VIRGOZ OILS AND FATS PTE. LIMITED vs FAISAL EXPORTS (PVT — 2026 PLD 75 KARACHI-HIGH-COURT-SINDH

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VIRGOZ OILS AND FATS PTE. LIMITED VS FAISAL EXPORTS (PVT.) LIMITED Ss.6 & 7---Foreign arbitral award---Recognition and enforcement, refusal of---Commercial sale contracts, dispute of---Unsigned instruments---Objector denying execution of written contract, plea of---Contractual relationship, proof of---No concluded/enforceable contract---Consequence---Arbitration clause not binding---Time limit/limitation to invoke arbitration (120 days)---Notice of arbitration issued beyond 120 days---Effect---Non-filing of appeal not fatal in such circumstances---Facts:---Plaintiff company filed suit under S. 6 of the 2011 Act to enforce the Palm Oil Refiners Association of Malaysia(PORAM) arbitral award arising out of two alleged palm oil sale contracts and awarding about USD 6.301 million plus interest---The defendant/objector resisted enforcement mainly on the grounds that no concluded/signed contracts (and hence no binding arbitration agreement) existed and the dealings were only correspondence / broker communications which were never acted upon, and the claim was time-barred under PORAM rules---Issue: "Whether a foreign arbitral award rendered by PORAM (Malaysia) could be recognized and enforced under S. 6 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, when the objector asserted that no concluded contract/arbitration agreement in writing ever came into existence and, in any event, the arbitration was invoked beyond the mandatory 120-day limitation under PORAM Rules?"---Held: A foreign award had to be enforced, unless it was adversely affected by the Art. V (of the Schedule) of the Act, 2011---No enforceable contact was ever concluded between the parties---Considering, that admittedly, both the plaintiff and the objector had longstanding business relationship, this crucial aspect about the existence of any contractual relationship was decided in favor of plaintiff discarding the defence of the objector, by stating that previously also, present objector had performed contracts without signed copies---If any step was taken in pursuance of the subject contracts, for instance, opening of letter of credit[by the objector], or, shipment by the plaintiff, even then, this finding of the tribunal would have been unexceptional; but, nothing happened in pursuance of the subject contracts---Further, an irrevocable and confirmed letter of credit had to be established in sellers' favor through a recognized bank not later than ten days from the date of contract which significant term along with others were never acted upon---Regarding the claim of damages no piece of evidence was produced in the arbitration proceedings about sustaining damages by the plaintiff yet the claim was accepted by the tribunal---Viz. the question as to whether the claim was time barred, if the original shipment dates of both the purported contracts were considered, that was 15th August to 10th September 2008 [First Contract] and 20th September to 10th October 2008 [Second Contract], then, a notice of arbitration was to be submitted within 120 (one hundred and twenty) days, after the expiry of the contract shipment period---Therefore, in respect of the First Contract, a notice of arbitration should have been sent on or before the 10th January 2009, whereas, with regard to the Second Contract, the notice of arbitration should have been sent by or before 10th of February 2009, but admittedly it was sent on 16th March 2009, that was, after the expiry of limitation period---This glaring error was not addressed in the award and without basingits conclusion on any tangible material, the award had treated the date of default as 15th November 2008, by accepting the one-sided version of the plaintiff---'Pro enforcement bias' and 'second guess' principles could not be made applicable in the present case, otherwise Article-V of the Act, 2011 would have become redundant---Although the grounds to refuse recognition and enforcement of a foreign award as enumerated in the Article-V, were exhaustive, but still it empowered the Courts to consider an award on its own merits and with a judicial mind---In these peculiar circumstances, non-filing of an appeal by the objector, in the present case, could not be treated as fatal---Since the subject matter was not arbitrable, therefore, the arbitration tribunal did not have the jurisdiction to decide the lis through the award, which was adversely affected by the sub-Article (2) of Article-V of the Act, 2011 and similar provisions of The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards---Present suit was dismissed, in circumstances. Citation Name: 2026 PLD 75 KARACHI-HIGH-COURT-SINDHBookmark this Case VIRGOZ OILS AND FATS PTE. LIMITED VS FAISAL EXPORTS (PVT.) LIMITED Ss.6 & 7---Foreign arbitral award---Recognition and enforcement---Opposing party not having signed the contract, objection of---Validity---Commercial transactions are not dependent on signing of agreements / contracts by both, seller and buyer, and in case of denial, particularly, by a buyer, the terms of the binding contract can be 'teased out' from the exchange of the correspondences, including emails and the other mode of modern communication.

VIRGOZ OILS AND FATS PTE. LIMITED vs FAISAL EXPORTS (PVT — 2026 PLD 75 KARACHI-HIGH-COURT-SINDH

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