quoting the words of an English Court upon this issue, which are by now almost inextricably linked to this topic and oft cited: "public policy is a very unruly horse, and once you get astride it you never know where it will carry you. It may lead you from sound law. It is never argued at all, but when other points fail."

105.Another frequently cited judicial comment on public policy is from Judge Joseph Smith in Parsons and Whittemore Overseas Inc. v. RAKTA1, who observed that the public policy defense ought only to succeed where enforcement of the award would violate the forum State's most basic notions of morality and justice.

106.The recent Privy Council decision of Betamax Ltd (Appellant) v State Trading Corporation (Respondent) (Mauritius)2 is of some guidance, in which, on appeal, the Privy Council overturned the decision of the Supreme Court of Mauritius which had set aside an award for being contrary to the public policy of Mauritius, because the underlying contract between the parties was in breach of the public procurement law of Mauritius. The Board held that the court was not entitled to use the guise of public policy to reopen issues relating to the meaning and effect of a contract or whether it complies with a regulatory or legislative scheme. For that reasons the decision of the 508 F.2d 969 (1974)

[2021] UKPC 14

Supreme Court of Mauritius setting aside the Award fell to be reversed.

107.In Pakistani jurisdiction, public policy has been interpreted in the context of the Act preceding the Foreign Arbitral Awards Act, 2011 i.e. the Arbitration (Protocol and Convention) Act 1937 in Nan Fung Textiles Limited v. Sadiq Traders Limited3 as being objects which are illegal by common law or legislation, which are injurious to good government which are adverse to justice, family life or public interest and objects economically against the public interest.

108.This court has also touched upon public policy in the case of Haji Abdul Karim and others v. Sh. Ali Muhammad4 as:

"Similarly, the appellants not having proved that a license for the working of the factory was necessary because the Chief Executive Officer had formed the opinion that the running of the factory was dangerous to life, health or property or likely to create nuisance, it cannot be held that running of the factory was opposed to public policy."

109.The Supreme Court of Azad and Jammu Kashmir in the case of Sardar Muhammad Yasin v. Raja Feroze Khan5" has defined public policy as:

"...any act the allowing of which would be against the general interests of the community. This policy has involved itself with the growth of organised society. Certain standards in the domain of morality, used in its widest sense, have assumed sanctity on account of the acceptance by the general community. Therefore, any agreement which would destroy these standards or adversely effect [sic] the development of society or its organization have to be viewed from this angle and it is here that the principle of public policy is born."

110.Therefore, it is easy to adduce the hesitance of courts and drafters alike in invoking public policy frivolously and without the most exceptional of circumstances. Most courts world over have favoured a restrictive approach to public policy in international commercial arbitration. It is imperative that, Pakistan is one of the countries that have yet to develop jurisprudence on international commercial PLD 1982 Karachi 619

PLD 1959 SC 167

PLD 1972 AJ&K 46

arbitration, and we must be cautious, and ought to adopt standards of practice in line with the international community. There is also a need to develop best standing practices for our own courts, which are seeing a rise in cases pertaining to international commercial arbitration; therefore, there is an utmost need to deliver precedent that is consistent and does not open floodgates to frivolous litigation. Indeed, the very purpose of parties going to arbitration is the (relatively) speedy settlement of disputes, which ought not to be impeded by a party resorting to litigation once an award is rendered.

111.The jurisdiction of courts under international commercial arbitration is merely supervisory; we deem it necessary to step in under circumstances, where, if not remedied, the arbitration award or agreement could lead to an unfair outcome for one of the parties. This is in no way means that domestic awards would be treated less favourably than foreign awards, but rather, the aim is to create a level playing field between the two and treat them at par.

112.A restrictive interpretation on challenge to enforcement of an award would therefore, ensure finality of award at its last stage, giving greater certainty to parties after having gone through rigorous arbitrations. The New York Convention itself advocates for a "pro-enforcement bias" and we are mindful of the same.

113.This does not in any way mean that the pro- enforcement bias impedes State interests however, and where a claim for violation of public policy is made, due care and attention ought to be awarded to that claim. However, one must be mindful that the public policy defense is an exceptional one at that, which demands heightened standards of proof that courts would normally require in order to refuse recognition and enforcement of a foreign arbitral award. Thus the Canadian courts have requested that the party opposing recognition and enforcement should present compelling evidence, and that recognition and enforcement should only be refused in instances of a "patently unreasonable award"6.

114.This heightened standard of proof is compatible with the exceptional nature of the public policy defense as well as with the fact that Article V(2) (b) ibid; provides a mere facility to the courts and not an obligation.

See Karaha Bodas Company, L.L.C. v. Perushahaan Pertambangan Minyak Dan Gas Bumi Negara and P.T.PLN (Persero) 2007 ABQB 616

115.Under the present scenario, we are convinced that this was not a case of unjust enrichment; rather, this was a case where the Appellant was aggrieved by the quantum of compensation awarded by the Sole Arbitrator. There had therefore, been no violation of public policy.”

21.The Hon'ble Supreme Court of Pakistan in Taisei Corporation case has emphasized that the New York Convention embodies a pro-enforcement policy and that the public-policy exception is to be construed narrowly. The said ground cannot be employed as a substitute for an appeal on facts or law, nor can it be invoked merely because the enforcing Court may take a different view of the contractual interpretation, evidentiary appreciation or legal reasoning adopted by the arbitral tribunal.

Recognition and enforcement may be declined on this ground only where enforcement would offend the most basic notions of morality and justice prevailing in Pakistan; it cannot be expanded so as to create additional grounds of defence not contemplated by Article V. It was held as under:- “The recognition and enforcement of a foreign arbitral award may be refused by the courts of Pakistan on the public policy ground only where it would violate the "most basic notions of morality and justice” prevailing in Pakistan. The public policy ground cannot be used to examine the merits of a foreign arbitral award or to create more grounds of defence that are not provided for in the Convention, such as misapplication of the law of Pakistan by the arbitrator in making the award or the arbitrator's decision being contrary to the law of Pakistan.”

21.In the present case, no such exceptional circumstance has been demonstrated. The objections concerning the execution of the Sales Contract, the authority of the signatory, contractual performance, letters of credit and the consequences of non-acceptance of the cargo, even when considered collectively, do not disclose an affront to the fundamental notions of public policy; rather, they constitute issues

arising from the commercial relationship which were capable of, and in fact were, submitted to and determined through the agreed arbitral mechanism. To permit such objections to be recast as matters of public policy would enlarge the limited supervisory jurisdiction of the enforcing Court into a merits review, contrary to the statutory scheme and the authoritative guidance of the Hon'ble Supreme Court.

22.The appellant further relies upon Article V(1)(b), alleging that it was not afforded proper notice of the appointment of the arbitrator or of the arbitral proceedings. This objection was considered by the learned Single Judge-in-Chambers inasmuch as the record disclosed that notices concerning the appointment of the sole arbitrator and the arbitral proceedings were sent to the appellant and that the appellant failed to furnish convincing evidence sufficient to displace the material available on record regarding service. The learned Single Judge-in-Chambers also took into account the findings made in the proceedings before the competent United States court concerning service of the proceedings.

Before us also, no material has been pointed out which would justify the conclusion that the appellant was deprived of a reasonable opportunity to present its case within the meaning of Article V(1)(b). A party cannot deliberately or negligently abstain from participating in an arbitral process, and thereafter seek to use its own non-participation as a basis for defeating enforcement of the resulting award. The maxim ‘nemo ex suo delicto meliorem suam conditionem facere potest’—no person can improve his position by reason of his own wrong—is attracted to such a situation. The objection is, therefore, without substance.

23.The respondent's pleadings also demonstrate that the appellant sought to rely upon the COVID-19 lockdown and the contractual force majeure clause in relation to its alleged inability to receive the goods and perform the relevant contractual obligations.

Whether the circumstances constituted force majeure, whether the contractual requirements were satisfied and what consequences flowed therefrom were matters for determination by the arbitral tribunal under the parties' contract. The mere assertion that the tribunal allegedly reached the wrong conclusion on such questions does not establish an Article V ground. We, therefore, find no justification for converting the enforcement proceedings into a merits review of the tribunal's determination concerning force majeure.

24.The objections advanced before us, taken collectively, disclose a common difficulty: the appellant seeks to enlarge the limited statutory grounds of refusal into a general equitable jurisdiction enabling the enforcing Court to reconsider whether the award was right or wrong.

Such an approach would defeat the legislative scheme. The Court recognized the general pro-enforcement orientation of the Convention and held that the grounds contemplated by Article V are the relevant grounds for refusal. The burden consequently lies upon the party resisting enforcement to bring its case squarely within one of those grounds. A generalized allegation of injustice, incorrect appreciation of evidence, contractual error or erroneous conclusion is not sufficient.

25.An appellate Court exercising intra-court jurisdiction is not expected to interfere merely because another view might theoretically be possible. The question is whether the impugned judgment suffers from a

legal error, misapplication of the governing statutory framework, perversity or failure to exercise jurisdiction vested by law. We have independently examined the reasons recorded by the learned Single Judge-in-Chambers. The learned Judge identified the statutory framework, considered the objections advanced by the appellant and concluded that they did not fall within, or did not sufficiently establish, any of the grounds warranting refusal of recognition and enforcement under Article V. The conclusion is consistent with the statutory policy of the Act, 2011 and with the authorities placed before us. We find no misdirection in law warranting interference.

26.There is another consideration which cannot be overlooked.

International commercial arbitration rests upon the premise that parties voluntarily select a neutral dispute-resolution mechanism in order to obtain a binding and final determination. Recognition and enforcement proceedings are intended to give practical effect to that bargain. If every contractual defence already considered by the arbitral tribunal could be re-agitated before the enforcing Court, the arbitral process would cease to provide finality. The successful party would effectively be required to litigate the same dispute twice—first before the tribunal and again before the court of enforcement. The New York Convention and the Act, 2011 do not contemplate such a regime. The Court's task is to protect the limited safeguards expressly preserved by law, not to substitute its own assessment for that of the arbitral tribunal.

27.Having considered the submissions of learned counsel, the record of the proceedings before the learned Single Judge-in-Chambers, the impugned judgment and the statutory scheme, we are satisfied that

the appellant has failed to establish any ground under Article V of the New York Convention/Schedule to the Act, 2011, which could justify refusal of recognition or enforcement of the foreign arbitral award. The objections relating to the alleged absence of prior confirmation by a court of the country of origin, the alleged excess of jurisdiction, the letters of credit, force majeure, contractual performance and the alleged procedural irregularities either do not fall within the limited scope of Article V in the manner suggested by the appellant or have not been established on the material available before the Court. The learned Single Judge-in- Chambers, therefore, committed no error of law or jurisdiction in recognizing and enforcing the award. The impugned judgment is accordingly found to be well-reasoned and legally sustainable.

28.In view of the above, this Intra-Court Appeal being devoid of merit is dismissed. No order as to costs.

(SHIREEN IMRAN) (AHMAD NADEEM ARSHAD)

JUDGE JUDGE

Announced in open Court on _____________.

JUDGE JUDGE

Approved for reporting.

JUDGE JUDGE

Gull*