British Airways Plc vs. Respondent: Bangladesh Air Services Pvt. Ltd.

Jun 28, 2022

IN THE SUPREME COURT OF BANGLADESH
(HIGH COURT DIVISION)

Civil Revision No. 3934 of 1994

Decided On: 08.02.1996

Appellants: British Airways Plc
Vs.
Respondent: Bangladesh Air Services Pvt. Ltd.

**Hon’ble Judges:**Md. Abdul Karim and Syed Amirul Islam, JJ.

Counsels:
For Appellant/Petitioner/Plaintiff: Shamsuddin Chowdhury with Sigma Huda, SAM Mahbub Elahi, Miss Tamanna Rahman, Advocates

For Respondents/Defendant: Abdul Wadud Khondaker, Advocate

Subject: Corporate Law

Catch Words

Mentioned IN

**Acts/Rules/Orders:**Code of Civil Procedure, 1908 (CPC) - Section 44A; Contract Act, 1872 - Section 28

Citing Reference:

Discussed

 

 3

Distinguished

 

 2

Mentioned

 

 2

Case Note:
arbitration - Jurisdiction - Whether Subordinate Judge had no jurisdiction over arbitration in view of clause 14 and clause 23 of agreement conferring jurisdiction on English court in matter of arbitration? - Held, having regard to agreement, it is clear that court in Bangladesh has no jurisdiction over arbitration - In this view of matter; order passed by arbitration and Subordinate Judge, in appointing an arbitrator suffers from inherent legal infirmity - By passing impugned order, arbitration and Subordinate Judge has committed error of law resulting in an error in decision occasioning failure of justice and order is liable to be set aside - In result, Rule is made absolute - Impugned order passed by arbitration and Subordinate Judge, is set aside. [19]

JUDGMENT

Md. Abdul Karim, J.

  1. This Rule was issued calling upon the Opposite Party to show cause as to why the order dated 27-11-94 passed by the learned Subordinate Judge and arbitration Court, Dhaka, in arbitration Miscellaneous Case No. 37 of 1994 should not be set aside. The petitioner British Airways plc is an Airline engaged in the business of carrying passengers and goods to and from different parts of the world. The opposite party Bangladesh Air Service Pvt. Ltd. is a Private Limited Company registered under the Companies Act. By an agreement dated April 18,1980, the petitioner British Airways Plc appointed the opposite party as its General Sales Agent for the district of Sylhet on terms and conditions mentioned in the agreement and by a subsequent amendment of the agreement dated 31-3-83 the area of operation of business of opposite party Bangladesh Air Services Pvt. Ltd. was extended to the districts of Chittagong, Chittagong Hill Tracts, Comilla and Noakhali Clause 14 of the agreement provides for arbitration in case of any dispute arising out of the agreement or any matter or thing related thereto in accordance with, and subject to, the provisions of arbitration Act, 1950. Under clause 3 of the agreement, the agency is liable to termination by 30 days' notice on either side. By a letter dated 15-1-94 Bangladesh Air Services Pvt. Ltd. informed the Manager of the petitioner in Bangladesh about a dispute from unjust or improper interference by the latter causing substantial financial loss to well over taka twenty-five million and that the matter should be referred to arbitration. This was followed by a notice of termination dated 25-1-94 to Bangladesh Air Services Pvt. Ltd. by British Airways to be effective from March 1, 1994. Thereafter Bangladesh Air Services Ltd. gave notice of arbitration and nominated Mr. TH Khan, a Senior Counsel of the Supreme Court, as arbitrator, but the British Airways at that time did not object to the nomination or appointment of Mr. TH Khan and after expiry of the prescribed period as per provision of arbitration Act, 1950, which has been made applicable as per clause 14 of the Agreement, the Bangladesh Air Services Ltd. requested the Arbitrator to enter on the reference. It was on 15-2-94 that Mr. Justice TH Khan entered on the reference and asked both sides to submit written statements of facts within three weeks. On 19-2-94 Bangladesh Air Services Ltd. filed an application for injunction before the learned Subordinate Judge, Dhaka, for restraining the British Airways from giving effect to the notice of termination and it was registered as arbitration Misc. Case No. 162 of 1994 and the Court directed British Airways to show cause within five days. The British Airways filed an objection raising a question of jurisdiction on the ground that the learned Subordinate Judge had no jurisdiction over the arbitration in view of clause 14 and clause 23 of the agreement conferring jurisdiction on the English court in the matter of arbitration. On 28-2-94 the learned Subordinate Judge directed the British Airways to maintain status quo in the matter. It was followed by an appeal to the learned District Judge against the order of status quo and the learned District Judge dismissed the appeal on the ground of maintainability. Thereafter on 10-3-94 the British Airways filed a Civil Revision being Civil Revision Case No. 1067 of 1994 for setting aside the order of status quo passed by the learned Subordinate Judge, 3rd Court, Dhaka. The matter was heard by a Division Bench of this Court, which reversed the judgment. Thereafter on 26-4-94 the Bangladesh Air Services Ltd. received a notice from Mr. Justice TH Khan that he would not proceed with the arbitration in view of the objection raised by the British Airways. It was followed by a telex from Bangladesh Air Services Ltd. to the British Airways proposing the name of Mr. Justice Abdul Wadud Chowdhury as the arbitrator in the vacancy caused by retirement of Mr. Justice TH Khan with a request to concur in the appointment within seven days. The British Airways responded with a letter informing the Bangladesh Air Services Ltd. that the proposal about the appointment of Mr. Justice Abdul Wadud Chowdhury as the arbitrator was not acceptable to them. On 28-4-94 Bangladesh Air Services Ltd. prayed for an interim order of injunction under section 41(b) read with item 4 of the second schedule to the arbitration Act, 1940, for restraining the British Airways from giving effect to the notice of termination and it was registered as arbitration Misc. Case No. 362 of 1994. The learned Subordinate Judge passed an order of an interim injunction in the light of the prayer of Bangladesh Air Services Ltd. There was a revision being Civil Revision No. 1773 of 1994 against the interim order of the Subordinate Judge and a Division Bench of this Court made the Rule absolute setting aside the interim order passed by the learned Subordinate Judge on the ground that there being no arbitration proceeding in the eye of law, the interim order of injunction issued by the learned Subordinate Judge suffered from infirmity. On 22-8-94 Bangladesh Air Services Ltd. filed an application under section 41(b) read with rule 4 of the second schedule to the arbitration Act, 1940, for restraining the British Airways from interfering with the former in functioning as the General Sales Agent. The application was contested by the British Airways and the learned Subordinate Judge, 3rd Court, Dhaka, rejected the application whereupon the Bangladesh Air Services Ltd. moved the learned District Judge, Dhaka, for transfer of the arbitration Misc. Case No. 368 of 1994 and it was accordingly transferred to the court of Subordinate Judge and arbitration Court, Dhaka, and renumbered as arbitration Misc. Case No. 37 of 1994. It was heard by the arbitration court and Subordinate Judge, Dhaka, to decide whether the court had jurisdiction to appoint an arbitrator under section 8(2) of the arbitration Act, 1940, which corresponds to section 10(d) of the English arbitration Act, 1950, in view of Exception 1 to section 28 of the Contract Act and on the question of proper law of contract as envisaged under the Private International Law. After full hearing, the learned Subordinate Judge under his order dated 27-11-94 held that the court had jurisdiction over the arbitration matter and appointed Mr. Justice Ruhul Islam as the sole arbitrator. It is against the order dated 27-11-94 that the British Airways moved this revisional application and obtained the present Rule.

  2. Mr. Shamsuddin Chowdhury, learned Advocate appearing for petitioner British Airways, submits that the Court of arbitration and Subordinate Judge, Dhaka, has no jurisdiction to appoint an arbitrator in view of clause 14 of the agreement stipulating that any dispute concerning the agreement or any matter or thing contained therein or related thereto shall be referred to arbitration in accordance with, and subject to, the provision of the arbitration Act, 1950, and clause 23 of the agreement providing that the agreement shall be interpreted in all respects in accordance with the law of England. Mr. Chowdhury contends that section 8(2) of the Bangladesh arbitration Act, 1940, and section 10(d) of the English arbitration Act, 1950, are in pari materia. Mr. Chowdhury contends that the ouster of jurisdiction of the local courts decided in 22 DLR (SC) 334 is not applicable to the instant case in view of Exception I to section 28 of the Contract Act, which keeps arbitration outside the ambit of ordinary tribunals. Mr. Chowdhury further submits that learned arbitration and Subordinate Judge acted illegally in failing to consider that clause 14 of the agreement clearly provides that the arbitration shall be in accordance with, and subject to, the provisions of the arbitration Act, 1950, and that clause 23 clearly stipulates that the agreement shall have to be interpreted in all respects in accordance with the law of England. Lastly, Mr. Chowdhury submits that the learned arbitration and Subordinate Judge acted illegally in failing to consider that the appointment of an arbitrator is beyond his jurisdiction as contemplated in section 10 of the English arbitration Act, 1950, and Exception I to section 28 of the Bangladesh Contract Act and the intent and spirit of the well settled principles of proper law of contract and Private International Law.

  3. In opposing the Rule, Mr. Abdul Wadud Khondker, learned Advocate for opposite party Bangladesh Air Services, Ltd. has dwelt upon the scope of proper law and referred to Cheshire’s Private International Law at page 214 that “Where it has not been expressly chosen, the proper law depends upon the localization of the contract. The Court imputes to the parties an intention to stand by the legal system which, having regard to the incidence of the connecting factors and of the circumstances generally, the contract appears most properly to belong”. Mr. Khondker has argued on the formulation of the proper law as the system of law with which the transaction has the closest and most real connection. Clause 14 of the agreement stipulates that any difference or dispute concerning the scope, meaning, construction or effect of the agreement shall be referred to arbitration in accordance with, and subject to the provision of the arbitration Act, 1950. Mr. Khondker submits that this application of the English arbitration Act, which the parties by mutual consent have opted for, has nothing to do with the jurisdiction of Bangladesh courts, which the parties by private stipulation cannot take away. In this connection Mr. Khondker has referred to section 28 of the Contract Act for his argument that any agreement in restraint of legal proceedings about the rights of any party under or any in respect of any contract by the usual legal proceeding in the ordinary tribunals is void to that extent. In support of his contention Mr. Khondker has referred to the decisions in the case of Michael Golodetz vs. Serajuddin and Co. reported in AIR 1963 (SC) 1044, Rabindra N. Maitra vs. Life Insurance Corporation of India reported in AIR 1964 (Cal) 141, the Eleftheria vs. Owners of Ship or Vessel (1969) 2 All ER 641, the Fehmarn (1958) 1 All ER 333 and MA Chowdhury vs. Messrs. Mitsui OSK Lines Ltd. 22 DLR (SC) 334.

  4. Some basic facts are admitted by both parties. It is admitted that by the agreement dated 18.4.80 the British Airways appointed Bangladesh Air Services Pvt. Ltd. as their passenger General Sales Agent for the district of Sylhet and it was subsequently extended to the districts of Chittagong, Chittagong Hill Tracts, Comilla and Noakhali. Under clause 3 of the agreement the contract is liable to be terminated by 30 days' notice from either side. Clause 14 of the agreement stipulates that any dispute or difference concerning any matter about the agreement shall be referred to arbitration in accordance with, and subject to, the provisions of English arbitration Act, 1950. Under clause 23 the agreement is to be interpreted in all respects in accordance with the law of England. It is further admitted that section 8(2) of Bangladesh arbitration Act and section 10(d) of English arbitration Act, 1950, about the appointment of an arbitrator are pari materia. The bone of contention is whether that Court in England or the domestic court has jurisdiction over the arbitration.

  5. Mr. Shamsuddin Chowdhury has taken the point that the learned arbitration and Subordinate Judge has committed an error of law in failing to consider that the appointment of an arbitrator is beyond his jurisdiction as contemplated in section 10 of the arbitration Act, 1950, and Exception I to section 28of the Bangladesh Contract Act. Mr. Abdul Wadud Khondker, on the other hand, submits that parties cannot by private stipulation oust the jurisdiction of the domestic tribunal. We shall now discuss the decisions referred to by the learned Advocates of both sides.

  6. In the case of Rabindra N. Maitra vs. Life Insurance Corporation of India AIR 1964 (Cal) 141, it was held that the proper law applicable to a contract is the system of law by reference to which the contract was made or with which the transaction has its closest and most real connection. We may quote Cheshire’s Private International Law (1973) at page 214 :

Where it has not been expressly chosen, the proper law depends upon the localization of the contract. The court imputes to the parties an intention to stand by the legal system which, having regard to the incidence of the connecting factors and of the circumstances generally, the contract appears most properly to belong.

The next case referred to by Mr. Khondker is the case of Michael Golodetz vs. Serajuddin and Co. AIR 1963 (SC) 1044. In this case there was an agreement between an Indian firm and an American Company for supply of manganese ore and the contract provided for arbitration of their dispute in New York according to American arbitration Association Rules. When a dispute arose, the Indian Party filed a suit in Calcutta High Court and the Defendant Company applied for stay of the suit under section 34 of the arbitration Act. It was found that all evidence was in India and there were difficulties in respect of foreign exchange, which practically made it impossible for the Indian firm to take their witnesses to New York. It was observed by the Supreme Court of India that the Court ordinarily requires the parties to resort for resolving disputes arising under a contract to the tribunal contemplated by them in their contract. That is not because the Court regards itself bound to abdicate its jurisdiction in respect of disputes within its cognisance, but because it seeks to promote the sanctity of contracts and for that purpose stays the suit. The jurisdiction of the court to try the suit remains undisputed under all circumstances. The Supreme Court of India agreed with the decision of the High Court that the facts established make out sufficient reason for not granting stay. Mr. Shamsuddin Chowdhury has submitted that the facts of the reported case are different from those of the instant case before us in that there is no question of granting stay of any suit filed by the Bangladesh Air Services Ltd. claiming damages calling for stay of the same.

  1. The Eleftheria case (1969) 2 All ER 641 was a case of an application for stay of an action brought against the ship owners by the cargo owners. In summarising the principles of law formulated by the English Courts, it is mentioned in the judgment that where the plaintiffs sue in England in breach of agreement to refer the dispute to a foreign court and defendants apply for stay, the English Court is not bound to grant stay but has discretion whether to do so or not. The discretion should be exercised by granting stay unless strong cause is made out for not doing so. In what country the evidence on the issues of fact is situated or more readily available and the effect of that on the relative convenience and expense of trial as between the English and the foreign courts are also to be considered. In the Fehmarn case (1958) 1 All ER 333, a cargo was loaded at a Russian port by a Russian shipper on board the Fehmarn, a ship owned by a German company. The ship made her journey to London, and the Russian shipper sold the goods to English buyers, the “cargo owners”, who became holders of the bill of lading. After the turpentine was unloaded in England, the English cargo owners made complaint of short delivery and contamination. The English importers, the owners of the cargo, brought an action against the German owners of the ship in the Admiralty Division of the High Court for damages. The German ship owners moved for setting aside the writ on the ground that the English Courts had no jurisdiction or alternatively that by the agreement i.e. the bill of lading the parties had agreed that all disputes should be judged in the USSR and determined according to the Merchant Shipping Code of the USSR. In this case Lord Denning observed:

The English courts are in charge of their own proceedings and one of the rules which they apply is that a stipulation that all disputes should be judged by the tribunals of a particular country is not absolutely binding. Such a stipulation is a matter to which the courts of this country will pay much regard and to which they will normally give effect, but it is subject to the overriding principle that no one by his private stipulation can oust these courts of their jurisdiction in a matter that properly belongs to them.

He did not regard the choice of law in the contract as decisive and added:

I prefer to look to see with what country the dispute is most closely concerned. Here the Russian element in the dispute seems to be comparatively small. The dispute is between the German owners of the ship and the English owners of the cargo. It depends on evidence here as to the condition of the goods when they arrived here in London and on evidence of the ship.

The dispute is more closely connected with England than with Russia.

The appeal was dismissed for the reason that there were not good reasons to stay the proceedings in the Admiralty Division of the High Court.

  1. Mr. Shamsuddin Chowdhury, learned Advocate for petitioner British Airways, has argued that in this reported case adjudication in Russian court as per stipulation was rejected, because the Russian element in the dispute was comparatively insignificant, but in the instant case the dispute is between British Airways and their General Sales Agent and the decision does not apply to the facts of the present case on all fours. Besides no question of stay of any suit in a domestic Tribunal is involved here.

  2. In the case of MA Chowdhury vs. Messrs. Mitsui OSK Lines Ltd. 22 DLR (SC) 334, the three appeals raised a common question of law relating to the validity of exclusive jurisdiction clause in bills of lading from the orders of the Subordinate Judge, Chittagong, returning the plaints in three Money Suits for damages. In the 1st case the owners of the vessel and their local agents claimed that since the bill of lading provides that “any dispute arising under this bill of lading shall be governed by Japanese Law except as may be otherwise provided herein and any such dispute shall be decided by Tokyo District courts in Japan” the court at Chittagong had no jurisdiction to try this case. In two other suits also similar contention was raised by the shipowners and their local agents depending on the exclusive foreign jurisdiction clause in the bill of lading. In delivering the judgment, his Lordship Hamoodur Rahman, CJ, found it difficult to accept the contention of the learned counsel for the respondent that “such foreign jurisdiction clauses are not hit by the main provisions of section 28 of the Contract Act, as they are neither opposed to Public Policy, nor amount to an absolute ouster of jurisdiction of “ordinary tribunals” within the meaning of the section. “In the opinion of the Supreme Court of Pakistan, such foreign jurisdiction clauses, even when they purport to give jurisdiction to a court in a foreign country, are really in the nature of arbitration clauses, which come within the exception to section 28 of the Contract Act and, therefore, should be dealt with in the same manner as other arbitration clauses.

It was further observed:

In the case of an arbitration it has to be remembered that the jurisdiction of the courts is not altogether ousted, for, the Courts merely stay their hands to allow the parties to resort to the form of adjudication to which they have previously agreed. By only staying the actions before them, the Courts still retain to themselves the jurisdiction to resume the case if the arbitration, for any reason, fails or the parties find it impossible to comply with the form of adjudication to which they had agreed.

While Mr. Wadud Khondker submits that this decision lends support to his argument, Mr. Shamsuddin Chowdhury, on the other hand, has argued that in the instant case the British Airways did not pray for stay of any suit for damages filed by the opposite party in the domestic tribunal and so the facts of the present case are quite different from those of the reported case.

  1. In the instant case, admittedly the law of choice as per the agreement is the English arbitration Act, 1950. Clause 14 of the agreement clearly stipulates that “any difference or dispute concerning the scope, meaning, construction or effect of this Agreement, or any matter or thing contained herein or related hereto shall be referred to arbitration in accordance with, and subject to, the provisions, of the arbitration Act, 1950. " Mr. Abdul Wadud Khondker, learned Advocate for Bangladesh Air Services Ltd., has argued that in selecting the proper law, the court has to consider the country with which the transaction has the closest and most real connection. The other factors, such as the availability of evidence, witnesses, documents, convenience of parties, expenses, etc, all point to Bangladesh for arbitration to take place and so the learned arbitration and Subordinate Judge acted within his jurisdiction in appointing Mr. Justice Ruhul Islam arbitrator to arbitrate upon the dispute between the parties. The foundation of the argument of Mr. Khondker is that the English arbitration Act, 1950, and Bangladesh arbitration Act, 1940, are in pari materia.

  2. We may quote clause 14 of the Agreement, which runs as follows:

(14) Any difference or dispute concerning the scope, meaning, construction or effect of this Agreement, or any matter or thing contained herein or related hereto, shall be referred to arbitration in accordance with, and subject to, the provisions of the arbitration Act, 1950. The arbitral award shall be final and conclusively binding upon the parties.

Clause 23 of the Agreement runs as follows:

  1. This agreement shall be interpreted in all respects in accordance with the law of England.

The import of clause 14 is that any difference or dispute concerning the agreement or any matter arising therefrom or related thereto shall be referred to arbitration in accordance with, and subject to, the provisions, of the English arbitration Act, 1950. This clause has got to be read with clause 23, which stipulates that interpretation of the agreement shall be done in accordance with the law of England. We note further that the expressions “in accordance with” and “subject to” occurring in clause 14 are conjunctive. We have given our consideration to the expression “subject to.” The expression “subject to” means conditional upon something, which in this case is English arbitration Act, 1950. It is one thing to read clause 14 in isolation and quite a different thing to read it along with clause 23. In this connection Mr. Shamsuddin Chowdhury has drawn our attention to section 10 of the arbitration Act, 1950, providing for an appointment of an arbitrator by the High Court of England or a Judge thereof on the failure of the parties to concur in the appointment of an arbitrator. This section sets out the mechanism for appointment of an arbitrator by the High Court of England or a Judge thereof.

  1. We may also refer to section 28 of the Contract Act under which any contract absolutely restricting any party to it from enforcing his rights under or in respect of any such contract by the usual legal proceedings in the ordinary tribunals of the country is void to that extent unless protected by the exceptions to the section. Exception 1 to section 28 protects the validity of an arbitration agreement similar to the one before us from the mischief of the main provision of the section. In this connection we may refer to the decision in the case of Oil and Natural Gas Commission vs. Western Company of North America reported in (1987) 1 Indian Supreme Court Cases 496. In this case the appellant Oil and Natural Gas Commission entered into a drilling contract with respondent Western Company of USA The contract provided for reference of any dispute to arbitration in accordance with the Indian arbitration Act, 1940, which was the law of choice of the parties as per the arbitration clause contained in the drilling contract. There was an arbitration in London, which was the agreed venue as per the arbitration agreement. The award was filed in the Bombay High Court by the respondent. After some time the respondent lodged a plaint in the US District Court seeking confirmation of the award and the appellant filed a petition under sections 30 and 33 of the Indian arbitration Act for setting aside the award and also prayed for an interim order restraining the respondent from proceeding further with the action instituted in the US Court. The Indian Supreme Court held that the facts of the case are eminently suitable for granting a restraint order as prayed for by the appellant.

  2. From a reading of clause 14 along with clause 23 of the agreement and having regard to the decisions of the cases we have discussed before, we find that only the English Court has jurisdiction over the arbitration or for appointment of an arbitrator. In this view of the matter, the learned Subordinate Judge and arbitration Court, Dhaka, was not within his jurisdiction in appointing an arbitrator. The impugned order dated 27-11-94, therefore, suffers from legal infirmity.

  3. Mr. Abdul Wadud Khondker, learned Advocate for opposite party Bangladesh Air Services Ltd. has contended that a foreign arbitration award is not enforceable in our country and in support of this contention has referred to the decision in the case of Messrs Haji Azam vs. Singleton Binda and Co. Ltd. : LEX/BDHC/0054/1975 : 27 DLR 583. In this case opposite party No. 1, a limited company having its registered office in London, filed two applications in the First Court of Subordinate Judge, Chittagong, under section 5 of the arbitration (Protocol and Convention) Act, 1937, with a prayer for a decree of Taka 8,81,376.00 and Taka 37,931.00 on the basis of two awards dated 19-6-68 and 15-8-68 respectively passed by an Arbitrator in London. These applications were resisted by the petitioner on the ground that the said awards were not enforceable in Bangladesh. Holding that the application under section 5 of arbitration (Protocol and Convention) Act, 1937, as not maintainable, the Division Bench observed:

The legislative cover given by the Pakistan Legislative body to the notification issued by the Government of British India under section 2(1) of the arbitration (Protocol and Convention) Act by enacting Ordinance No. 53 of 1962 may have been an expression of the will of the State of Pakistan indicating its acceptance of the said notification as one on its own behalf, but that cannot be regarded as sufficient acceptance on behalf of the People’s Republic of Bangladesh without similar legislative enactment by the appropriate law making authority of the State of Bangladesh.

No action having been taken on behalf of the State of Bangladesh under section 2(1) of the Act, the provisions of the said Act, have not, in our opinion, become operative in Bangladesh also on this ground, notwithstanding the aforesaid amendment effected by Ordinance 53 of 1962.

The other case cited by Mr. Abdul Wadud Khondker is the case of MV Aghia Thalassini and others vs. Abu Bakr Siddique reported in 32 DLR (AD) 107. In this case the appeal arose out of an order issued by the High Court Division in an Admiralty Suit dismissing an application under section 34 of the arbitration Act filed by the appellants for stay of the proceedings in the suit. Their Lordships of the Appellate Division approved the order of the High Court Division in rejecting the prayer for stay on the ground that the allegations of respondent No. 1 about fraud, collusion and conspiracy of the other party causing loss to him could only be substantiated on evidence at the trial. In the instant case, we are not dealing with a prayer for stay of the proceedings of a suit. The facts of the reported case are distinguishable from those of the present case before us.

Section 44A of the CPC reads as follows :

44A. Execution of decree passed by Courts in the United Kingdom and other reciprocating territory.

(1) Where a certified copy of a decree of any of the superior Courts of the United Kingdom or any reciprocating territory has been filed in a District Court, the decree may be executed in Bangladesh as if it had been passed by the District Court.

(2) Together with the certified copy of the decree shall be filed a certificate from such superior Court staling the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment.

Explanation 1-“Superior Courts” with reference to the United Kingdom, means the High Court in England, the Court of Session in Scotland, the High Court in Northern Ireland, the Court of Chancery of the Country Palatine of Durham.

Explanation 2-“Reciprocating territory” means the United Kingdom and such other country or territory as the Government may, from time to time, by notification in the official Gazette, declare to be reciprocating territory for the purposes of this section; and “superior Courts,” with reference to any such territory, means such Courts as may be specified in the said notification.

Explanation 3-“Decree”, with reference to a superior Court, means any decree or judgment of such Court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty, and

(a) with reference to superior Courts in the United Kingdom, includes judgments given and decrees made in any court in appeals against such decrees or judgments, but

(b) in no case includes an arbitration award, even if such award is enforceable as a decree or judgment

  1. The power of the Court to appoint an arbitrator under section 8(2) of the arbitration Act 1940, corresponds to similar power under section 10 of the English arbitration Act, 1950. Section 26 of arbitration Act, 1950, deals with judgment in terms of the award by leave of the High Court in England or a judge thereof and it may be enforced as such. The meaning that emerges from a reading of sub-section (1) of section 44A of the CPC and clause (b) of explanation 3 to that section is that the decree of the High Court in England is enforceable in a District Court in Bangladesh as if it had been passed by such District Court, but an arbitration award, even if enforceable as a decree or judgment has been excluded from the meaning of the term “decree” and not executable as such.

  2. We have given anxious consideration to this aspect of the matter and we hold that even if such an award is not executable in Bangladesh as such, still opposite party Bangladesh Air Services Ltd, could, in case of success in getting an award, pursue their remedy for enforcement of the award in England under section 26 of the arbitration Act, 1950, and may pray for costs for having to file the proceedings in a foreign country.

  3. Under the law any party can enter into an agreement with another party and the agreement, if enforceable by law, is a contract. Here opposite party Bangladesh Air Services Ltd. has entered into the agreement with petitioner British Airways with a stipulation to refer any dispute between them to arbitration in accordance with, and subject to, the provisions of arbitration Act, 1950. The intention of the parties, we are satisfied, was to confer jurisdiction on the court in England over the arbitration and this accords with the intent and spirit of explanation-1 to section 28 of the Contract Act.

  4. Mr. Abdul Wadud Khondker has made a submission that under section 34 of the arbitration Act, 1940, the domestic tribunal may pass an order staying the proceedings of any suit filed by one party to an arbitration agreement against the other so as to allow the arbitration proceedings to continue. But in the instant case we are not confronted with a situation of having to consider whether to stay proceedings of a suit so as to allow proper conduct of the arbitration. We do not find any substance in the contention of the learned Advocate for the opposite party that this analogy gives jurisdiction to the domestic tribunal over the arbitration itself.

  5. Having regard to the agreement and the discussion of the cases cited by the both sides, it is clear that the court in Bangladesh has no jurisdiction over the arbitration. In this view of the matter, the order passed by the learned arbitration and Subordinate Judge, Dhaka, in appointing an arbitrator suffers from inherent legal infirmity. By passing the impugned order, the learned arbitration and Subordinate Judge has committed error of law resulting in an error in the decision occasioning failure of justice and the order is liable to be set aside. In the result, the Rule is made absolute. The order dated 27-11-94 passed by the learned arbitration and Subordinate Judge, Dhaka, in arbitration Misc. Case No. 368 of 1994/37 of 1994 is set aside.

Send a copy of this order to the trial Court at once.

Bangladesh vs. Respondent: Luxmi Bibi and Ors.
Bangladesh Air Service (Pvt.) Ltd. vs. Respondent: British Airways PLC

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