M/S Project Builders Ltd. Vs. Joint Venture of M/s. China National Technical 2017 (2) LNJ 114

Case No: Arbitration Application No. 8 of 2015

Judge: Syed Refaat Ahmed. J.

Court: High Court Division,

Advocate: Mr. M. Quamrul Haque Siddique, Mr. Shafique Ahmed,

Citation: 2017 (2) LNJ 114

Case Year: 2016

Appellant: M/S Project Builders Ltd.

Respondent: Joint Venture of M/s. China National Technical

Subject: Arbitration/Mediation

Delivery Date: 2017-09-19

HIGH COURT DIVISION

 

(SPECIAL STATUTORY JURISDICTION)

 

 

 

Syed Refaat Ahmed, J

Judgment on

14.06.2016

}

}

}

}

}

}

}

}

}

}

}

}

}

}

}

}

}

}

M/S Project Builders Ltd. (PBL) of PBL Tower, (Level 5th and 6th), 17 North C/A, Gulshan-2, Dhaka-112; Represented by it Managing Director Mr. Aminul Islam.

. . .Petitioner

-Versus-

The Joint Venture of Messer’s China National Technical Import and Export Corporation and Messer’s Beijing Sound Environmental Engineering Company Limited, represented by its project manager Mr. Chen Hongye, CNTIC-BSEEC-JV of-Jiuling Building, No.-21, Xisanhusanbeilu, Haidian District, Beijing, Peoples Republic of China; at present of Karnaphuli Water Supply Project, KWSP-C-1, Pumra, Rangunia, Chittagong and others.

...Opposite Party

 

Arbitration Act (I of 2001)

 

Sections 3 and 12

 

The parties to any agreement are free to insert a forum selection clause and/or a choice of law clause for resolution of contractual disputes. A forum selection clause in a contract with a conflict of laws element as in the present case allows parties to initiate litigation in a specific forum. Such clause may take the form of both requiring a specific process (for example, arbitration as in the present instance) to be carried out in a specific location.                                             . . .(13)

 

Arbitration Act (I of 2001)

 

Section 3

 

A distinction also has to be drawn between a forum selection clause and a choice of law clause. Parties are usually free to nominate the proper law under which all relevant disputes are to be resolved. If there is an express selection, as in this case of Bangladeshi law, this choice will be respected by this Court so long it is made bona fide. It is under this head that the question of extent of application of the Act in the facts becomes moot. This Court finds Section 3(1) and (2) to exclude in that regard the operation of the Act in governing the arbitration procedure leaving the agreed terms of contract to accord primacy to the ICA of the ICC governed by the ICC Rules to set the forum and procedure for arbitration. This Court substantiates that finding by delving further into the genesis of the Act and its exact operational parameter relative to the requirements of the applicable international legal régime.                                              . . .(14)

 

Arbitration Act (I of 2001)

 

Section 3

 

This Court is of the view that the conundrum resultantly posed by these widely divergent modes of interpretation and application of Section 3 makes it imperative for the scope and application of Section 3 to be revisited and thrashed out on the floor of the legislature rather than the halls of justice to clearly indicate its true intent and purport. Indeed, the underlying rationale of the New York Convention and UNICITRAL Model Law will serve as necessary guidelines in this regard for the legislature to deliberate over this issue.            ...(17)

 

Arbitration Act (I of 2001)

 

Sections 3 and 7Ka

 

This Court finds that by its own terms Section 3(2) of the Act denies the competence of this Court in the facts to issue such conservatory and interim measures by invocation of Section 7Ka of the Act. Section 3(2) which operates to neutralize on a limited scale the absolute ouster in Section 3(1) of this Court’s jurisdiction in a foreign-seated arbitration does not expressly allow for an exception to be made, however, in terms of Section 7Ka interventions. Instead, Section 3(2) dwells exclusively on the Act’s Chapter X provisions on recognition and enforcement of certain foreign arbitral awards.      . . . (25)

 

Arbitration Act (I of 2001)

 

Section 7Ka

 

Article 28.2 of the ICC Rules cannot feasibly be invoked by any of the parties’ to  call Section 7Ka into aid. The only avenue available, therefore, to the Petitioner is to rely on the arbitral tribunal or appointed institution itself to exercise such authority under Article 28.1 of the ICC Rules.          . . .(25)

 

Arbitration Act (I of 2001)

 

Sections 3(1)(2) and 7Ka

 

Interim measures sought by invocation of Section 7Ka of the Act, are granted in a state of utmost urgency and are aimed at urgently protecting the subject-matter of pending and prospective arbitration and to ensure against an award ultimately becoming frustrated. In the present case, the dispute stemming from a termination of the Subcontract having arisen on 15.4.2014, the Petitioner ought to have filed the dispute case as soon as possible. Instead, the Petitioner, without pursuing the resolution of the dispute through the mechanism devised under the ICC Rules and as agreed upon expressly otherwise, is found to have resorted to the Section 7Ka mechanism as an instrument and device at procrastination and avoidance of ICC Rules. Furthermore, in addition to the jurisdictional bar under Section 3(1) and (2), Section 7Ka remains inapplicable ‘if the parties are not agreed otherwise.                                          . . . (27)

 

HRC Shipping Ltd. Vs. M.V. X-Press Manaslu and others, 1 LCLR [2012], Vol.2, pp.207–22 (the “HRC” case); STX Corporation Ltd. Vs. Meghna Group of Industries Limited and others, 1 LCLR [2012] Vol.2, pp.159–178 (the “STX” case); Bhatia International Vs. Bulk Trading SA, 2002 AIR(SC) 1432; Unicol Bangladesh Vs. Maxwell {56 DLR (AD) 2004}, Uzbekistan Airways Vs. Air Spain Limited {10 BLC (2005)}; Canada Shipping Vs. TT Katikaayu, {55 DLR(2002)} and Bharat Aluminium Co. Ltd. Vs. Kaiser Aluminium Technical Service, [2012] 6SCC, 552 (the “BALCO” case) ref.

 

Mr. M. Quamrul Haque Siddique, Advocate with

 

Ms. Shamima Akther, Advocate and

 

Ms. Salina Aktar, Advocate

 

. . . For the Petitioner

 

Mr. Shafique Ahmed, Senior Advocate with

 

Mr. Mahbub Shafique and

 

Dr. K.M. Hafizul Alam, Advocates

 

. . . For the Respondent No. 1

 

JUDGMENT

 

Syed Refaat Ahmed, J: This is an Application under Section 12(3)(a)(ii) of the Arbitration Act, 2001(“Act”) for appointment of arbitrators.

 

2.             The Chittagong Water Supply & Sewerage Authority (“CWASA”) with the aid of Japanese loan undertook a project to construct a water treatment plant in Chittagong commonly known as “Karnaphuli Water Supply Project” and on 15.6.2011 CWASA entered into an agreement (“Main Contract”) with the Opposite Party No. 1, China National Technical Import & Export Corporation/ Beijing Sound Environmental Engineering Co. Ltd., Joint Venture to execute and complete the intake facility and water treatment plant. As per Clause 4.4 of the General Conditions (“GC”) of the said Main Contract the Opposite Party No. 1, Contractor further entered into a Subcontract Agreement with the Petitioner dated 31.10.2011 for execution of the civil construction work of the Karnaphuli Water Supply Project Subcontract No. KWSP-C-I-S Intake Facility and Water Treatment Plant. As per the Subcontract, the Petitioner provided a Performance Guarantee of Tk.13,36,61,375/- and an advance Performance Guarantee of Tk.8,55,90,968/- in favour of the Opposite Party No.1, both in the form of Bank Guarantees.

 

3.             The Petitioner asserts that the Main Contract assigned a completion date of 8.5.2014, but the Opposite Party No.1 and the Petitioner could not meet that deadline.          

 

4.             It is asserted that the work-schedule was substantially disrupted on account of civil strife and shutdowns during 2013.  The Petitioner estimates that resultantly all works remained suspended for approximately 116 days leading the Petitioner to pray for extension of completion time. Accordingly, the Opposite Party No. 1, Contractor made an application for extension of time to CWASA and it was extended to June, 2015. It is contended that the Contractor, however,  did not consider the Petitioner’s application for extension of time  as was the Petitioner’s legitimate expectation under Clause 8.3 of the Subcontract General Condition (“GC”).

 

5.             It is asserted that by a letter dated 10.4.2014 the Opposite Party No.1, Contractor served a notice of termination of the Subcontract to the Petitioner alleging deliberate delay by the Petitioner amounting to a breach of the Subcontract. The Petitioner responded on 13.4. 2014 protesting against the termination notice and requested a negotiated resolution of the dispute.

 

6.             It is alleged that without referring the dispute to a Dispute Adjudication Board (“DAB”) as envisaged in Clause 20.4 of the Subcontract GC, and in avoidance of any steps at a negotiated resolution of the dispute the Opposite Party No. 1 on 15.4.2014 conveyed its insistence on a termination, thereby, turning down the Petitioner’s request for constitution of a DAB. The Petitioner sensing a shutting down of all avenues at a negotiated settlement consequentially invoked the parties’ arbitration agreement as a last resort for a settlement of the dispute. That agreement, evident in Clause 20.7 of the Subcontract GC, reads thus:

 

 “Unless settled amicable(sic), any Subcontract dispute in respect of which the Subcontract DAB’s decision has not become final and binding shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce and Main contract clause 20.6(Arbitration) shall apply”.

 

In the facts, an amicable settlement not being readily forthcoming and efforts at constituting the DAB having failed, the Petitioner submits that the present arbitration application has been filed relying on and referring to Clause 20.6 of the Main Contract GC as per the agreed terms in Clause 20.7 of the Subcontract GC read with the laws of Bangladesh. The said Clause 20.6 of the Main Contract GC, in so far as it deals with the forum, place, language and applicable laws for arbitration, reads as follows:

 

‘Unless indicated otherwise in the Particular Conditions, any dispute not settled amicably and in respect of which the DB’s decision (if any) has not become final and binding shall be finally settled by arbitration. Unless otherwise agreed by both Parties:

 

a)      For contracts with foreign contractors, international arbitration with proceedings administered by the international arbitration institution appointed in the Contract Data, conducted in accordance with the rules of arbitration of the appointed institution, if any, or in accordance with UNCITRAL arbitration rules, at the choice of the appointed institution.

 

b)      the place of arbitration shall be the city where the headquarters of the appointed arbitration institution is located.

 

c)      the arbitration shall be conducted in the language for communications defined in Sub-Clause 1.4[ Law and Language], and

 

d)      For contracts with domestic contractors, arbitration with proceedings conducted in accordance with the laws of the Employer’s country”.

 

Additionally, Clause 1.4 of Main Contract GC stipulates that the “Contract shall be governed by the law of the country or other jurisdiction stated in the Contract Data.” Part A of the Particular Conditions of the Main Contract, to the extent relevant for the present purpose, signifies the governing law to be that of Bangladesh. The Data also details the date of appointment and constitution of a Dispute Board  or DAB pursuant to Clause 20 of Main Contract GC. However, as the facts attest to that stage in dispute resolution was abandoned by the parties.            

 

7.             The Petitioner emphatically stresses that being a domestic contractor, any dispute in which it is embroiled, and in the absence of agreement to the contrary, is strictly to be resolved as per paragraph (d) of Clause 20.6 of the Main Contract as quoted above. Accordingly, the Petitioner’s learned Advocate Mr. M. Quamrul Haque Siddique submits that in applying paragraph (d), the arbitration is to be conducted in accordance with the laws of the employer’s country, i.e., Bangladesh. That in turn, Mr. Siddique submits, brings this matter automatically under the purview of the Act. It is further asserted that the Opposite Party No. 1 being a foreign company, this Court under Section 2(c) of the Act constitutes the proper and competent forum to entertain this case as arising out of an “International Commercial Arbitration”. Mr. Siddique points out that Section 2(c) (ii) identifies disputes arising out of contractual relationships with a foreign body corporate like the Contractor to be an International Commercial Arbitration, thereby, equipping this Court with the authority under Section 12(3)(ii) to appoint an arbitrator in the facts.

 

8.             Mr. Siddique submits that the invocation of Section 12(3)(ii) is necessitated on account of the Petitioner serving a Notice of Arbitration on 1.6.2014 by appointing a member of the arbitration tribunal. The Notice significantly draws on Article 4.1 of the Rules of Arbitration of the International Chamber of Commerce (ICC) (“ICC Rules”). The Opposite Party No. 1 did not reply to the request but instead on 20.5.2014 sent a letter to the bank for encashment of both the Bank Guarantees. This in turn resulted in the Petitioner filing Arbitration Petition No. 7 of 2014 under Section 7Ka of the Act before this Court on 8.6.2014. This Court, it is noted, issued a show cause notice and an ad interim injunction restraining the Opposite Parties from encashment of the Performance/Bank Guarantees till disposal of the dispute through arbitration.

 

9.             The Opposite Party No. 1, Contractor, as represented by its learned Advocate Dr. K.M. Hafizul Alam, submits in response that because of the Petitioner’s failure to complete the work within the stipulated time the Subcontract was terminated on 10.4.2014 as per Clause No. 15.6 of the Subcontract GC. Drawing on the arbitration provisions of Clause 20.7 of the Subcontract GC read with Clause 20.6 of the Main Contract GC, Dr Alam argues that as per Clause 15 of the Memorandum of Contract Negotiation for Contract No. KWSP-C-1 (“Memorandum”) of the Main Contract, the place of such arbitration shall be Paris, France. Furthermore, the Memorandum specifically incorporates the parties’ agreement under Clause 20.6(a) on the ICC being the appointed institution of arbitration governed by the ICC Rules. It is argued that since the agreed place of arbitration is clearly outside Bangladesh, then as per Section 3(1) of the Act this Application under Section 12 of the Act is not maintainable and as such the Rule is liable to be discharged. Section 3(1) relevantly reads thus:

 

“3. Scope-(1) This Act shall apply where the place of arbitration is in Bangladesh.”

 

It is submitted that, accordingly, the arbitration procedure in the facts is to be governed solely by the ICC Rules. Dr Alam emphasizes further that contrary to Mr. Siddique’s arguments, Clause 20.6(d) will have no manner of application in determining the place or seat of such arbitration. In that regard, the agreement of the parties reflected above both in the Subcontract and the Main Contract identifying the appointed institution, the rules of arbitration and place of arbitration reign supreme in the facts. There is also the statutory ouster of any local court’s jurisdiction under Section 3(1) of the Act to entertain Sections 7Ka and 12 Applications with arbitrations conducted oversees as is reinforced by the clear contractual provisions of Clause 15 of the Memorandum. It is noted that the Memorandum confirms “the matters and aspects discussed and agreed by and between” CWASA and the Contractor and “shall be deemed to form and to be read and construed as part of the Contract Agreement as set for the in Clause 2 thereof.” Clause 15 of the Memorandum as accords primacy of status to the ICC as the appointed institution for arbitration governed by the ICC Rules reads thus:

 

“it is agreed by the Parties that the arbitration set forth in Clause 20.6 of the General Condition shall be under the rules of the arbitration of the International Chamber of Commerce in Paris.”

 

To insist otherwise now, as the Petitioner does by ignoring the clear provisions of Section 3(1) of the Act and invoking Section 12(3)(a)(ii), would, according to Dr. Alam be tantamount to misconstruing  the law and committing a breach of the agreed term in Clause 20.7 of the Subcontract under which the only guiding and deciding rules for conducting the arbitration are the ICC Rules. Dr. Alam, accordingly, submits that the Opposite Party No. 1, Contractor is admittedly a Joint Venture enterprise comprising of foreign entities and that, therefore, any dispute between the parties will be decided under Clause 20.6(a) of the Main Contract. Dr. Alam emphasizes that Clause 20.6(d) could be invoked only if the Contractor had been a domestic company subject indeed to the parties to the arbitration agreement being at liberty otherwise to decide on a seat or place of arbitration outside of Bangladesh.

 

10.         Emphasizing, therefore, on the primacy of the applicability of the ICC Rules, Dr. Alam, led by senior Counsel Mr. Shafique Ahmed, has highlighted thus the relevant provisions of Articles 4, 6 and 18 of the ICC Rules:

 

“ARTILE 4

 

Request for Arbitration

 

1. A party wishing to have recourse to arbitration under the Rules shall submit its Request for Arbitration (the “Request”) to the Secretariat at any of the offices specified in the internal Rules. The Secretariat shall notify the claimant and respondent of the receipt of the Request and the date of such receipt.

 

2. The date on which the Request is received by the Secretariat shall, for all purposes, be deemed to be the date of the commencement of the arbitration.

 

ARTICLE 6

 

Effect of the Arbitration Agreement

 

1. Where the parties have agreed to submit to arbitration under the Rules, they shall be deemed to have submitted ipso facto to the Rules in effect on the date of commencement of the arbitration. …

 

2.  By agreeing to arbitration under the Rules, the parties have accepted that the arbitration shall be administered by the Court.

 

 

4. In all cases referred to the Court under Article 6(3), the Court shall decide whether and to what extent the arbitration shall proceed. The arbitration shall proceed if and to the extent that the Court is prima facie satisfied that an arbitration agreement under the Rules may exist.

 

 

5. In all matters decided by the Court under Article 6(4), any decision as to the jurisdiction of the arbitral tribunal, except as to parties or claims with respect to which the Court Decides that the arbitration cannot proceed, shall then be taken by the arbitral tribunal itself.

 

ARTICLE 18

 

Place of the Arbitration

 

1.      The place of the arbitration shall be fixed by the Court, unless agreed upon by the parties.

 

2.      The arbitral tribunal may, after consultation with the parties, conduct hearings and meetings at any location it considers appropriate, unless otherwise agreed by the parties.

 

3.      The arbitral tribunal may deliberate at any location it considers appropriate.”

 

11.         It is now the prayer of the Opposite Party No. 1, Contractor to dismiss this Application given the overarching significance and applicability of the ICC Rules as opposed to the Act in the facts and circumstances.

 

12.         Heard the learned Advocates for the parties concerned and perused the Application and responses and replies filed resultantly under Affidavits duly sworn.            

 

13.         It is evident to this Court at the outset that the moot question before this Court is what will be the lex arbitri governing the entire process of arbitration in this case. Indeed, the parties to any agreement are free to insert a forum selection clause and/or a choice of law clause for resolution of contractual disputes. A forum selection clause in a contract with a conflict of laws element as in the present case allows parties to initiate litigation in a specific forum. Such clause may take the form of both requiring a specific process (for example, arbitration as in the present instance) to be carried out in a specific location. In many cross-border contracts of some complexity, as indeed arises in the present instance, the forum for resolving disputes may indeed not be the same as the country law that governs the contract. Additionally, such contract may provide a staged procedure for resolving disputes. That is also true of this case. This Court finds that the provisions above noted drawn variously from Main Contract GC, Sub contract GC, Memorandum and the Contract Data cumulatively operate to provide a forum selection clause by which the parties have already agreed upon an appointed institution presiding over the arbitral process through the parties’ chosen set of institutional roles, in this case being the ICC Rules governing the ICC’s International Court of Arbitration (“ICA”).

 

A distinction also has to be drawn between a forum selection clause and a choice of law clause. Parties are usually free to nominate the proper law under which all relevant disputes are to be resolved. If there is an express selection, as in this case of Bangladeshi law, this choice will be respected by this Court so long it is made bona fide. It is under this head that the question of extent of application of the Act in the facts becomes moot. This Court finds Section 3(1) and (2) to exclude in that regard the operation of the Act in governing the arbitration procedure leaving the agreed terms of contract to accord primacy to the ICA of the ICC governed by the ICC Rules to set the forum and procedure for arbitration. This Court substantiates that finding by delving further into the genesis of the Act and its exact operational parameter relative to the requirements of the applicable international legal régime. It is noted that Bangladesh, on 6.5.1992, ratified the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). Nine years into the ratification, to enact the New York Convention and with a view to address issues posed by previous legislations specifically regarding the law relating to international commercial arbitration and recognition and enforcement of foreign arbitral awards, the Act was enacted on 24.1.2001. The Act is based on the UNCITRAL Model Law on International Commercial Arbitration (1985) (the “UNCITRAL Model Law”), comprising of a set of rules aimed at the harmonization of national arbitration statutes and containing a number of salient features underlying the law relating to both domestic and international arbitration. That notwithstanding, the question still remains as to whether the Act has fully captured  the true spirit of either the New York Convention and/or the UNCITRAL Model Law in  facilitating an expeditious disposal of international commercial disputes in a manner facilitating international commerce. In this context, nowhere is the problem as stark as in the case of Bangladeshi courts’ authority to rule on interim measures of protection when the arbitration is seated abroad. That issue has come to a head centering around the exact meaning and extent of application of Section 3 of the Act. Indeed, the application of Section 3 in terms of foreign-seated arbitrations has led to conflicting decisions by this Court evident in strikingly different conclusions arrived at in two notable cases i.e., HRC Shipping Ltd. v M.V. X-Press Manaslu and Others reported in 1 LCLR [2012], Vol.2, pp.207–22 (the “HRC” case) and STX Corporation Ltd. v Meghna Group of Industries Limited and others reported in 1 LCLR [2012] Vol.2, pp.159–178 (the “STX” case).

 

14.          The HRC Case involved a dispute under a charter agreement of shipment of certain cargo from Bangladesh to Sri Lanka whereby much of the cargo was lost at sea as a result of a tsunami while the ship was berthed at its destination port. The Claimant HRC, however, attributed the loss additionally to the negligence of the ship’s crew and claimed compensation and damages by instituting an Admiralty Suit in Bangladesh. The charter agreement having incorporated an arbitration clause, the defendants commenced arbitral proceedings in London and applied for the Admiralty Suit to be stayed under Section 10 of the Act. The defendants argued that Section 10 requires the Suit to be stayed in favour of arbitration, whereas HRC argued the Act to be applicable only to arbitration proceedings seated in Bangladesh and cited Section 3 to be a clear bar to the stay order sought by the defendants. The Court found merit in the defendants’ position by according Section 3(1) a purposive meaning given that the Act was found to aim at establishing a uniform legal framework for the fair and efficient settlement of disputes arising in international commercial arbitration. In so granting a stay of the Admiralty Suit in favour of the arbitration seated in London, the Court also delved into the merits of a purposive and inclusive interpretation to Section 3(1) in relation to interim remedies. The subscription to the Indian Supreme Court’s ratio decidendi in Bhatia International v Bulk Trading SA reported in 2002 AIR(SC) 1432 was written large in the HRC ratio given that the Indian Supreme Court had pursued a similar rationale of interpretation to overcome similar deficiencies in the wording of Section 2(2) of the Indian Arbitration and Conciliation Act, 1996 (IACA).

 

15.         The STX Case, on the other hand, pertained to an arbitration clause in a supply contract under which the arbitration was seated and commenced in Singapore. STX filed for interim remedies in Bangladesh under Section 7Ka of the Act and argued for adoption of a purposive approach towards interpreting the Act. For their part, the Respondents citing decisions in Unicol Bangladesh v Maxwell {56 DLR (AD) 2004}, Uzbekistan Airways v Air Spain Limited {10 BLC (2005)} and Canada Shipping v TT Katikaayu, {55 DLR(2002)} substantiated their position for a conventional approval at interpreting Section 3 of the Act. They argued for a literal interpretation to be accorded Section 3 by virtue of which the Court was not reposed with the authority to order injunctions in relation to arbitration seated outside of Bangladesh. In this instance, the Court found itself to be in agreement with the Respondents.

 

16.         This Court is of the view that the conundrum resultantly posed by these widely divergent modes of interpretation and application of Section 3 makes it imperative for the scope and application of Section 3 to be revisited and thrashed out on the floor of the legislature rather than the halls of justice to clearly indicate its true intent and purport. Indeed, the underlying rationale of the New York Convention and UNICITRAL Model Law will serve as necessary guidelines in this regard for the legislature to deliberate over this issue. Indeed, the fact of the IACA being amended by the Arbitration and Conciliation (Amendment) Act, 2015 may also serve as a persuasive factor in amending Section 3 of the Act. Section 2(2) of the IACA until 2015, in a manner similar to the Act, expressly provided that Part I (General Provisions) applied where the place of arbitration is in India. Although the Supreme Court in the Bhatia Case, despite the clear wording otherwise of the IACA before the amendment, held that unless necessarily implied or expressly excluded, Part I would apply to all arbitrations including those outside India, that position was later overruled by the Indian Supreme Court in Bharat Aluminium Co. Ltd. v Kaiser Aluminium Technical Service reported in [2012] 6SCC, 552 (the “BALCO” case), whereby the Indian apex Court held that the IACA (as it stood in1996) had no manner of application to foreign- seated arbitration denying Indian courts any authority at the time to interfere or issue any interim orders in respect of arbitration seated outside India. The 2015 amendment now ensures, however, that IACA would apply even if the place of arbitration is outside India. Section 9 of the IACA as deals with interim measures has notably been brought under that ambit of relaxed application. Pending, however, such amendments introduced in this jurisdiction to the Act, it is this Court’s considered view, therefore, that the STX ratio remains the one meriting this Court’s subscription in preference to the HRC ratio leading this Court to find that the Act presently has no application to foreign-seated arbitration.

 

17.         There is further the issue of the overwhelming agreement between the parties to be governed by the ICC Rules in this case. This Court finds in that regard that admittedly there is a dispute which was not settled amicably and indeed no DAB was formed either. There is found, therefore, no bar under Clause 20.7 of the Subcontract to proceed to arbitration under the ICC Rules in keeping particularly with Clause 20.6 of the Main Contract. The parties are agreed further that they are involved in an international commercial arbitration as defined under Section 2 of the Act. With regard to their disagreement on the place of arbitration, it is found that their agreed contractual terms expressly stipulate such arbitration to be conducted as per ICC Rules at a designated place being Paris, France with leeway granted the arbitration tribunal under Article 8 to determine further the actual venue or location of conducting proceedings and deliberation. Drawing further on the distinction between the forum selection provision and the choice of law provision, the contractual stipulation is also for the substantive issues raised in arbitration to be considered as per the laws of Bangladesh. The Contract Data clearly attests to that. These various strands of applicable law and the actual place or seat of arbitration are found also to converge and merge under Clause 15 of the Memorandum that brings out the operation specifically of the ICC Rules and implicitly of Rules 4, 6 and 18 quoted above. It is found that under Article 4, the Petitioner ought now to pursue arbitration through the ICC Secretariat given that in the facts, and as Article 6 envisages, there is found an agreement between the parties to submit to the ICC Rules and the jurisdiction of the ICA as defined in Article 1 of the ICC Rules. Furthermore, this Court finds that the parties being already agreed under the Memorandum on Paris as the place for arbitration, Article 18 allows for the arbitral tribunal itself to conduct its proceedings at any location or venue deemed appropriate. This attests to the fact that while Paris remains the juridical seat of arbitration, i.e., the place to which the arbitration is legally attached, the physical location or venue of arbitration may indeed be different. Article 18 draws on that very distinction.    

 

18.         Dwelling further on Clause 20.6, this Court has noted further Dr. Alam’s clarification that if the parties are not otherwise agreed, provisos (a), (b), (c) and (d) of the aforesaid clause will be applicable. It is found that in the present case, however, the parties have agreed in Clause 20.7 of the Subcontract and Clause 15 of the Memorandum that the rules of procedure for conducting the arbitration will be those of the ICC. Consequentially, proviso (a) of Clause 20.6 is found to provide a checklist of determinants of the arbitration and such arbitration being conducted in accordance with the appointed institution’s rules. Clause 20.6 of the Main Contract read with Clause 15 of the Memorandum categorically identify such appointed institution to be the ICC with its headquarters in Paris, France.  That being the case, then applying Clause 20.6(b) the place of arbitration has to be Paris.

 

19.         It is also found that Clause 20.6(d) will not be applicable in case of the dispute arising out of the Subcontract executed between the foreign Contractor and the domestic company Petitioner, because if Clause 20.6(d) is to apply in the present case then the clear agreed terms of Clause 15 of the Memorandum and Clause 20.7 of the Subcontract will be breached. It is also this Court’s view that even if no place of arbitration was to be found in the facts to have been agreed upon under the Subcontract, then as per Article 18.1 of the ICC Rules the place of arbitration would stand to be fixed by the tribunal itself negating wholly any application of Clause 20.6(d) in the instant case.

 

20.         This Court notes that since the Respondents challenge the maintainability of the main Section 12 Application in this case, they also consequentially challenge the maintainability of an accompanying Section 7Ka Application. The latter Application was filed at the heels of the Petitioner having withdrawn from prosecution an earlier Application filed, i.e., Arbitration Application No. 7 of 2014.

 

21.         This Court by an Order of 3.4.2016 in Arbitration Application No. 7 of 2014 noted that an Application for non-prosecution brought to light the fact that the Performance Guarantee No. 02/2012 dated 2.1.2012 for Tk. 13,36,61,375/- and the Advance Performance Guarantee No. 274/2011 dated 10.12.2011 for Tk. 8,55,90,968/- as collectively constituted the subject matter of that Section 7Ka Application had since been returned to the Applicant-Petitioner. It was submitted by the learned Advocate for the Applicant-Petitioner, Mr. M. Quamrul Haque Siddique that the original Performance/ Bank Guarantees had been returned by the Opposite Party No. 1 under cover of a letter dated 23.3.2016 and, consequentially, the Applicant-Petitioner had deposited the said Guarantees to the bank concerned. It was submitted by Mr. Siddique that in view of the such developments the purpose of that initial Section 7Ka Arbitration Application stood fully satisfied and that his client wished not to proceed further with that this Arbitration Application. The prayer for that Arbitration Application to be dismissed for non-prosecution and the Rule as issued earlier on 10.6.2014 to be discharged similarly was resultantly allowed.

 

22.         The second Section 7Ka Application, filed as an accompaniment to the main present Section 12 Application, is to restrain the Opposite Party No. 2 CWASA from making any future payments against any bill, performance guarantee to the Opposite Party No. 1,Contractor arising out of the Karnaphuli Water Supply Project Contract No. KWSP-C-1, till disposal of the dispute through arbitration.

 

23.         The learned Advocate for the Petitioner, Mr. Quamrul Haque Siddique had initially argued that even before accepting the primacy accorded the ICC Rules by the Opposite Party No. 1, Contractor the jurisdiction as to preservation of  the subject-matter of the dispute needed to be resolved. In this regard, Mr. Siddique argued for Section 7Ka of the Act to prevail over all else. In response, Dr. Alam aptly referred to Article 28 of the ICC Rules as deals with conservatory and interim measures of protection ordered either by the arbitral tribunal itself or by any competent judicial authority. Article 28 reads thus:

 

“Conservatory and Interim Measures

 

1.      Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the arbitral tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate. The arbitral tribunal may make the granting of any such measure subject to appropriate security being furnished by the requesting party. Any such measure shall take the form of an order, giving reasons, or of an award, as the arbitral tribunal considers appropriate.

 

2.      Before the file is transmitted to the arbitral tribunal, and in appropriate circumstances even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures. The application of a party to a judicial authority for such measures or for the implementation of any such measures ordered by an arbitral tribunal shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the arbitral tribunal. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat. The Secretariat shall inform the arbitral tribunal thereof.”

 

24.         This Court finds that by its own terms Section 3(2) of the Act denies the competence of this Court in the facts to issue such conservatory and interim measures by invocation of Section 7Ka of the Act. Section 3(2) which operates to neutralize on a limited scale the absolute ouster in Section 3(1) of this Court’s jurisdiction in a foreign-seated arbitration does not expressly allow for an exception to be made, however, in terms of Section 7Ka interventions. Instead, Section 3(2) dwells exclusively on the Act’s Chapter X provisions on recognition and enforcement of certain foreign arbitral awards and  reads thus:

 

“3(2) Notwithstanding anything contained in sub-section (1) of this section, the provisions of sections 45, 46 and 47 shall also apply to the arbitration if the place of that arbitration is outside Bangladesh.”

 

This Court finds that in the circumstances, therefore, Article 28.2 of the ICC Rules cannot feasibly be invoked by any of the parties’ to  call Section 7Ka into aid. The only avenue available, therefore, to the Petitioner is to rely on the arbitral tribunal or appointed institution itself to exercise such authority under Article 28.1 of the ICC Rules.

 

25.          This Court reiterates that such grant of interim measures is not within the purview of the Bangladeshi courts and any decision to the contrary would render the plain words of Section 3(1) to be superfluous and redundant. By that reason alone, the Petitioner’s Section 7Ka Application also stands to be dismissed.

 

26.         Furthermore, interim measures sought by invocation of Section 7Ka of the Act, are granted in a state of utmost urgency and are aimed at urgently protecting the subject-matter of pending and prospective arbitration and to ensure against an award ultimately becoming frustrated. In the present case, the dispute stemming from a termination of the Subcontract having arisen on 15.4.2014, the Petitioner ought to have filed the dispute case as soon as possible. Instead, the Petitioner, without pursuing the resolution of the dispute through the mechanism devised under the ICC Rules and as agreed upon expressly otherwise, is found to have resorted to the Section 7Ka mechanism as an instrument and device at procrastination and avoidance of ICC Rules. Furthermore, in addition to the jurisdictional bar under Section 3(1)  and (2), Section 7Ka remains inapplicable ‘if the parties are not agreed otherwise’. But in the present case as per Clause 15 of the Memorandum read with and Clause 20.7 of the Subcontract GC and Clause 20.6 of the Main Contract GC, the parties are found to have clearly agreed at the very outset to settle any dispute by way of arbitration as per the ICC Rules thereby negating any ground for the maintainability of the Application for interim measures.

 

27.         Predicated on the above, it is this Court’s finding that the arbitration procedure will be governed by the ICC Rules but the substantive law applicable in the resolution of the dispute will be that of Bangladesh. This Court is unable to accept, therefore, Mr. Siddique’s arguments as make Clause 20.6(a) and (b) wholly nugatory. Indeed the agreed provisions in Clause 15 of the Memorandum and Clause 20.7 of the Subcontract GC reinforce the primacy of the ICC Rules in governing the appointed institution ICA’s endeavour of resolution of the dispute through an arbitral tribunal as envisaged in Articles 1.1 and 1.2 of the ICC Rules.

 

28.         Upon a consideration of the above, this Court finds that the Section 12 Application for appointment of arbitrator is not maintainable. This Court further finds similarly against the maintainability of the Section 7Ka Application as well.

 

29.         In the result, both the Petitioner’s Applications are dismissed in their entirety.

 

        There is no Order as to costs.     

 

Ed.