KARACHI, June 3: A plaint challenging the imposition of war risk surcharge by the Conference Lines shipping companies came up before Justice Zahid Kurban Alavi of the Sindh High Court on Monday.
Counsel Muneeb Akhtar, representing the Sapphire group of industries, argued that the war risk surcharge was discriminatory and violative of the Monopolies & Restrictive Trade Practices (Control & Prevention) Ordinance of 1970 and was affecting Pakistani exports.
It is the case of the plaintiff that the shipping liner conferences are cartels which fix prices and hence commit an offence under the law.
The war risk surcharge has been imposed because Pakistan’s territorial waters have allegedly become dangerous in the post-Sept 11 situation. Interestingly, ships going from Europe to India also pass through the same Pakistan waters (as the typical route is Dubai, Karachi, Bombay, Sri Lanka, etc). However, no surcharge has been imposed on India even though that cargo also passed through the same supposedly dangerous waters.
While Pakistani exporters, like the plaintiffs, are being made to suffer the burden of the war risk surcharge, no such levy is imposed by the defendants on India. The proximity of the two countries means that essentially the same shipping lines/conferences provide maritime services to both. Ships arriving in Pakistan invariably have either come from India, or that country is the next port of call. Thus, shipping in Indian waters and to and from that country is at precisely the same maritime risk as Pakistan. Yet, the defendants do not impose any such increase or surcharge on India as is being done in Pakistan’s case (except a nominal Suez Canal surcharge which was also levied in the case of Pakistan and other countries).
The counsel also contended that Pakistan had signed the UN convention, but it had not ratified them and the municipal law had not been amended to cater for that. His contention was that if there was a contradiction between international law and municipal law, municipal law would prevail. There were several Supreme Court rulings on this point, he said.
It might be pointed out that when England and Canada ratified this treaty they inserted a special clause in the law stating that the anti-competition laws would not apply to the liner conferences. This was a clear admission that otherwise the anti-competition laws would apply to the liner conferences, for if this had not been the case, they would not have inserted such a clause.
It was Mr Akhtar’s contention that imposition of the war risk surcharge by the liner conference was in contravention of the Monopolies & Restrictive Trade Practices (Control & Prevention) Ordinance of 1970 which stated that there should be no restrictive trade practices (section 3).
Its section 6 stated that price-fixing agreements should be deemed to be restrictive trade practices, ie, once a price-fixing agreement was established, then the law would regard that to be a restrictive trade practice.
It was submitted that section 3 prohibited absolutely any undue concentration of economic power, or unreasonable monopoly power, or unreasonably restrictive trade practices. Thus, the said section put on every person in, or doing business in, Pakistan a statutory duty and obligation to ensure that the terms thereof were not violated.
It followed that if, for example, a person or persons engaged in restrictive trade practices, such persons would be in breach of their statutory duty under section 3. Section 6 provided what sort of agreements were, in law, deemed to be violative of the prohibition cast by section 3, and the definition section made clear that the term “agreement” was to be given a broad application.
Any agreement or arrangement which was violative of section 6 was thus automatically a breach of the duty cast in terms of section 3, and all persons acting on the basis of such an agreement or arrangement were necessarily employing unlawful means.
The grievance of the plaintiffs arose, inter alia, directly from the defendants having allegedly acted in breach of the provisions of the Ordinance in a manner violative of law.
Responding to the respondent’s contention that the plaintiffs should approach the Monopoly Control Authority, the plaintiffs contended that in England they had a similar law under which, instead of setting up a bureaucratic body like the Monopoly Control Authority, they set up a special court manned by sitting High Court judges. A similar situation arose in England and the same objection was taken, ie, go to the special Court and not the regular High Court. The matter went all the way up to the Court of Appeal, where one of their most distinguished judges, Lord Denning, in effect stated that if the ordinary court realized that something illegal was being done, then they could pass an order themselves and did not have to refer the case to the special court.
Shaiq Usmani, representing the defendants, claimed that conference lines was not a company but a consultative group. It was the defendant’s contention that the liner conferences had been formed for the protection of the consumer because otherwise there would be a price war between the shipping companies, and the consumer would be confused.
When he referred to related UN conventions becoming part of international law, Justice Alavi observed that “has the US ratified most of the international conventions it has signed.”
