KARACHI, June 4: The Sindh High Court reserved on Tuesday order on the application of the plaintiffs consisting of textile mills owners, through which they had sought restraining shipping lines from charging the war risk surcharge (WRS).

It is the case of the plaintiffs, the Sapphire group of industries, that the war risk surcharge is discriminatory and violative of the Monopolies & Restrictive Trade Practices (Control & Prevention) Ordinance of 1970 and is affecting Pakistani exports.

It is the case of the plaintiffs that the shipping liner conferences are cartels which fix prices and hence commit an offence under the law.

Picking up the threads of his arguments, M. Shaiq Usmani, counsel for the Shipping Lines, submitted before Justice Zahid Kurban Alavi that Pakistan is signatory to UNCTAD Convention of 1973 whereby the Shipping Lines were permitted to form Conferences for regulation of freights the world over to avoid the price war in the freight market.

He continued that even though this Convention was not finally ratified by Pakistan nor was it introduced as a Municipal Law in Pakistan, the very fact that the convention was signed by Pakistan would show that it would have persuasive value insofar as the Pakistani courts were concerned. He referred to the Supreme Court judgment in the famous Shela Zia’s case.

He contended that the fact that the Convention had been ratified by the required number of states, it had force of law insofar as international law was concerned.

He further argued that the concept of regulation of certain trades, including that of freights through formation of Liner Conferences, was now an accepted principle of ECC law provided such regulation was in the interest of trade.

He then referred to various sections of the Monopoly Control Ordinance of 1970, and argued that it was not applicable to the defendants. Even if it was applicable for arguments sake, there was an exemption provided in the Ordinance in respect of regulations of prices in the interest of trade similar to the provisions of the ECC Regulations, he argued.

He also stated that under the Ordinance there was a provision of interim orders to be made by the Monopoly Control Authority (MCA), which was unusual and hence there was no basis for the plaintiffs’ demands for injunction from the court.

Mr Usmani then argued that there was a difference between freight and surcharge. While freight was of permanent nature, surcharge was a temporary phenomenon.

He said surcharge merely entailed the passing of additional premium that the shipowners paid to the Hull & Machinery Underwriters, to the customers of shipping lines. It covered not only hull & machinery but also the containers besides risk of delays to the ship due to diversion of the ships as a result of hostilities, the risk of terrorist activities against the ship in a port and similar other risks. He gave the example of the rise in the premium of car insurance in the wake of incidents of car hijacking in Karachi. He said insurance business, as a rule, was a sensitive business and it immediately reacted to situations.

He said no injunction could be granted as it would entail partially granting the entire prayer in the suit and in any case damages would be an adequate remedy for the plaintiffs.

Barrister Sajid Zahid, appearing for Maersk Pakistan and A. P. Moller Group - Maersk Sealand, submitted that no allegations were raised previously that the conference lines operated as “cartels” acting “collusively in a monopolistic way” to fix exorbitant prices. Accordingly, they had no ground to make these allegations now in respect of the WRS, which was a temporary levy attracted by the current conditions in the region.

His argument was that while the WRS was imposed by Lloyds and other underwriters, but they had not even been impleaded in these pleadings. This created an anomalous situation that if the High Court granted an injunction to restrain the levy of WRS by the shipping lines, Lloyds and other underwriters would continue to impose the WRS, which would create serious problems for the international shipping lines operating in Pakistan as their economics of doing business here would be jeopardized.

He contended that in view of the jurisdiction of the MCA a special forum was created by law for investigating such matters, the jurisdiction of the High Court of Sindh under section 9 of CPC was impliedly barred.

He explained that in consequence of hostilities in Afghanistan and the military action in the region/Arabian Sea and other adjoining territorial waters, the insurers/underwriters, including Lloyds of London, in view of the threat of terrorism imposed the WRS on shipping lines for the vessels going to the war-risk zones which included Pakistani ports.

Since the shippers had already claimed a specified refund of the WRS paid by them and separate damages of Rs100 million claimed as their alleged losses, this was further ground that they were not entitled to an injunction, as where compensation was an adequate remedy, injunction did not lie, he submitted.

Mohammed Naeem, counsel for some other defendants, argued surcharge was not a permanent thing, it was temporary. In this context, he pointed towards at least three reductions in the recent months.