Popular Biscuit Limited vs. Respondent: Beximco Bremer Export Contor Brand, Repprecht Gmbh and Others

Jul 27, 2022

IN THE SUPREME COURT OF BANGLADESH
(APPELLATE DIVISION)

Civil Appeal No. 153 of 2002

Decided On: 28.06.2005

Appellants: Popular Biscuit Limited
Vs.
Respondent: Beximco Bremer Export Contor Brand, Repprecht Gmbh and Others

**Hon’ble Judges:**Md. Ruhul Amin, M.M. Ruhul Amin and Md. Tafazzul Islam, JJ.

Counsels:
For Appellant/Petitioner/Plaintiff: Rafique-ul-Huq, Senior Advocate, Azizul Huq, Advocate with him, instructed by Md. Aftab Hossain, Advocate-on-Record

For Respondents/Defendant: Abdul Wadud Bhuiyan, Senior Advocate, Ozair Farooq, Senior Advocate with him, instructed by Nawab Ali, Advocate-on-Record Respondent Nos. 3-4 and Respondent Nos. 1-2, 5-6 Ex-parte

Subject: arbitration

Catch Words

Mentioned IN

Relevant Section:
arbitration ACT, 1940 [REPEALED] - Section 34

**Acts/Rules/Orders:**Code of Civil Procedure, 1908 (CPC) - Section 151

Citing Reference:

Discussed

 

 4

Mentioned

 

 1

Case Note:
Civil - Suit - Stay of - Section 34 of arbitration Act, 1940 - Present appeal directed against judgment and order passed by High Court Division setting aside judgment and order passed in money suit rejecting application filed by respondent Nos. 3-6 under Section 34 of arbitration Act praying for stay of suit - Whether judgment and order passed by High Court Division need interference - Held, respondent Nos. 3-6 took steps on several occasions to adjourn case in name of filing written statement - Respondent Nos. 1 and 2 backed out from arbitration proceedings which was pending before ICC Paris - High Court Division while staying proceedings of trial court, did not at all take into consideration these aspects - Judgment and order passed by High Court Division in staying suit cannot be sustained - Appeal allowed. [28]

Disposition:
Appeal allowed

Industry: Miscellaneous

JUDGMENT

Md. Tafazzul Islam, J.

  1. This appeal by leave is directed against the judgment and order of 15.5.2000 passed in F. M. A. No. 195 of 1993 by the High Court Division setting aside the judgment and order dated 13.6.1993 passed by the learned Subordinate Judge (now Joint District Judge), Noakhali in Money Suit No. 1 of 1992 rejecting the application filed by the defendant respondent Nos. 3-6 under section 34 of the arbitration Act, 1940 praying for stay of the suit and there upon directing the respondent Nos. 3-6 to take steps for settling the dispute upon referring the same to the appropriate arbitrator and also directing the arbitrator, to whom the dispute may so be referred, to complete the arbitration within one year from the date of receipt of the records from the Court and also holding that in case of failure the suit shall proceed. The appellant filed the above Money Suit No. 1 of 1992 against the respondent Nos. 1-6 claiming from them TK. 89,20,459.98/- as compensation stating inter alia, that in December 1983 the appellant floated International Tender inviting offers for supplying machinery and equipments, rendering services as well as supervising the erection and installation of the machinery and equipments; the bid of the respondents Nos. 1 and 2 filed through the respondent No. 3 having been accepted they entered into a contract on 2.5.1984 with the appellant for the aforesaid works; the respondent No. 1 and 2 having violated the terms of the contract the appellant, on 28.10.1987, filed arbitration case before the international Chamber of Commerce (ICC) at Paris against them depositing a portion of the fees; the respondent Nos. 1 and 2 also appeared before ICC Paris in connection with the above arbitration proceeding depositing portion of the fees; on 5th August, 1988 the above respondents raised the plea that the appellant is liable to deposit an amount of D. M. 25,000/- as security before commencement of the arbitration proceeding as Bangladesh Shilpa Rin Sangstha (BSRS), in the meantime, invoked the performance guarantee; the respondent Nos. 1 and 2 subsequently also expressed their unwillingness to deposit the balance portion of their fees; in the above situation ICC Paris on 14.2.1991 finally informed the appellant as well as the respondent Nos. 1 and 2 that the claims are considered withdrawn without prejudice to the parties and as a result the above arbitration case could no longer be proceeded and hence the suit.

  2. The respondent Nos. 3-6 entered appearance in the above suit on 25.4.1992 and applied for time to file written statement and thereafter on five subsequent dates i.e. on 27.5.1995, 16.6.1992, 15.7.1992, 14.10.1992 And 25. 11.1992 they also filed applications seeking time to file written statement. On 16.6.92 they also filed another application under section 151 CPC seeking direction upon the appellant to supply them the Bengali version of the plaint raising the plea that the same is needed to enable them to file written statement. The same was supplied on 17.8.1992. However, on 17.08.1992 the above defendants Nos. 3-6 filed an application under section 34 of the arbitration Act praying for stay of the suit referring to arbitration clauses as contained in the contract dated 2.5.1984. The appellant by filing written objection opposed the above prayer contending amongst others, that the respondents Nos. 3-6 earlier by filing several applications sought time to file written statement in the suit and thereby submitted to the jurisdiction of the civil court and further in the above application there is also no averment to the effect that the respondent Nos. 3-6 are ready and willing to decide the dispute through arbitration and to do all things necessary for proper conducting of the arbitration proceeding.

  3. The learned Subordinate Judge (Now Joint District Judge) by order dated 13.06.93 rejected the above application upon observing that the arbitration commenced earlier by the appellant before ICC Paris could not proceed due to numerable conduct demonstrated by the respondent Nos. 1 and 2 in participating the above proceeding which was not at all fair. The High Court Division however allowed the appeal reversing the above order dated 13.06.1939 holding that in view of the principle as laid down in the case of Food Corporation of India and another vs. Yadav Engineer and Contractor reported in (1982) 2 Supreme Court Cases 25, the respondent Nos. 3-6 are not debarred from getting the advantage of Section 34 of the arbitration Act 1940 because they did not file any written statement and also did not take any steps in the proceedings within the meaning of Section 34 of the arbitration Act; the respondent Nos. 3-6 filed an application on 16-6-1992 seeking an order from the Court directing the appellant to supply them the Bengali version of the plaint which being allowed the appellant filed Bengali version of the plaint on 17.8.1992 and on that very date the respondent Nos. 3-6 submitted application for stay under section 34 of the arbitration Act and as such it cannot be said that the respondent Nos. 3-6 acquiesced to the continuation of the proceeding of the suit before filing of the Bengali version of the plaint and on the other hand the above facts indicate that the respondent Nos. 3-6 had no prior knowledge about the arbitration proceedings commenced before ICC Paris; if an arbitration clause exists in the agreement, the Court should stay the proceedings of the suit and allow the parties to take the advantage of it and arbitration be held and if the arbitration could not be fruitfully concluded in that case only the plaintiff of the suit can claim that he is not debarred from proceeding in the suit; the appellant did not implead the respondent No. 3 in the arbitration proceeding before the ICC Paris though the contract dated 2.5.1984 shows that the term ‘Seller’ includes “M/s. Brexco Bremer Expart-H Expart Brand Gmbh. Rotdornwaj 20, 2801, Grasberg. West Germany, the respondent No. 1, and also its local agent M/s Burhan (Bangladesh) Ltd. the respondent No. 3, and in view of the above it cannot be said that the respondent No. 3 was given opportunity to contest in the arbitration proceeding before the ICC at Paris.

  4. Leave was granted to consider whether the High Court Division committed error in holding that even after filing the applications seeking time for filing written statement on four occasions the respondent Nos. 3-6 were not debarred from filing application under section 34 of the arbitration Act praying for stay of the proceedings of the suit in as much as by taking such steps in the proceedings of the suit the respondent Nos. 3-6 are deemed to have submitted to the jurisdiction of the Civil court and waived their right of arbitration and thereby they were not entitled to an order of stay.

  5. The learned Counsel for the appellant submits that the respondent No. 3-6 took steps on six times for filing written statement in the suit and as such the application dated 17.8.1992 for stay is not maintainable and in the said application the respondent Nos. 3-6 nowhere mentioned that they were ready and willing to performed their part of the contract, that is, to take necessary steps for proper conduct of the arbitration proceedings before the ICC I Paris and that in the facts and circumstance of the present case stay order cannot be granted and the High Court Division has misconstrued and misinterpreted the scope of section 34 of the arbitration Act.

  6. The learned Counsel for the respondent No. 3-6 submits that filing of applications praying for time to file written statement having been conditional and depended upon supplying the Bengali version of the plaint, filing of those can not be construed as taking ‘steps’ within the meaning of section 34 of the arbitration Act and the High Court Division correctly found that the respondent Nos. 3-6 did not acquiesce with the proceeding of the suit before submission of the Bengali version of the plaint; the respondent Nos. 3-6 had although been ready and willing to perform their part of the contract and even now they are prepared to participate in the arbitration proceeding before ICC Paris; the appellant having failed to discharge its obligations and/or exhaust the formalities regarding arbitration the instant suit is to be stayed till commencement and disposal of the arbitration proceedings before ICC Paris; the said arbitration was not held at Dhaka in violation of the clause 18 of the contract dated 2.5.1984 and in the arbitration proceedings before the ICC Paris the respondent Nos. 3-6 not being made parties they could not avail the advantage of taking part in the above arbitration proceeding and in their application under section 34 they also categorically stated that they are ready and willing to take necessary steps for proper conduct of the arbitration proceedings.

  7. As it appears in (1982) 2 SCC 25 relied on by the High Court Division, which corresponds to AIR 1982 SC 1302, The plaintiff, on 1.6.1982, filed a suit against Food Corporation of India, 1st defendant and Shyam Narain Nigam, District Manager of 1st defendant, 2nd defendant, for a declaration that the contract between the plaintiff and the 1st defendant for handling and transportation of the goods of the 1st defendant was subsisting and the plaintiff also prayed for an order restraining the defendants from committing breach of the same by way of handing over that work to someone other than the plaintiff and on the same date a notice of motion was taken out under Order XXXIX Rules 1 and 2 read with Section 151, C. P. C. for an order of interim injunction restraining the defendants from committing a breach the of (of the) contract and from interfering with the work of handling and transport of goods of the 1st defendant by the plaintiff during the pendency of the suit. On 2.6.1981 the returnable date, the 2nd defendant, who had office in the city of Gwalior appeared and prayed for time for “reply and arguments to the plaintiffs application for temporary injunction”. The court allowing the same posted the case on 3.6.1981. The notice issued upon the 1st defendant being not served till 2.6.1981 the case was posted on June 3, 1981 for reply, arguments and awaiting service. On June 3, 1981 when the case came up, an application was moved on behalf of 1st defendant inviting the attention of the Court to the subsisting arbitration agreement between the plaintiff and the 1st defendant and praying that suit may be stayed as provided in Section 34 of the arbitration Act. The learned trial Judge, though was of the view that the dispute between the parties its covered by the arbitration agreement set out in Article 19 of the contract, but negative the contention that an application made by the 2nd defendant for filing reply to the notice of motion taken out by the plaintiff for interim injunction is a step taken in the proceedings and accordingly granted stay of further proceedings in the suit. The learned 3rd Additional District Judge, before whom the appeal came up for hearing, agreed with the view taken by the learned trial Judge and dismissed the appeal. On revision the learned Judge of the High Court Division made the Rule absolute holding that an application for filing reply to a notice of motion for interim injunction is a step taken in the proceeding, which would disentitle the party from invoking the arbitration agreement. On appeal the Supreme Court of India, considering the fact that the suit was filed on 1st June 1981 and on June 3, 1981 an application for stay of suit was made on behalf of the 1st defendant under Section 34, ex facie, the proceedings did not disclose any step having been taken by the 1st defendant in the proceeding as would disentitle it to an order under Section 34 and the application seeking time to file reply to an interim injunction application cannot be said to be a step in the proceedings as would display an unequivocal intention to proceed with the suit or would disclose that the defendants had acquiesced into the resolution if dispute by the court or had abandoned the rights under the arbitration agreement. As it appears in the judgment impugned the High Court Division quoted the headlines from paragraph 9 of the above (1982) 2 SCC 25. If the above decision of the Indian Supreme Court is read as a whole including the paragraphs 11 and 12, it will be crystal clear that what was decided in the said decision is that if a party to a arbitration agreement files suit and simultaneously files interlocutory application such as for interim injunction or for appointment of receiver for protection either of the property or interest of the parties, in that event the other party, to face the interlocutory injunction order or appointment of receiver, can seek time and seeking of such time will not amount to submitting to the jurisdiction of the Court.

  8. The Supreme Court of India, in the case of State of Uttar Pradesh Vs. Janaki Saran, reported in AIR 1973 SC 207 held that taking other steps in the suit proceedings connotes the idea of doing something in aid of the progress of the suit or submitting to the jurisdiction of the court for the purpose of adjudication of the merits of the controversy in the suit and by taking that steps in the proceedings for adjournment of the case in the name of filing written statement the applicant shall be deemed to have submitted to the jurisdiction of the court.

  9. The expression “before filing a written statement or taking any other steps in proceeding' as in section 34 of arbitration Act 1940 came up for consideration in the case of Muhammad Idris and others vs. Tobarak Hossain, 17, DLR 209 wherein the plaintiff, on 1.6.1962, filed suit against the defendants for accounts and other relies and upon receiving the summons on 15.6.1962 the defendants entered appearance on 27.6.1962 and in paragraph 1 of the application which was filed on the same date i.e. 27.06.1962, it was stated; that the defendants will contest the suit instituted by the plaintiff and submit written statement in the suit” and in the prayer portion it was stated “It is therefore prayed that your honour would be pleased to grant and adjournment for filing of written statement in the interest of justice Thereafter, on 9.7.1962 the defendants filed an application for stay of further proceedings under section 34 of the arbitration Act which after hearing was rejected on 28.8.1962. The defendant, being aggrieved, preferred Miscellaneous Appeal, which was dismissed. On revision the High Court, considering the contents of paragraph 1 as well as the prayer as quoted above, discharged the Rule holding that if without waiving one’s right under the agreement for arbitration some step is taken for the purpose of appreciation of the nature of the case then he will be free to make an unqualified prayer for stay in terms of section 34 of the arbitration Act but if it appears that the defendant has taken some step in the proceedings whether in the shape of written statement or otherwise signifying thereby his submission to the jurisdiction of the civil court then certainly he should be deemed also to have acquiesced in the proceeding before the civil court and paragraph 1 as well as the prayer portion of the application dated 27.06.1962 clearly indicate the intention of the defendant to contest the suit by filing a written statement and summons having been served on or about 15.06.1962, there was enough time for the defendants to go the ought the plaint consisting of a few pages only and this application for time, therefore, was made for the purpose of contesting the suit and in order to get facilities for such contest, time was asked for by means of this application for contest and not indicative of want of appreciation as to the possible nature of the case and consequent instructions to be given to the lawyer concerned and so by means of this application the defendants submitted to the jurisdiction of the civil court and further there is nothing by was of explanation in the later application dated 9.7.1962 as for what reasons or circumstances the petitioners were compelled to file an application like that on 27.6.1962.

  10. As it appears in the above decision the High Court Division also referred to the case of New Bengal Shipping Company vs. Eric Lancaster Stump of Singapore reported in 1 PLR Dhaka-1 where in a Division Bench of the High Court Division supported the view that an application for time to file written statement in certain circumstances might be regarded as amounting to steps in the proceedings within the meaning of section 34 of the arbitration Act.

  11. In the case of Halcyon Steamship Co. inc. vs. Prov. of E. Pak, 26, DLR (SC) 7 the plaintiff instituted suit for realisation of Rs. 90,204/-as compensation for loss it sustained owing to damage cause to a part of a consignment of wheat carried by a ship of the first defendant, a shipping company, and the second defendant was the shipping agent at Chittagong of the first defendant. Upon entering appearance in the suit consecutively on four occasions both the defendants, by joint petitions, prayed for its adjournment with a view to enabling them to file an application under section 34 of the Act and for that purpose to file the Charter Party agreement, which, they averred they had not been with them. On the 5th occasion, however, the two defendants parted their company from each other and while on this occasion the first defendant filed the Charter Party agreement together with an application praying that the suit be stayed under section 34 pending a reference to praying that pending the decision on the petition of the first defendant under section 34 further proceedings in the suit against it be stayed on the ground that it was a mere agent of the first defendant and that its liability, if any, was that of an agent only. The learned Subordinate Judge having dismissed the application under section 34, the first defendant preferred an appeal. The High Court of East Pakistan dismissed the appeal taking the view that the petition of the second defendants was in effect one for an adjournment which amounted to taking a step in the proceedings and as such the second defendant having submitted to the jurisdiction of court there was sufficient reason for refusing the prayer for the first defendant for stay of the said proceedings. On appeal the Supreme Court also dismissed the appeal holding that in the petition filed by the second defendant before the learned Subordinate Judge there is nothing to indicate that it was not willing to submit to the jurisdiction of the Court and the said petition contains a simple prayer that the suit against the second defendant be stayed pending the decision on the first defendant’s application under section 34 which amounted to taking as step in the proceedings within the meaning of section 34 disentitling the second defendant at any future point of time to the benefit of the provision of stay of proceedings.

  12. As it appears in the instant case the High Court Division also held that the respondent Nos. 3-6 submitted the application on 16.06.92 for supplying the Bengali version of the plaint which being allowed the appellant after preparing the Bengali version of the plaint submitted the same in the court on 17.8.1992 and on that date the respondent Nos. 3-6 submitted an application under section 34 of the arbitration Act for staying proceedings of the suit and as such it cannot be said that the respondent Nos. 3-6 acquiesced to the jurisdiction of the court before placing the Bengali version of the plaint in the court. But as it appears from the order sheet of the instant suit earlier, on several occasions, the respondent Nos. 3-6 prayed time for filing the written statement and on the basis of those prayers time was allowed. The Order Sheet shows as follows:-

  1. It further appears that in the body of the application filed on 25.4.92 it was stated that 

  2. It also appears on the next dates fixed i.e. on 27.5.1992, 16.6.92, 15.7.92. 15.10.92 and 25.11.92 the respondent Nos. 3-6 filed application with similar statements and prayers.

  3. It also appears that on 16.6.1992 respondent Nos. 3-6, apart from filing application praying for time to file written statement, also filed another application praying as follows:-

  1. It thus appears that in the above application dated 16.6.1992 also, on which the High Court Division relied, the respondent Nos. 1 and 2 wanted the Bengali version of the plaint to enable them to file written statement and so by filing the above application they also submitted to the jurisdiction of the Civil court. So the High Court Division committed error in holding that the respondent Nos. 1 and 2 did not acquiesce to the jurisdiction of the civil court before filing the Bengali version of the plaint.

  2. The High Court Division also took exception to the failure of the appellant in not impleading the respondent No. 3 and others in the arbitration proceeding before the ICC Paris, observing that the contract dated 20.5.1984 shows that the “seller” shall also mean and include M/s. Burhan (Bangladesh) Ltd. the respondent No. 3 the local agent of the respondent No. 1, but as it appears in their application under section 34 of the arbitration Act the respondent Nos. 3-6 amongst others stated as follows:-

4….. From the statements made in the plaint by the plaintiff it is clear that the defendant No. 1 and its principal, the defendant No. 2 extended full and completed co-operation in respect of the arbitration. But inspite of the readyness and willingness of the defendants regarding the arbitration, the arbitration never commended at Dhaka due to failure of the plaintiff as evidenced from letter dated 9.8.1991 of ICC addressed to the learned lawyer of the plaintiff Messers Moudud Ahmed and Association. It appears the International court of arbitration considered claimants (Plaintiffs) claim as withdrawn as of June 24th, 1991 by application of Article 15 of the Internal Rules. The ICC Accounting Department has already returned U.S. Dollar 1000.00 to the plaintiff claimant and U.S. Dollar 1740,00 to the defendants. The above money was found to be refundable to the parties as being in excess of the fees, costs and remuneration of the ICC arbitration.

  1. That since the arbitration neither commence nor held in Dhaka as invoked by the plaintiff, and without the arbitration proceedings being held and completed, the legal proceedings cannot be concerned or continued as per the provisions made in the contract (Article-19) regarding legal proceedings.”

  2. That in the facts and circumstances stated above the instant legal proceedings cannot continue without the arbitration being held.

  3. “That these defendants had although been ready and willing and even now prepared to participate in the arbitration, but the plaintiff having failed to discharge its obligations and or exhaust the forum regarding the arbitration, the instant proceeding (suit) is to be stayed till commence being held and completed, the legal proceedings cannot be concerned or continued as per the provisions made in the contact (Article-19) regarding legal proceedings.

  1. It thus appears that the respondent nos. 3-6 in the above application did not take any ground regarding the failure of the appellant to implead the respondent No. 3 as a party in the arbitration proceeding of ICC Paris.

  2. Further as it appears from the Supplementary Paper Book filed before us in the letter of ICC Paris dated 7.9.88 addressed to Professor Wikrom Maolanond, the Sole Arbitrator, it was stated as follows:-

I wish to inform you that the ICC Court of arbitration has taken the following decisions to set in motion the procedure in this matter.

I. Appointment of the Arbitrator:

The Court, at its session of August 30, 1988, appointed you as sole arbitrator upon proposal of the Thai National Committee.

II. Forwarding of the File to the Arbitrator:

  1. In accordance with the provisions of article 10 of the ICC arbitration Rules I have the pleasure of enclosing the file in this case which consists of the following documents:

-Claimant’s Request for arbitration (20 pages) +App. 1-31 dated October 28,1987:

Defendant’s Answer to the Request together with a Request for conciliation and a Power of Attorney dated April 15, 1988;

Additional Answer to the Request for arbitration (3 pages)+ enclosures dated June 17, 1988;

-Affidavit of A. T. M. Safiullah dated June 26,1988;

-Claimants Reply to Defendant’s answer to the Request for arbitration (5 pages)+ App. 32-42 dated July 27, 1988;

-Claimant’s Affidavit-in-Opposition+ annexes A-D dated August 31, 1988;

Secretariat’s letter dated April 7,1988 addressed to the Defendant party;

-Secretariat’s letter dated July 1st, 1988, addressed to the parties;

Secretariat’s letter dated July 8th, 1988, addressed to the parties;

Secretariat’s letter dated September 2nd, 1988, addressed to the parties.

Correspondence of a purely administrative nature is not included.

As you know, the arbitrator’s first task is to draw up the Terms of Reference in accordance with the provisions of article 13 of the ICC arbitration Rules. In this respect, may I draw your attention to the attached explanatory note and in particular to the time limit of two months within which the Terms of Reference must be communicated to the Court.

  1. The amount in dispute is presently evaluated at US$ 99.693,-

In case of a change in the amount in dispute, the sole arbitrator is kindly invited to let the Secretariat know, so as to enable it to ask the Court to reconsider the advance on costs.

  1. DHAHA was confirmed as place of arbitration

III………..

IV. Advance on Costs paid by the parties: The Secretariat draws the attention of the sole arbitrator to article 9.4 of the ICC arbitration Rules stating that the Terms of Reference becomes effective upon payment of the total advance on costs fixed at US $ 12,000,——, subject to later readjustments, by the parties, To date, Claimant party as paid US $ 3,000,——–, Defendant party US $ 3,000,——-The sole arbitrator is requested to transmit to the Court the original of the Terms of Reference, according to article 13, and to get in touch with the Secretariat in order to obtain confirmation of payment of the total amount fixed by the court as advance on costs.

V. Reimbursement of Expenses and Payment of Fees:

  1. You will find enclosed a Note to the Arbitrator according to which we asks you to timely submit requests for reimbursement and accompanying bills. All requests for reimbursement are at latest due with the submissions of the Award to the Secretariat. After this date no further requests will be taken into account.

  2. Upon approval of the draft of the Final Award, the Court will determine the costs of arbitration including the fees of the arbitrator in accordance with article 20 of the ICC arbitration Rules and article 18 of Appendix II- Internal Rules.

VI. Miscellaneous:

The parties are invited to correspond henceforth exclusively with the arbitrator while forwarding copies of any correspondence to the opposing party and to the Secretariat.

Sincerely yours,

Sd/-

Charistophe Imhoos

ICC Court of arbitration

Secretariat

Enclosures: Documents as mentioned

under II.

Note to the Arbitrators

ICC arbitration Rules

CC (with note to the parties).

  1. It thus appears that the appellant made request for arbitration on 28.10.1987 and the respondent Nos. 1 and 2 filed power and on 15.4.88 answered to the above request together with a request for conciliation then on 17.6.1988 the above respondent Nos. 1 and 2 also gave additional answers to the request for arbitration, then on 26.6.1988 A. T. M. Shafuullah, the Managing Director of respondent No. 3 filed affidavit, then on 27.7.88 the appellant gave reply to the answers of the respondents No. 1 and 2, then on 31.8.88 the appellant submitted affidavit in opposition and that the venue of the Arbitrations was fixed at Dhaka Since A. T. M. Shafiullah, the Managing Director of the respondent No. 3 though not impleaded as a party before ICC Paris, appeared before ICC Paris on behalf of respondent Nos. 1 and 2 and filing affidavit took necessary steps, the High Court Division was not justified in holding that the appellant failed to impleaded the respondent No. 3 and others in the arbitration proceeding of ICC Paris and there by the respondent Nos. 3-6 did not get any opportunity to take appropriate steps before ICC Paris.

  2. However the respondent Nos. 3-6, in the application under section 34 also referred to the letter of ICC Paris dated 9.8.1991 and took the ground that the arbitration proceeding neither commenced nor held at Dhaka but however did not state the background in which ICC Paris issued the above letter and the circumstances for which the proceeding could not be held at Dhaka.

  3. The Supplementary Paper Book filed before us also contain the following letters:-

(a) Letter dated 16.6.88 by which the counsel of the respondent Nos. 1 and 2, informed ICC that the appellant is to deposit D. M. 25,000 as security for expenses potentially connected with the hearing of this arbitration in the city of Dhaka, in case the appellant is found by the Arbitrator and the respondent Nos. 1 and 2 in the arbitration travel and stay at Dhaka as the payment of this sum potentially due then, is doubtful in view of the well known currency restrictions and similar difficulties in Bangladesh and that the arbitrator should see that such a deposit exists prior to incurring the expenses for holding a hearing at Dhaka.

(b) Letter dated 10.8.88 by which ICC informed the said counsel that ICC is not in a position to grant such a demand, which might be directed to the Arbitral Tribunal, once duly constituted and that in terms of Article 8.5 of the ICC arbitration rules, regarding interim or conservatory measures that the parties may apply for to the competent judicial authorities.

(c) Letter dated 8.2.1989 addressed to the counsel of the appellant in which Sole Arbitrator stated as follows:-

The letter dated 20th January 1989 of Mr. Gualterio Weiss, the Defendants Counsel reached me on Monday 30th January 1989.

The letter dated 27th January 1989/mc of Mr. Christophe Imhoos, Secretariat of ICC Court of arbitration reached me on Tuesday 7th February 1989, informing me that the court extended the time limit for submission of the Terms of Reference until March 31st 1989.

In his letter dated 20th January 1989 mentioned above, the Defendant’s Counsel stated that the one element which was submitted (by the Defendant) and which does not appear in the Terms of Reference is his request to issue orders that the Claimant should deposit as security on amount of DM 25,000-for expenses potentially connected with the hearing of his arbitrating in the City of Dhaka, he thereby asked to include request in the Terms of Reference. He also gave his view on the applicable law to this case.

As the time limit kindly extended by the Court of arbitration to March 31,1989 is drawing closer and some more steps or arrangements may have to be made in order that the Terms of Reference will be finalized within the granted extension of time, would you please expedite your reply to the Defendant’s request for the said inclusion, with the claimant’s suggested amendments to the Terms of Reference, if any at your earliest opportunity.

C. C………..

(d) Letter of ICC dated 3.1.1990 informing both the parties amongst others, as follows:-

The Secretariat refers to the latest communications received from the parties in the above referenced arbitration and state that they have not yet remitted the balance of the outstanding amounts of their respective advance on costs, i.e. USD 7,000- for the claimant party and USD 4,250, for the Defendant party.

As of totally, claimant has settled USD 3,000,- while Defendant has paid USD 3,750,-

The Terms of reference is therefore not yet operative and the sole arbitrator cannot proceed in respect of the parties' respective claims, pursuant to Article 9(4) of the ICC.

  1. A final time limit of 30 days is hereby granted for this purpose, failing which the Secretariat shall apply Article 15 of the Internal Rules which provides the following:-

When a request for an advance on costs has not been complied with, the Secretariat may act a time limit, which must not be less than 30 days on the expiry of which the relevant claim whether principal claim or counter claim, shall be considered as withdrawn. This does not prevent the party in question from lodging a new claim at a later date.

(e) Letter dated 19.2.1990 the counsel of the respondent Nos. 1 and 2 informed the ICC as follows:-

  1. “As replacement of Prof. Maolanond I can accept on behalf, of the respondent Sellers, an English Lawyer residing in Hong Kong.

  2. With regard to further payments of an advance on costs I state the position of my client that additional payments will not be forthcoming now. The claimants are referred to article 9(2) of the rules of arbitration.

The buyers and the bank acting upon their instructions and on their behalf have collected unilaterally and in the opinion of Sellers illegally the amount of a performance bond whereby they have caused grave financial damage to this Sellers in Germany. The Sellers are not prepared to add further costs to what already has been spent or taken away from them.'

(f) Letter dated 17.1.1991 by which the counsel of the respondent Nos. 1 and 2 informed the ICC as follows:-

The position of my clients is unchanged: They shall not participate in any expenses of this arbitration, even if a counterclaim has been observed. I have explained the reasons for this behavior before. The very counter claim is the result of a breach of confidence by the bank the matter in Bangladesh. In view of the situation there is no interest to pursue the matter in arbitration. It will probably be necessary to file a claim before the Ordinary Justice in Bangladesh.

Since no advance on costs will be forthcoming from the Defendant the matter is now up to the decision of the Claimants.

  1. As at appears in the background of the above circumstance ICC Paris by letter dated 19.8.1991 informed the parties as follows:-

Please be advised that the International Court of arbitration at its sessions of August 7th, 1991 look the following decisions in this matter:

  1. The Court considers claimants claims as withdrawn as of June 24th 1991 by application of Article 15 of the Internal Rules.

  2. The Court fixes the administrative expenses at USD 2.5000.

Claimant being paid USD 3,000-and Defendant USD 3,740-Claimant is entitled to a refund of USD 1,000 and Defendant USD, 1,740-

The ICC Accounting Department has been invited to proceed to the settlement of the above contained sums in favour of the parties.

The Secretariat hereby closes the above referenced file.

  1. From the contents of the above letter dated 17.1.1991 it appear that the counsel of the respondent Nos. 1 and 2 categorically stated as follows:-

In view of the situation there is no interest to peruse the matter in arbitration. It will probably be necessary to file a claim before the Ordinary Justice in Bangladesh.

  1. The position of law is that when the arbitration proceedings commences the parties should be ready and willing to do all things necessary to the proper conduct of the arbitration. But as it appears before ICC Paris the respondent Nos. 1 and 2, Expressing their unwilling to continue with the arbitration proceeding, backed out from the arbitration proceedings stating that they will not bear any further expenses in the arbitration proceeding. In view of above, the arbitration proceeding could not commence at Dhaka.

  2. Moreover in their application filed under section 34 the respondent Nos. 1 and 2 never asserted that they would pursue the arbitration proceedings before ICC Paris. In the above circumstances the plaintiff filed the present suit in Bangladesh which is permitted under Article 19.2 of the contract dated 2.5.1984 which provides that- “In the event, the arbitration as referred to in Article 18 above fails, the buyer or seller may sue or be sued”. In view of the above, after filing of suit by the appellant in Bangladesh how the respondent Nos. 3-6, instead of contesting the suit and filing any counterclaim in the suit, can invoke arbitration clause and take the stand that arbitration proceeding be started fresh before ICC Paris Considering the above the learned trial Judge held that the conduct demonstrated by the respondent Nos. 1 and 2 was not fair. The High court Division failed to take into consideration the above facts though those were placed before it by the appellant by filing counter affidavit.

  3. It further appears that the High Court Division, while staying the proceedings of the trial court, did not at all take into consideration the two basic lawful aspects of the case i.e. the respondent Nos. 3-6 took steps on several occasions to adjourn the case in the name of filing written statement and that the respondent Nos. 1 and 2 backed out from the arbitration proceedings which was pending before the ICC Paris. So the judgment and order dated 15.5.2000 passed by the High Court Division in staying the suit cannot be sustained. Accordingly the appeal is allowed without any order as to costs.

Cosmic Chemical Industries Ltd. vs. Respondent: The Commissioner of Taxes, Taxes Zone 3, Dhaka
Drilltee-Maxwell Joint Venture vs. Respondent: Gas Transmission Company Limited (GTCL) and Ors.

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