SC reverses verdict against US firm: Bank guarantee controversy
By Our Staff Reporter
ISLAMABAD, March 21: The Supreme Court has finally ended a controversy generated after it had issued a direction to an American multinational to furnish US $1 billion bank guarantee
for defending itself in a suit for damages instituted by a Pakistani company.
The judgment which had distressed the American government and the World Bank and some say for whose reversal the government of Pakistan was approached at the highest level was finally reversed on Friday last.
The apex court bench headed by former Chief Justice Sheikh Riaz Ahmad, in its decision on July 12, 2002, had directed the Westinghouse Electric Corporation, to furnish bank guarantee of US $1 billion for qualifying itself to defend a suit for damages.
The American company had taken the stance that "someone" had typed few lines (with typewriter and apparently after the judges had signed the documents), extremely prejudicial language that could be read to require it to put a bond of $1 billion before they could even present their defences in court.
The Pakistani company, Wak Orient, owned by former Senator Gulzar and Senator Waqar, had filed a suit for specific performance of the contract and recovery of damages in the Civil Court at Lahore against the Westinghouse Electric Corporation for its alleged failure in the establishment of 400 mega watt power station near Port Qasim.
The Supreme Court heard the case on a number of occasions and passed different orders. But after the change of Chief Justice of Pakistan, the Supreme Court has ended the controversy by reversing all the orders on which objections were raised.
The Supreme Court bench, comprising Justice Mian Ajmal, Justice Fakeer Mohammad Khokhar and Justice Falak Sher in its order stated. "We have heard the case.
It may be noted that the judgment and decree passed by the Civil Judge Ist Class, Lahore in favour of the respondents for specific performance and recovery of Rs60 billion as damages was set aside by the learned Division Bench of the Lahore High Court and the case was remanded to the trial court for decision afresh after giving sufficient opportunity to the petitioner to file the written statement, therefore, there remained no decree in field.
The suit is yet to proceed wherein an application under Section 34 of the Arbitration Act is pending adjudication which has to be disposed of first wherein the court has also determined its jurisdiction before calling upon the defendant to file written statement.
As far as the direction with regard to the furnishing of bank guarantee is concerned, it has been modified by the above- quoted order dated 12.12.2002 whereby trial court has been directed to first determine the question of its jurisdiction in the light of Section 34 of the Arbitration Act and if the trial court decides in the affirmative then it would pass appropriate order and in case the court concludes that it has the jurisdiction, then it can direct furnishing of security instead of bank guarantee.
Since the case in the trial court has not yet proceeded on its merits, therefore, such and direction was unwarranted and the same is recalled. However, after the commencement of the proceedings in the suit the trial court at any stage, if moved may pass appropriate order under the relevant provision of the code of Civil Procedure.
Both the review petitions are accordingly disposed of." Justice Mian Mohammad who authored the final order, was also part of the bench which had passed the controversial orders.
